1. Setting a bad contract for a small number of patients is not smart. In
essence, we are increasingly seeing situations where surgery centers sign a bad
contract for a very small percentage of their patients. This contract might not be
heavily negotiated and it may be at a low price. The surgery center reasons that this
has little impact to them because these patients represent a small percentage of their
patients. However, increasingly, one preferred provider organization or insurance
company sells their contract rates and leases out the network to another party. Thus,
when somebody thought they were contacting for 1 to 2 percent of the patients, they
find over the course of time that they are actually contracting for a great number of
their patients. Thus, surgery centers have to be increasingly vigilant about walking
away from contracts that are not at rates that are profitable.
“Why would you ever sign a contract that you’re going to lose money on?” asks Brent
Lambert, MD, FACS, chairman of the board and a founder of Ambulatory Surgical Centers
of America. “Once you’ve signed a contract with a payor, it’s very hard to move it.
You’re establishing a relationship in which they think of you as a sucker.
“You may sign a contract — it may not be a terrible contract but it’s not a very
favorable contract — with a small payor, and you find out they have other relationships
with other payors, and now you’re locking yourself into very unfavorable payments with
other payors where you could be getting more if you went to them individually,” he
says.
2. Do not overbuild. Overbuilding an ASC can result in its demise. A center
with substantial fixed building and equipment costs will likely face long-term cost
problems. To prevent this from happening, the ASC should be built to meet the expected
volume and specialty needs. There are not many things that can predict the long term
death of a center more than over expenditure on fixed building costs and fixed
equipment costs. These are costs that almost never go away. Where appropriate and
fiscally viable, an ASC may consider building to accommodate future growth but this
should be done with caution.
“The best way to make sure you do not overbuild is to let data drive the process of
determining the scale of the facility,” says Kenneth Hancock, president and chief
development officer of Meridian Surgical Partners. “Determine the net transfer of cases
from the physicians to the new center by analyzing billing reports and conducting
in-depth interviews with the physicians to validate the information and gain additional
intelligence.
“As part of this diligence, the healthcare political landscape and the payor
environment should be taken into account in order to apply the appropriate discounts.
Once a realistic case volume is established, a conclusion can be made on the size the
facility should be to support the case volume without overbuilding. In some development
projects, a decision is made to evaluate the need to build a shell that could occupy a
future operating room as case volume increased,” he says.
3. Choosing the right anesthesia provider is vital. ASCs should treat
anesthesia as more than just a requirement to run their business. Anesthesia is a
critical component to patient care and profitability, which is why it is vital that
ASCs perform due diligence when making their choice of an anesthesia provider. The
better providers will have experience working in ASCs and will buy in to the mission of
the center.
“The key is understanding that anesthesia is the backbone of any successful
operating room or surgery center,” says Marc Koch, MD, MBA president and CEO of Somnia.
“My belief is the better the anesthesia group, the better performing the OR. With that
in mind, it is critical that an ASC Anesthesia group be multi-faceted by delivering on
clinical quality, patient safety and financial results equally to enable the facility
meet its objectives.”
When performing due diligence on the selection of a new anesthesia provider or
group, Dr. Koch recommends ASCs consider the following questions:
-
Does it have relevant ambulatory anesthesia experience? Related operational
benchmarking data? - Does it currently or is it in the process of seeking ambulatory accreditation?
- Does it have a quality assurance program?
- Does it have a transparent financial model?
4. LASIK is best left to practices rather than surgery centers.
“There is a strong overlap on the service side of LASIK that naturally connects the
ophthalmology office to the LASIK suite,” says Edward Colloton, MD, an ophthalmologist
at Eye Surgical Associates in Bloomington, Ill. “Many patients think of LASIK as a
quick ‘laser thing’ — in and out in 20 to 30 minutes and I see great — not like ‘real
surgery.’ Patients do not expect the stepped-up level of care that would be seen in a
typical multi-specialty ASC when they are undergoing LASIK. They also like to see the
same faces that they saw in the office at their pre-op appointments. The service side
of this procedure is so important that there is little room for compromise.
“On the economic side, these are really single-use laser devices with high costs and
frequent upgrades,” Dr. Colloton says. “Nearly all LASIK docs use a global fee that
includes the surgery facility costs, but the net all flows through the MD practice.
Costs associated with the procedure can be shifted, deferred or ‘eaten’ much easier in
the MD office environment. The LASIK specific center with multiple surgeons is a model
that has worked, especially with the high costs of laser technology and in more urban
settings, but given the opportunity, most LASIK surgeons would like the laser in or
adjacent to their primary office.”
If an ASC is eager to bring LASIK into the center, a rural setting, as opposed to a
mature metropolitan marketplace, is likely the wisest location for such a venture, says
Rick DeHart, CEO of Pinnacle III.
“There is potential for an ASC (in a rural setting) to use specialty procedures to
attract a surgeon and benefit from the additional case volume,” he says. “This usually
applies where LASIK volumes are lower and a surgeon can fill the surgery day with
multiple types of cases.”
