It may seem that every ambulatory surgery center is joining up with a hospital or corporate partner, but in reality, many freestanding ASCs still stand by the old ways of doing business. Standalone facilities can prosper in the current environment if they make sure to keep costs down, negotiate beneficial contracts and retain a strong group of physician-investors. Karen Cannizzaro, administrator of Physicians Day Surgery Center in Naples, Fla., discusses how her ASC has succeeded without the assistance of a corporate or hospital partner.
1. Bring in an expert to handle managed care contracting. Managed care contracting can be difficult for a standalone surgery center without the negotiating power of a large hospital or corporate partner. If your surgery center staff is inexperienced in negotiating managed care contracts, you might consider bringing in outside help. "We use a company that is also used by some of the corporate chains, so we get all of that expertise in our little center," Ms. Cannizzaro says. "The company has a lot of knowledge that we wouldn't have access to, and they help us analyze our figures and figure out which specialties are profitable." Walking into a managed care contract negotiation without data can be like stepping into the lion's mouth; if you feel unsure about what your center can offer in terms of cost and quality, talk to an expert to determine how to use your strengths to gain leverage.
2. Rely on surgeons for recruitment. A hospital or corporate partner can provide a valuable service in increasing case volume. While a hospital might send ASC-appropriate cases your way, a corporate partner can provide expertise in contacting and recruiting physicians for your center. Without either, recruitment can be difficult. "I spent a lot of time early on trying to recruit physicians on my own, and it's very hard as an administrator to get your foot in the door," Ms. Cannizzaro says.
She says physician-to-physician recruitment is more effective. "It's a less threatening approach because these are their peers," she says. Physicians can have even more success than an experienced corporate partner because the conversation feels less like a hard sell. "[The new physicians] don't feel like they're making money for a corporation if our physicians talk to them," she says. Ask your physicians to target known quality providers in the area and discuss the benefits they experience in bringing cases to your facility.
3. Start every vendor negotiation with high standards. Vendor negotiations can be tough for a center with low case volume and limited market share. If your ASC cannot use the leverage of a hospital or corporate partner, start with a group purchasing organization membership and go from there. Ms. Cannizzaro recommends never paying list price for an item outside the GPO. "We also know that we have to shop around with GPO ownership," she says.
If you are faced with a tough vendor negotiation, enter the situation with your head held high. Don't assume you have to accept a bad price just because you're the "little guy" in the situation. If you have competitive quotes from other vendors and information about historical pricing, you may be able to get a good price right off the bat. If you can't negotiate any lower, you can ask the vendor for a free extended warranty or other benefits that may not be offered up front. To arm herself with strategies for getting the best price, Ms. Cannizzaro reads frequently about negotiation tactics and advice. "Vendors are smart and spend a lot of time educating their sales people, so you have to spend a lot of time educating yourself," she says.
4. Provide good benefits to keep employees at the center. One of the two biggest costs to a surgery center is staffing (the other is supplies), so keeping staffing costs in check is vital to profitability. Ms. Cannizzaro says her center must pay more to purchase health insurance because the center only has access to small group coverage for its employees — but surprisingly, she thinks the extra expense pays off in the long run. "We have a very good benefit package for our employees, and our average employee has been here eight and a half years," she says. "It may cost us a little more in benefits, but you save in cost in the long run." When your employees stay with the center for years, you build a knowledgeable, capable team of experts who know how to turn cases over quickly, deal with problems effectively and please their long-time surgeons.
5. Plan for the future. Ms. Cannizzaro says one of the most important aspects of running a standalone surgery center is planning for the future. "Corporations are not successful by accident — they have a plan," she says. "Standalone surgery centers often sell themselves short. They need to have a plan and evaluate and adjust that plan as the market shifts."
She says her center keeps the "bigger picture" in mind at all times by benchmarking against other facilities, reading about changes to the industry and thinking about where the center will be in several years. She says the center has not ruled out the possibility of seeking a hospital or corporate partner down the line, but for now, the ASC is content to remain a freestanding center. "With accountable care organizations on the horizon, we have definitely started discussions about where that's going to take us as a business," she says. "We would not be opposed to doing whatever we need to do to survive."
