Make an Underutilized ASC a Winner

Both owners and current non-owners can benefit.

In Virginia, a state in which a powerful hospital lobby has been effective in limiting the development of independent ambulatory surgery centers, Frank Cotter, MD, and his partners at Vistar Eye Centers in Roanoke, waged a bitter and costly three-year battle to finally win approval to construct a practice-owned ASC. During the course of this struggle, which attracted substantial coverage in the local media, one hospital-friendly politician called Dr. Cotter overpaid and a threat to the continued operation of the local hospital's emergency room.

“My answer was always the same,” says Dr. Cotter. “I told them that my only goal was to create a facility in which I could perform safe, consistent and successful ophthalmic surgery for patients in a convenient and friendly environment.”

Welcoming Competitors

The hard-won approval that Dr. Cotter achieved provided him with a gem—one of very few independent ophthalmic ASCs in the area. Having fought all the difficult battles for approval on their own, he and his partners could have justifiably kept use of the two-OR ASC within their practice and possibly gained a significant competitive advantage. However, he did just the opposite, inviting other local ophthalmologists to become equal-share owners of the facility to maximize its use.

“I just think that having equal-share owners is the best way to go, as it gives everyone the same influence over decision-making,” says Dr. Cotter. “I even invited our major competitor to become an owner. One of their partners at first voiced severe reservations about working with us. He was uncomfortable about bringing his patients into a building with our name on it, feeling it would make our practice look superior to his.”

Attractive exterior and convenient parking have helped make the Roanoke Valley Center for Sight appealing to both surgeons and patients.

To quell these fears, Dr. Cotter agreed to a number of the competing practice's requests, including a neutral-sounding name for the ASC—The Roanoke Valley Center for Sight.

Today, the Roanoke Valley Center for Sight has 14 equal ophthalmologist owners, a few who are non-owner users, and one of the highest utilization rates in the country. Ophthalmologists have flocked to the ASC because they believe it offers significant advantages to performing surgery in a hospital outpatient department.

“At the local hospital, our elderly patients had to deal with parking that was far away, four banks of elevators, up to nine hours in the hospital and the possibility that they might not get an ophthalmic tech to assist in their surgery,” asserts Dr. Cotter. “Add to that the greater chance of infection that is present in a general hospital environment.”

At the Roanoke Valley Center for Sight, surgeon-owners appreciate that the stable, well-trained staff specializes in ophthalmic procedures, downtime is minimal, equipment is state-of-the-art and the high surgical volume creates purchasing clout with vendors. For the center's patients, convenience and superior outcomes are at the top of the list of priorities.

“We now have retina and oculoplastic surgeons also using the facility,” says Dr. Cotter. “And we continue to welcome new owners and users. I make it a policy to give premium block time to a new surgeon. My basic belief is that each case lowers the overhead for the facility. Once you have met your fixed costs, every additional case adds to the profitability of the center.”

Dr. Cotter's Strategy Evaluated

Glenn deBrueys, CEO of American SurgiSite Centers, which is a part owner and/or manager of eight ophthalmic surgery centers in the Northeast, has 23 years of experience in the development and operation of ophthalmic ASCs. He says that inviting in competing surgeons as equal owners to help maximize utilization of an ASC is exactly the right decision.

“My advice is get past your ego,” says Mr. deBrueys. “You can compete for patients in many ways, but the ASC should be neutral ground.”

At American SurgiSite facilities, which are used by both surgeon-owners and non-owners (where state regulations permit), neutrality is the watchword. “If it's Dr. Brown's day to operate, there is a sign welcoming Dr. Brown's patients,” says Mr. deBrueys. “If it's Dr. Green's day to operate, there is a sign welcoming Dr. Green's patients.”

Mr. deBrueys says there a number of arrangements that ophthalmic surgeons can make to obtain access to an ASC. However, he thinks that having an ownership stake is the best way to ensure some control of your situation in a rapidly changing reimbursement environment.

“All of the surgeon-owners should have reasonable equity in the facility,” says Mr. deBrueys. “In that way, all of the surgeon-owners have sufficient interest in ensuring the success of the ASC.

Strategies for ASC Owners

The Outpatient Ophthalmic Surgery Society (OOSS) conducts research on ASC performance, including patient and surgeon usage patterns over time.

The American SurgiSite ASC in West Orange, NJ. Note the convenient parking area right next to the low-rise building.

The most welcome news for ASC owners, according to Kent Jackson, PhD, vice president of member research and development, is that ophthalmic-oriented ASCs have established themselves as the “facility of choice” for four of every five surgeons and patients by ensuring convenience, safety, efficiency and an exceptional level of care. “The battle for customer preference was won several years ago and the competitive focus is now shifting to optimizing ASC efficiency and utilization,” asserts Dr. Jackson.

