Q: What impact is the economy having on ASCs?
Todd Flickema: I think that recent articles regarding layoffs may be a hint this storm has already hit our shores. What will be interesting to watch is how centers that have historically enjoyed very comfortable profit margins will react.
Q: What is the most important thing an ASC can do in 2009 to preserve profit?
TF: It is absolutely critical for surgical facility owners and managers to focus on the fundamentals in this economy and changing political landscape. It goes without saying that the centers with lower profit margins may have little, if any, time to plan and react. I think there are a number of very profitable facilities that have not concentrated on some of the fundamentals, such as really understanding their costs per case by specialty with regards to labor and supplies. They have not looked at other money-saving or efficiency opportunities. They simply don’t challenge themselves. I think this is imbedded in two primary human nature tendencies: 1) They have been making a great deal of money so they don’t find it necessary to bother with the details; and 2) they don’t want or like any potential change. I am afraid what will happen is that the storm may sweep over some of these centers, and they will find themselves with dramatically lower margins. Then, another aspect human nature will kick in — what I believe my college psych professor referred to as "projection." They will blame external factors beyond their control, such as the economy and the government.
My advice to owners and managers: If you want to preserve your profits in 2009, start looking at the fundamentals now and start challenging yourself to embrace change.
If you would like to share your thoughts regarding these issues, please send them to Scott Becker at sbecker@mcguirewoods.com.