Read more advice on operating a successful ambulatory surgery center:
-4 Tips for Managing Orthopedic Surgery Center Costs
-6 Ways a Hospital/Surgery Center Joint Venture Benefits Both Parties
1. Bring in an expert to handle managed care contracting. Managed care contracting can be difficult for a standalone surgery center without the negotiating power of a large hospital or corporate partner. If your surgery center staff is inexperienced in negotiating managed care contracts, you might consider bringing in outside help. "We use a company that is also used by some of the corporate chains, so we get all of that expertise in our little center," Ms. Cannizzaro says. "The company has a lot of knowledge that we wouldn't have access to, and they help us analyze our figures and figure out which specialties are profitable." Walking into a managed care contract negotiation without data can be like stepping into the lion's mouth; if you feel unsure about what your center can offer in terms of cost and quality, talk to an expert to determine how to use your strengths to gain leverage.
2. Rely on surgeons for recruitment. A hospital or corporate partner can provide a valuable service in increasing case volume. While a hospital might send ASC-appropriate cases your way, a corporate partner can provide expertise in contacting and recruiting physicians for your center. Without either, recruitment can be difficult. "I spent a lot of time early on trying to recruit physicians on my own, and it's very hard as an administrator to get your foot in the door," Ms. Cannizzaro says.
She says physician-to-physician recruitment is more effective. "It's a less threatening approach because these are their peers," she says. Physicians can have even more success than an experienced corporate partner because the conversation feels less like a hard sell. "[The new physicians] don't feel like they're making money for a corporation if our physicians talk to them," she says. Ask your physicians to target known quality providers in the area and discuss the benefits they experience in bringing cases to your facility.
3. Start every vendor negotiation with high standards. Vendor negotiations can be tough for a center with low case volume and limited market share. If your ASC cannot use the leverage of a hospital or corporate partner, start with a group purchasing organization membership and go from there. Ms. Cannizzaro recommends never paying list price for an item outside the GPO. "We also know that we have to shop around with GPO ownership," she says.
If you are faced with a tough vendor negotiation, enter the situation with your head held high. Don't assume you have to accept a bad price just because you're the "little guy" in the situation. If you have competitive quotes from other vendors and information about historical pricing, you may be able to get a good price right off the bat. If you can't negotiate any lower, you can ask the vendor for a free extended warranty or other benefits that may not be offered up front. To arm herself with strategies for getting the best price, Ms. Cannizzaro reads frequently about negotiation tactics and advice. "Vendors are smart and spend a lot of time educating their sales people, so you have to spend a lot of time educating yourself," she says.
4. Provide good benefits to keep employees at the center. One of the two biggest costs to a surgery center is staffing (the other is supplies), so keeping staffing costs in check is vital to profitability. Ms. Cannizzaro says her center must pay more to purchase health insurance because the center only has access to small group coverage for its employees — but surprisingly, she thinks the extra expense pays off in the long run. "We have a very good benefit package for our employees, and our average employee has been here eight and a half years," she says. "It may cost us a little more in benefits, but you save in cost in the long run." When your employees stay with the center for years, you build a knowledgeable, capable team of experts who know how to turn cases over quickly, deal with problems effectively and please their long-time surgeons.
5. Plan for the future. Ms. Cannizzaro says one of the most important aspects of running a standalone surgery center is planning for the future. "Corporations are not successful by accident — they have a plan," she says. "Standalone surgery centers often sell themselves short. They need to have a plan and evaluate and adjust that plan as the market shifts."
She says her center keeps the "bigger picture" in mind at all times by benchmarking against other facilities, reading about changes to the industry and thinking about where the center will be in several years. She says the center has not ruled out the possibility of seeking a hospital or corporate partner down the line, but for now, the ASC is content to remain a freestanding center. "With accountable care organizations on the horizon, we have definitely started discussions about where that's going to take us as a business," she says. "We would not be opposed to doing whatever we need to do to survive."
Read more advice on operating a successful ambulatory surgery center:
-4 Tips for Managing Orthopedic Surgery Center Costs
-6 Ways a Hospital/Surgery Center Joint Venture Benefits Both Parties