Despite the ascendancy of ASCs as the preferred choice, OOSS research indicates that many facilities, including many of those affiliated with smaller-volume practices, often operate at less than optimum levels when they limit access to surgeon-owners within the practice and only to the procedures they perform.

“Larger volume ASCs tend to have better utilization rates, demonstrating the ability to balance the efficiencies of high owner involvement with the advantages of enhanced utilization through involvement of non-owner surgeons and increasing the range of procedures they can support,” says Dr. Jackson.

Having an underused ASC all to yourself can be convenient and simpler to staff, and might help attract new partners or figure in a future sale of the practice. But experts in ASC management favor a strategy that focuses on enhancing current income from facility fees earned through optimum utilization by surgeon owners and non-owners. Doing so enhances the present and future value of the practice.

Sharing an ASC With Retina

If a practice owns an ASC and for some reason does not want it used by competing practices, one option would be to invite a retina practice to use or share ownership of the facility. With the recent increase in Medicare reimbursement for many retina procedures and the expansion of the number of retina procedures that can be performed in an ASC, the attraction of offering retina in an ASC has grown.

Bringing retina into an ASC for the first time will require some staff training but practices that have done so report that experienced staff members are quick to adapt to retinal procedures and that equipment manufacturers are willing to help in the training process.

There are challenges in scheduling because retina procedures tend to require far more time than simple cataract removal. In addition, retina specialists deal with more “short notice” emergency procedures such as retinal detachments.

Despite these challenges, sharing an ASC with a retina practice can lead to important advantages, such as better communication for managing referrals and possible referrals.

Because some equipment used by retina specialists is expensive, any retina practice coming into an ASC as either a user or part owner should share in the costs of equipping the ASC for retina procedures.

One caveat: In any efforts to maximize the use of your ASC, it is important that new surgeons be willing to align themselves with the culture and capabilities of the facility. That means no prima donnas. The goal is to add surgeons, even major competitors, who can work in a way that is complementary to the existing usage of the ASC.

Looking for Access to an ASC?

Surgeons who have no ownership stake in an ASC are often seeking a more efficient, better-equipped, more patient-friendly facility to perform their procedures. This is especially true of surgeons who are currently using the outpatient department of a community hospital.

In some low population, low procedure-volume areas of the Midwest and West, such as Montana, Wyoming and the Dakotas, use of the community hospital may be the only realistic alternative unless you desire the “convenience and control advantages” of your own (low-volume) ASC.

In other states, where the hospital lobby is powerful and the number of ASCs are limited, such as Georgia, North Carolina, Virginia, Connecticut, New York and New Jersey, you may be surprised to learn that competing surgeons are willing to allow you access to their ASC. But you have to make the approach. It's quite possible that the competitor is interested in the facility fees that a new surgeon can bring in, or the competitor might even be willing to offer an ownership stake in the ASC. As explained earlier in this article, this can be a very workable arrangement if all parties treat the ASC like neutral ground.

Most modern ophthalmic ASCs create a welcoming and patient-friendly environment, as opposed to the more institutional hospital settings.

In some states, such as Rhode Island and in some Medicare-certified single-specialty surgery centers in New Jersey, you can only perform your procedures in the ASC if you have an ownership stake in that facility. Surgeons in those states who are currently non-owners should think about buying into an existing ASC or risk having no control of their surgical income in a rapidly changing reimbursement environment. In fact, non-owners in all states should now be considering buy-in opportunities to ensure that they have at least some future influence in the decision-making process.

For example, Kreg Palko, senior vice president of Constitution Surgery Centers, which has ownership stakes and management arrangements with a number of single-and multi-specialty ASCs in New England, says that he prefers having surgeon owners as opposed to non-owners who simply use the facility.

“As long as the surgeon meets the standards of the screening process of our governing board, we can usually offer an equity stake in the facility,” says Mr. Palko. “Some want in and some don't. From our standpoint, an owner is going to be a more stable and reliable user of the facility.”

Non-owners Now Highly Vulnerable

Though a number of ophthalmologists have been able to function—and even flourish—for many years as non-owners of surgical facilities, the coming of so-called accountable care organizations and other fundamental changes in the healthcare system may well work against the continuation of their unencumbered “lean and mean” practice model. The days of being satisfied with collecting only a surgeon's fee will surely end if new reimbursement models make the surgeon's fee a target of cost-saving efforts. Be forewarned. OM