asc management
We Equip Our Surgery Center
Our plan to equip the ASC was well thought out, but state inspectors required unanticipated changes.

By Larry Patterson, M.D., and Ray Mays

We began the process of equipping our ASC at the end of 2001. We chose that time in order to lock in "end of the year" discounts and arrange delivery for April of 2002, when we would actually need the equipment. This month, I'll discuss our approach to equipping our ASC.

Our plan required close coordination among the surgeons, the nurse administrator, our ASC consultant and the practice administrator (me). The surgeons made a list of every piece of capital equipment that they needed to begin operations and no more. We had two lists of equipment, "must have" and "nice to have."

Our ASC consultant began the search for the "must have" items to obtain the best pricing. The nurse administrator handled the delivery time, bio-med inspections and in-service training. I handled the financing.

We Choose to Lease

Numerous articles and columns have been written on leasing vs. purchasing equipment. I'm a fan of leasing because leasing:

• can readily be structured to match cash flow
• preserves credit line sources (during the construction phase a line of credit is crucial to cover unexpected expenses)
• can simplify future upgrades
• provides a measure of flexibility in payment terms
• allows for payment with current, untaxed income instead of already-taxed profits.

Your accountant should be able to prepare a pro-forma comparing a capital lease vs. an operating lease. We entered into lease arrangements with several different leasing companies and developed close working relationships with these companies that continue to be valuable.

Inspectors Require Changes

Our greatest equipment challenges involved interpretations of the hospital code by our state inspector. Our emergency power plans, approved by the state engineer's department, called for a battery backup system. The inspector required us to scrap these plans and install a diesel-powered generator to power the ASC, the HVAC systems for the entire building, as well as all the life safety systems in the building.

We were also required to convert from a portable medical gas system to a more costly plumbed system. And finally, we were required to change from a portable suction system to a plumbed system.

Have your architect contact your state's medical facilities department and get an early decision (in writing) on these issues. We learned the hard way that it's the department that actually conducts the inspection that has the final authority on whether or not your facility gets licensed.

Other issues you'll need to consider in equipping an ASC:

Warranties. Ideally, these should begin when you actually start to use the equipment. There could easily be a 30- 45-day period between installation and use, depending upon your state inspection schedule and Medicare approval.

Setting up and installing equipment. The manufacturer's rep should coordinate this with you. However, some items (in our case the OR lights and the microscope) need to be installed by both the manufacturer's rep and the contractor.

Increased insurance coverage. You'll be receiving several hundred thousand dollars worth of equipment in a relatively short amount of time and your insurance limits will have to be increased.

I also suggest that the nurse administrator create a spreadsheet of ordered equipment and inventory. As the ordered items arrive, they can be installed, stored, accounted for, and checked off the list.

Larry Patterson, M.D., is practice owner, and Ray Mays is practice administrator of Eye Centers of Tennessee, a general ophthalmology practice serving 300,000 residents of middle and east Tennessee. You can reach Ray Mays at raym@ecotn.com.