Ophthalmic surgery is changing so quickly that it seems more difficult than ever to plan for your future setting. Cataract surgery reimbursements continue to plummet, casting a lot of uncertainty over any economic models you might create for an ambulatory surgery center (ASC).

At the same time, refractive surgery is opening up opportunities that you probably don't want to miss out on by being too conservative. But when it comes to planning for future surgical settings, nothing can be as risky as over extending yourself. So . . . what should you do?

Here, I'll share some of the insights I've gained as a consultant helping more than 150 surgeons change surgical locations and other aspects of their businesses during the past 10 years.

In the 80s to early 90s, the public healthcare sector started acting on an impulse from Wall Street that ancillary services, particularly ASCs, could command healthy dividends for enthusiastic shareholders. It was during this time period -- most particularly during the early 90s -- that the ASC "courting ritual" moved into high gear.

Literally hundreds of surgeons across the country sold their ASCs to large public corporations, most of which had no experience in the ASC arena. Many of these unions were less than perfect, and a good number of surgeons found themselves wishing they'd "dated longer" before they got "married."

Having experienced many of these transactions alongside numerous surgeons -- as an ASC manager, corporate regional director and consultant -- I found that most were unnecessarily painful for all parties involved. Here's how you can avoid a similar fate and increase your chances for success.

If you're purchasing an ASC or a partnership interest in an ASC, a good rule to follow is to always do a walk-through, as though you were the surgical patient. You can take this as far as lying down on a gurney. This suggestion has prompted a lot of raised eyebrows and funny looks, but I've never had a surgeon not learn something valuable from this experience.

Always do the walk-through during operating hours. As you proceed on your walk, remember to look around and see what your patients will see. Will they see stained ceiling tiles and unhappy faces? What will they feel? Bumpy wheelchairs and gurney, and rough linens that should already have been replaced? What will they smell and hear? I think you get the idea. It's amazing, from an operational standpoint, what you can learn about the facility as you go through this process. Remember, if you feel uncomfortable with the experience, so will your patients.

After you complete the walk-through, ask yourself if you'd feel comfortable having a family member operated on in the facility. If your answer is no, rethink the opportunity. Consider whether minor or major changes would be required to make you feel more at ease.

A group of surgeons I know purchased an ASC a year ago -- for a "bargain." It was such a bargain that 1 year later, after spending more than $1 million in capital expenses and renovations, they're still not ready to open.

When surgeons tell me that they've purchased an ASC or a partnership interest, I ask them "What exactly does that entail?" Most say, "I make additional income each month we make money." To which I respond, "What happens if you lose money, what happens then?" Some look at me as though they never thought they could lose money in an ASC.

Don't get me wrong, I think that partnership opportunities in ASCs are definitely where physicians need to be focusing their efforts. But you need to make sure you know what you're buying, to avoid spending unnecessary dollars. The best way to accomplish this is to review capital equipment inventory, as well as outstanding accounts payable (AP) and accounts receivable (AR).

