Industry experts identify critical best practices for turning around an ASC in poor financial health.
1. Determine turnaround potential. According to Luke Lambert, CEO of ASCOA, a struggling ASC can ask several questions to determine the turnaround potential of the facility, including:
• Can more cases be recruited? A lack of available specialists means the ASC will struggle to add cases. If physicians in your area are employed by the hospital, they will likely be unable to become a partner in the facility. Similarly, if the majority of your community's primary care physicians are employed by the local hospital, they will frequently tell specialists that referrals must be taken to the hospital, Mr. Lambert says.
• Can reimbursement be improved? If contracts have been neglected for several years, your ASC may be getting paid under old reimbursement rates. You should evaluate if you will be able to improve your reimbursements, a factor that will strongly influence your ASC's turnaround potential. Mr. Lambert says ASCs can gain leverage in contract negotiations by working with physicians to decide where cases will be performed or threatening to drop the contract, if feasible.
From: 3 Questions to Determine the Turnaround Potential of an ASC
2. Focus on employee morale. When attempting to turn around a struggling center, you may be so focused on the ASC's financial health that you neglect its staff members. According to Buddy Bacon of Meridian Surgical Partners, "half the battle of any business is creating the right environment that motivates people to put forth their best efforts," he says. "When employees feel like they are a valuable part of the process and have a sense of ownership, it translates into positive financial results."
He recommends talking with employees about the ASC's difficulties. If you keep communication lines open, your employees will understand if you need to make staffing cuts, even though they may not like the decision. They may also be able to contribute ideas to increase revenue or cut costs.
From: Improve Your Struggling ASC This Week: Q&A With Buddy Bacon of Meridian Surgical Partners
3. Improve accounting efficiency. In the experience of Joseph Zasa, co-founder and managing partner of ASD Management, accounting inefficiencies can be a significant problem for struggling ASCs. In order to implement a successful turnaround at the Surgical Center for Excellence in Panama City, Fla., Mr. Zasa and his team put in place new policies and procedures for collection, including pre-op collection procedures that encouraged patients to pay their balance before the procedure was performed.
Mr. Zasa says the surgery center also integrated managed care contracts into the information management system, meaning the center could determine its receivables and work aged A/R properly. The facility also started using a monthly accrual system with a professional healthcare accounting firm, which allowed staff members to keep better track of A/R and match their revenues.
From: Case Study: Successful Joint-Venture Turnaround
4. Increase surgeon involvement. Physician engagement is essential for a profitable ASC, according to many experts. Jeffry Peters of Surgical Directions says increasing surgeon involvement in an ASC's governance can help the ASC build a strategic vision that will drive volume growth. Surgeons are extremely useful in building this vision because they play such a large role in volume, he says. If your ASC is struggling and physician-owners are largely absent from your executive committee, restructure the governance body to include physicians, nursing, anesthesia and representatives from your corporate or hospital partner, if applicable.
From: Turnaround Case Study: Minor Issue or Fatal Flaw?
5. Focus on staffing and supply costs. Staffing and supply costs are the two biggest expenses to an ASC, so any struggling ASC should take time to evaluate expenses and determine whether costs can be reduced. Graham Cherrington executive vice president of operations for NovaMed recommends matching labor to case volume, meaning employees should be staffed more when case volume increases and less when it decreases.
By flexing your staff to match projected volumes, he says "you can really align better the one cost item you control most in your ASC, and that's labor." He adds, "We ask our managers, our ASC directors, to take their budgeted labor balance early in the month or before the month starts and get a projected number of cases. Net revenue per case is a good proxy for how much revenue you'll generate, and then [you can] figure out how many dollars you have to play with on the staffing side."
Sue Leveque, RN, administrator at Central California Endoscopy Center in Fresno, Calif., says hiring someone responsible for keeping a close eye on the prices of pharmaceuticals and smaller supplies is just as essential to preventing monetary waste as close monitoring of schedules. Ms. Leveque says prices on drugs and smaller supplies, such as syringe needles and bite locks, can vary tremendously on a week-to-week basis. "You can't keep ordering supplies from the same vendor anymore and assume the prices are going to stay the same. Our materials staff member checks the prices on all our items all the time to make sure we always have the best price, and if we don't have the best price, that person makes a call to make sure we get it," Ms. Leveque says.
