3 Mistakes Physician Owners Make When Developing a New ASC

Practice Management

An ASC can be effectively developed and managed by physician-owners — if the owners are experienced in ASC processes and willing to dedicate the necessary time to manage the center. "If they're really interested in ASC management and they have a lot of knowledge about how to run a center, you can use a strong physician leader to run a center," says Evelyn Miller, vice president of development for United Surgical Partners International. Unfortunately, physician-owners often overlook crucial financial details regarding surgery center management, leading to poor profits and disorganized operations. Ms. Miller discusses three common mistakes physician-owners make when developing and managing a new ASC.  

1. Overbuilding. A common mistake physician-owners make when developing a new ASC is overestimating the number of cases they can bring to the center, Ms. Miller says. If a physician is performing 100 cases a month, he or she might assume that 100 percent of those cases can be performed in the surgery center and therefore bank on that number when deciding how many ORs to build. "They think, 'I can bring 100 cases to the surgery center every month' and don't think about co-morbidities that will make a patient inappropriate for surgery in the ASC setting," she says.

In this case, she says physician owners should look at the percentage of cases they perform each month and determine how many of those cases would be appropriate for the ASC setting.

2. Signing the first managed care contract they see. Without knowing the ins and out of managed care contracting, Ms. Miller says many physician-owners fall victim to their anxiety and sign managed care contracts too quickly. "They allow the insurance carrier to push them into accepting a lower rate that doesn't cover their costs," she says. "I think there's a certain finesse to managed care contracting, and I would want someone with experience who has a good relationship with a payor to do my managed care contracting."

She says physicians planning to develop an ASC on their own should hire a staff member who has experience with managed care contracting and has established relationships with payors. "There are a lot of nuances, and insurance companies will definitely take advantage of someone [who clearly doesn't have experience]," she says.

3. Not paying attention to expenses.
Ms. Miller says one of the primary reasons physician-owned ASCs fail is inattention to the center's expenses. She says every supply, staffing decision and piece of equipment has an effect on the ASC's bottom line, and owners who only pay attention to big item expenses may find themselves in financial trouble.

Ms. Miller says expenses are one of the first things a management company looks at when acquiring a physician-owned center, and frequently the company finds the ASC is losing money simply through lack of oversight. "We analyze repairs and maintenance, landscaping, housekeeping, every single expense," she says. "Generally we find that staffing, scheduling and drugs and medical supplies are [areas where ASCs lose money]."

"You have to be looking at your supplies per case and your staffing per case and monitoring the pulse of your ASC 24/7," she says. "An experienced administrator will do that naturally because they have the experience to know that those expenses are important."

Learn more about United Surgical Partners International.

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