If you haven’t already, you will most likely face a situation at some point that pushes you to rethink the setup, footprint, or location of your ASC. Considerations revolve around whether you should undertake minor improvements to update it, do a major renovation to your existing facility, completely rebuild, or just ride it out.

To decide, you’ll need to assess if and how your reach has changed. For example, is there another nearby geographic or physical location where you could dramatically increase the number of cataract or retinal surgeries? What’s the age of the partners in your practice? Have you outgrown your surgical space? And perhaps the most defining variable in your decision: How much are you willing to spend?

We enlisted the help of two experts in the field to lead the discussion. Mark Kontos, MD, is senior partner of Empire Eye Physicians in Spokane and Coeur d’Alene, WA, (and co-medical editor of The Ophthalmic ASC) and has recently faced the challenges and rewards of rebuilding his ASC. Bruce Maller, founder and CEO of BSM Consulting in Incline Village, NV, has helped practices of all sizes make and execute these important decisions.

Here, they share their own experiences and the key considerations that go into the decision-making process, as well as the pros and cons of each option to grow your business—both in size and in profitability.

EVALUATE YOUR CURRENT SITUATION

“If I were an owner and had a voice in what we should do,” explains Maller, “the question to ask is, ‘Why would we do it?’ There must be something prompting us to consider an update, renovation, or a rebuild.” Make sure your partners (if you have them) agree on what that “why” is.

Before you do anything beyond that step, evaluate your current financial issues and do a baseline assessment of the business.

“That must include the current financial standing of the center and what the current capital structure is,” explains Maller. “For example, are we carrying a large amount of debt? Is our balance sheet healthy? What do our margins look like? Is there anything that is constraining our margins, like fundamental issues with the physical space?”

Then, look realistically at your current and longer-term situation, Dr. Kontos adds. “Do you want to add more doctors, or hours? Determine those needs and set objectives.”

That means performing a deep-dive analysis of the condition of your current facility, and then working with your other stakeholders to determine your specific objectives. That may sound simple, but both experts agree that getting everyone to agree and deciding how to weigh each doctor’s preferences on key issues can be tough.

And then there’s financing.

“For something small, you can generally finance internally within the practice without having to go to an outside source,” explains Dr. Kontos.Practices that are looking at leasing or going into a new building, however, will likely require external financing, he adds.

This means you’ll have to look at the cost of borrowing money. That’s one reason to maintain a strong relationship with a bank in your community.

Financing is just one of the items that need to be agreed on among the partners. And the more decisions there are to be made, the more likely it is that there will be some disagreement.

“That’s something that practices need to navigate based on their partnership structure,” says Dr. Kontos.

Only after all of this should you begin the process of cementing your goals and determining which option is best. It is not, to say the least, a speedy process.

“Get that good, solid financial assessment, along with feedback from the key principles. Take all of that together and prioritize, based on the feedback, what you think are your best opportunities to achieve those overall goals,” advises Maller.

To help you with those decisions, here’s a look at some of the pros and cons of each growth scenario—a modest update, a complete renovation, or a new construction.

A MODEST UPDATE

→ CONS: It is likely a temporary fix, and one that may need to be replaced with either a renovation or rebuild in a few years. It doesn’t buy you any flexibility to expand by adding a doctor or ASC space. For some, it’s a Band-Aid at best.

→ PROS: It’s great if you’re on a lease that ends in a few years, or if you plan to retire or relocate soon. It can also make a big difference in patients’ perceptions of you. It’s affordable, and something that can be done frequently. An added bonus: You can likely stay open during the process.

FULL RENOVATION

→ CONS: Complex renovations, such as adding and upgrading surgical suites and imaging rooms, and then factoring in regulations and compliance issues, can sometimes result in costs that are almost as much as a new facility.

Dr. Kontos uses his own situation, which resulted in a rebuild, as an example. “We would have had the same size space that we’d had for the last 20 years. We’ve added a doctor, so renovating wasn’t a good option.”

It also doesn’t make sense if some of the doctors are nearing retirement, or your lease is expiring in less than five years. Potential successor surgeons won’t find that attractive, either. And, don’t forget that renovation also likely requires you to be closed for a short time (but then, a rebuild on site usually does, too).

→ PROS: If you can expand as needed in your current space—to add a doctor, staff, equipment, or to update—a renovation is great scenario. It sends a message to patients that you are investing in them and their health. And, it’s a solid option if you have 10 years left on a lease or built-in renewal options for at least that long.

REBUILD/RELOCATION

→ CONS: It’s expensive, and you need experts on all sides, including some dealing with the endless red tape. Also, with private equity constantly changing the ASC landscape, you’re in danger of one opening near you and impacting all your assumptions regarding growth, reach, competition, etc.

If you overbuild, it will be difficult (and beyond) to carry the related debt service. Also, if predictions for future OR hours, staffing requirements, technology, and compliance needs are off, you may well find yourself in trouble.

→ PROS: Sometimes you have no choice. Dr. Kontos felt he didn’t. A rebuild or new construction allows you the most control, assuming you collaborate every step of the way with the design and construction teams.

Also, you get what you want...or as close to it as (your) money will buy. You hopefully have built into the project the capability to increase doctors, staff, surgical set-ups, equipment, and regulatory compliance for the foreseeable future. No other format can accommodate all of that.

TAKE YOUR TIME

Wherever you are on the decision spectrum, both experts stress the importance of reviewing your current situation vs. these options on a regular basis.

As Dr. Kontos says, “Maybe you don’t make any changes right now. However, it helps if you’re constantly re-assessing and going through the scenarios.” ■