From: 4 Solid Business Ideas to Improve Your ASC's Profitability and 5 Ways to Avoid Wasting Money at Your ASC
1. Determine turnaround potential. According to Luke Lambert, CEO of ASCOA, a struggling ASC can ask several questions to determine the turnaround potential of the facility, including:
• Can more cases be recruited? A lack of available specialists means the ASC will struggle to add cases. If physicians in your area are employed by the hospital, they will likely be unable to become a partner in the facility. Similarly, if the majority of your community's primary care physicians are employed by the local hospital, they will frequently tell specialists that referrals must be taken to the hospital, Mr. Lambert says.
• Can reimbursement be improved? If contracts have been neglected for several years, your ASC may be getting paid under old reimbursement rates. You should evaluate if you will be able to improve your reimbursements, a factor that will strongly influence your ASC's turnaround potential. Mr. Lambert says ASCs can gain leverage in contract negotiations by working with physicians to decide where cases will be performed or threatening to drop the contract, if feasible.
From: 3 Questions to Determine the Turnaround Potential of an ASC
2. Focus on employee morale. When attempting to turn around a struggling center, you may be so focused on the ASC's financial health that you neglect its staff members. According to Buddy Bacon of Meridian Surgical Partners, "half the battle of any business is creating the right environment that motivates people to put forth their best efforts," he says. "When employees feel like they are a valuable part of the process and have a sense of ownership, it translates into positive financial results."
He recommends talking with employees about the ASC's difficulties. If you keep communication lines open, your employees will understand if you need to make staffing cuts, even though they may not like the decision. They may also be able to contribute ideas to increase revenue or cut costs.
From: Improve Your Struggling ASC This Week: Q&A With Buddy Bacon of Meridian Surgical Partners
3. Improve accounting efficiency. In the experience of Joseph Zasa, co-founder and managing partner of ASD Management, accounting inefficiencies can be a significant problem for struggling ASCs. In order to implement a successful turnaround at the Surgical Center for Excellence in Panama City, Fla., Mr. Zasa and his team put in place new policies and procedures for collection, including pre-op collection procedures that encouraged patients to pay their balance before the procedure was performed.
Mr. Zasa says the surgery center also integrated managed care contracts into the information management system, meaning the center could determine its receivables and work aged A/R properly. The facility also started using a monthly accrual system with a professional healthcare accounting firm, which allowed staff members to keep better track of A/R and match their revenues.
From: Case Study: Successful Joint-Venture Turnaround
4. Increase surgeon involvement. Physician engagement is essential for a profitable ASC, according to many experts. Jeffry Peters of Surgical Directions says increasing surgeon involvement in an ASC's governance can help the ASC build a strategic vision that will drive volume growth. Surgeons are extremely useful in building this vision because they play such a large role in volume, he says. If your ASC is struggling and physician-owners are largely absent from your executive committee, restructure the governance body to include physicians, nursing, anesthesia and representatives from your corporate or hospital partner, if applicable.
From: Turnaround Case Study: Minor Issue or Fatal Flaw?
5. Focus on staffing and supply costs. Staffing and supply costs are the two biggest expenses to an ASC, so any struggling ASC should take time to evaluate expenses and determine whether costs can be reduced. Graham Cherrington executive vice president of operations for NovaMed recommends matching labor to case volume, meaning employees should be staffed more when case volume increases and less when it decreases.
By flexing your staff to match projected volumes, he says "you can really align better the one cost item you control most in your ASC, and that's labor." He adds, "We ask our managers, our ASC directors, to take their budgeted labor balance early in the month or before the month starts and get a projected number of cases. Net revenue per case is a good proxy for how much revenue you'll generate, and then [you can] figure out how many dollars you have to play with on the staffing side."
Sue Leveque, RN, administrator at Central California Endoscopy Center in Fresno, Calif., says hiring someone responsible for keeping a close eye on the prices of pharmaceuticals and smaller supplies is just as essential to preventing monetary waste as close monitoring of schedules. Ms. Leveque says prices on drugs and smaller supplies, such as syringe needles and bite locks, can vary tremendously on a week-to-week basis. "You can't keep ordering supplies from the same vendor anymore and assume the prices are going to stay the same. Our materials staff member checks the prices on all our items all the time to make sure we always have the best price, and if we don't have the best price, that person makes a call to make sure we get it," Ms. Leveque says.
From: 4 Solid Business Ideas to Improve Your ASC's Profitability and 5 Ways to Avoid Wasting Money at Your ASC