• Capital equipment inventory.
The price you pay for a center includes its capital equipment. Reviewing a list of the ASC's capital equipment before you invest in it will prevent you from overpaying for equipment that's going to have to be replaced or is no longer under warranty. Why pay $50,000 for a phaco unit that's 10 years old?
Most ASCs have this list in place for inventory and accounting purposes so it should be easy to obtain. It should include make, model, serial number and fair market value of all equipment.
Also, ask about the ASC's policy on purchasing new capital equipment. A good policy should protect the ASC partnership from unauthorized purchases. It should define the following points:
• who has the authority to purchase equipment
• the allowable dollar amount per transaction on capital quipment expenditures
• protocol for purchases over a certain dollar amount.
• Make sure these protocols are followed and agreed upon by the partnership.
• Accounts payable.
Always ask to review the surgery center's AP policy. All bills should be paid within 30 days and entered in the AP system at least weekly so that management has a good understanding of what's being spent to generate current case revenues.
Find out if the ASC takes advantage of buying discounts. Most vendors offer discount programs if bills are paid within 30 days. Depending on what types of supplies the ASC utilizes, different buying group programs could save the facility from 10% to 25% on purchases.
As a potential buyer, you also want to review the detailed payable journals for at least the previous 3 years. Payable journals help prevent mismanagement and abuse. They tell you where the money is going and to whom.
Once you're an ASC owner, you should receive a detailed general ledger each month, showing to whom checks were paid, when they were paid and the amount paid. Look for dollar amounts that would have required additional signatures.
Also, do a random credit check with several vendors. Make sure the amount that they list as outstanding matches the AP in front of you.
I once contacted an Eye Bank to find out why they wouldn't send a particular ASC any more corneas. From what I could see, the balance was under $10,000 and current. The Eye Bank informed me that the ASC was always late paying their bills, and the amount owed was well over $40,000.
Upon further investigation, I discovered that the ASC didn't have a policy in place for handling AP. When I inquired about it, the AP clerk responding by saying, "What's the use of entering the bills into the system each week if we don't pay all the bills?" I reminded the clerk that this wasn't her decision to make and that all bills needed to be entered each week if you use accrual accounting.
Remember, if you're buying a facility, any unpaid debt most likely will be your responsibility.
• Accounts receivable.
Knowing what questions to ask can save you a lot of unnecessary grief and money. At a minimum, you should ask to see the following reports:
• aging
• charges by doctor/by month/year to date (YTD)
• procedures by doctor/by payer/by month/YTD
• payments and adjustment by doctor and by payer/by month/YTD
• charges by procedure code
• charges by implantables.

• cash management
• policy on self-pay patients
• collection and accounting procedures for deductibles and copays
• precertification for surgeries
• verification of surgery benefits
• credentialing
• what's covered on major managed care contracts
• major managed care contracts coming up for renewal.

Most single-specialty ASCs don't want to go through the administrative setup -- not to mention the expense --of adding other specialists. However, if a center is under-utilized, one specialty you can consider adding is pain management. It doesn't occupy the OR, it doesn't require any major capital expenditures, staff can easily be trained and it offers highly profitable returns. The average reimbursement for pain management ranges from $300 to $500 and it can take as little as 10 minutes.

Anesthesia groups are looking for places to set these up. All that may be required is a board-certified pain management specialist, the necessary packs to do the procedures and available space. If you aren't currently considering this option, you should discuss adding this additional revenue source with your administrator and chief of anesthesia.

Another consideration is leasing space to laser-assisted in situ keratomileusis (LASIK) companies who need an area large enough to handle their patients. Many are looking to expand by renting space in pre-existing centers. Under-utilized ASCs are the perfect solution.

This is just as important as evaluating business plans. Each of us has worked with someone who was not a good personality fit. When problems aren't corrected early, they become more difficult to correct.

I once spoke with a group about a physician who was always causing problems by not showing up for surgery on time -- and often not showing up at all. When I asked them how long this had been going on, they replied, "For about the past 10 years."

By that time, his conduct was firmly established and had already seriously affected their business. Unmotivated to perform due to declining reimbursement levels, the surgeon ended up taking an early retirement.

More and more hospitals that aren't making money on ophthalmic surgery may start downsizing their ophthalmic department to make room for other economically feasible cases. This will force surgeons to seek out other opportunities in ASCs in order to keep performing surgery.

Selected physicians may face being denied privileges in ASCs because of capacity problems, surgical approach, personality, or because the ASC isn't accepting any more ophthalmologists on staff.

For those of you who are already having problems with hospitals, think about what will happen after Medicare announces the next round of hospital cuts for cataract surgery.

Remember, be proactive, not reactive. Don't wait for the ax to drop. Start planning for your future surgical setting now.

Keeping these strategies in mind should help you form a lasting and successful union.