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Mar 10
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ASC Trends

New White Paper! Looking Ahead: 10 ASC Trends and Developments to Watch in 2017

By ASC Development, ASC Governance, ASC Management, Leadership, Payor Contracting, Revenue Cycle Management No Comments

We are excited to release our latest white paper – 10 ASC Trends and Developments to Watch in 2017.

We are still in the early months of 2017, but it is already shaping up to be an interesting year in health care — one that is likely to be a mix of uncertainties, challenges, and opportunities.

Fortunately for ASCs, they are well-positioned to thrive in the rapidly changing and evolving marketplace.  They may even be able to improve their position by planning for and effectively responding to trends and developments.

The 2017 trends and developments for ASCs identified by our leadership team include a forecast for strong industry growth, interest in adding new specialties, and continued migration of higher acuity cases to ASCs.

Changes in the relationship between ASCs and payors are impacting reimbursement especially in facilities who do not have strong revenue cycle management solutions.  Bundled payment programs and the growing number of self-insured employers continue to create marketing opportunities.

Unfortunately, the continued escalation of the financial responsibility borne by patients present revenue challenges.  And, a rise in cyberattacks has disrupted health care, bringing cybersecurity to the provider forefront.

Finally, educating patients, physicians, health systems, and payors on the value of ASCs remains a top priority. Raising this awareness is crucial to fuel the growth the ASC industry is primed to experience in 2017.

In summarizing what’s ahead in 2017 for ASCs, Trista Sandoval, our Director of Business Development & Physician Relations, said:

“One of our main strategies is to continue to focus on raising awareness of ASCs as a high-quality, low-cost option for care, and doing what we can to drive applicable outpatient cases to our ASCs. That may take the form of helping hospital systems build their own ASCs, educating patients through direct consumer marketing, or reaching out to physicians to build awareness of the ASC setting as a viable option for their procedures.”

Through such efforts, Pinnacle III’s leadership team believe ASCs will thrive in 2017.

To read the full report, download the white paper here: https://www.pinnacleiii.com/white-papers/ 

The Pinnacle III Marketing Team

Mar 06
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ASC Medical Equipment

Purchasing ASC Medical Equipment Doesn’t Have to Be a Pain

By ASC Development, ASC Management 2 Comments

Purchasing medical equipment for a new surgery center or adding new equipment to your existing ASC can be daunting.  With forethought, however, the task is manageable and can be downright rewarding.  Here are some important considerations to keep in mind.

1. Buy only what you need.

How do you know you what you need?  Communication with your surgeons is key.  Review their preference cards.  Understand the kinds of cases they perform.  Discuss their equipment model and vendor preferences.  This information will arm you to shop wisely and negotiate well. 

If you’re in an existing center and a physician requests new equipment, identify what prompted the request.  Gather information on how the equipment will improve patient care.  Determine if new volume will be generated and understand what types of cases will be served by the equipment.   Calculate the anticipated return on investment.  If you need the equipment for rarely performed cases and it will take five years to recoup the investment, it may make sense to defer the purchase until the situation changes.

2. Negotiate.

It may not be in your ASC’s best interest to accept the first price a vendor provides.   Determine if you have opportunities for discounts based on aggregated purchases.  Is GPO pricing available?  Are there demo models on hand to purchase?  Is there package pricing based on the number of disposables you purchase from the vendor? 

Don’t be afraid to shop around to see if other vendors offer better pricing.  While your surgeon may be partial to a specific vendor, they may be willing to switch to an alternate vendor if cost savings can be realized.   

Be willing to look at refurbished equipment, especially for your workhorse items.  Once refurbished, these items can last another ten years.  Work with reputable refurbishment vendors when considering this option. 

You can also check for used equipment online.  Craigslist and eBay often have great pieces of equipment available.  Sometimes, the price you pay may be worth the additional risk you assume by shopping for these items online.

3. Trial new equipment.

There is an abundance of new technology on the market right now.  Ask your vendors to bring in new equipment for a trial period.  This will allow surgeons to test the equipment to determine if it meets their needs and provides the highest quality of care to their patients. 

It’s important to have facility staff involved in setting up the equipment.  This allows them to familiarize themselves with the equipment prior to its purchase. During the equipment trial, ask the following questions.  What effect does the equipment have on turnover times?  Does it provide any efficiencies?  The answers will aid in your purchasing decision.

4. Review warranty and service contracts.

If the equipment breaks, is it fully replaceable?  Does the vendor provide loaners to meet the facility’s needs while the equipment is out for service?  Does the warranty cover the first year of service?  Does receiving service from an outside vendor void the warranty?  These are all important questions to consider prior to the purchase.

5. Lease, finance, or pay cash?

When considering how to pay for your equipment, determine the life of the equipment.  What is your cash on hand? How much interest will you pay for the lease or loan?  What are the buyout terms at the end of the lease?  Consider both the short- and long-term impact of the purchase.

6. Delivery and installation.

Often, little thought is given to the delivery and installation of the equipment.  The size of your capital purchase dictates how and where delivery occurs.  If you have a loading dock at your center, indicate that on the purchase order.  If you don’t have a loading dock, ensure you specify the need for a liftgate.  You may think whoever is delivering your equipment will bring it inside and place it where you like.  This is not always the case.  If you need inside delivery and placement of your equipment, indicate this on your purchase order so the vendor can provide this information to the delivery company. 

Another consideration is the unpacking and disposal of delivery pallets.  Sometimes the equipment is delivered encased in pallets.  If you require disposal of this material, let the vendor know.  It is often necessary or helpful to ask your vendor to unpack the equipment for you.  This helps prevent any damage to the equipment and identify issues that may have occurred during transit.

7. User Competency.

To ensure employee competency with new equipment, schedule an in-service demo for your staff with the vendor representative.  Develop a competency document that employees sign-off on indicating they understand the correct use and function of the equipment.  Retain these documents in employees’ personnel files.

Making capital purchases is a vital step in your surgery center’s development. Optimize this process to address the ongoing maintenance and long-term sustainability of your facility.  Once you understand the nuances and address the considerations noted above, the process is easier to navigate successfully.

Lisa Austin – Vice President of Facility Development

Feb 10
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Ambulatory Surgery Center Associations

The Importance of State Ambulatory Surgery Center Associations

By ASC Development, Leadership No Comments

Involvement in your state surgery center association is crucial to the vitality, longevity, and success of your ASC.  Perhaps my personal story will demonstrate why.

I am a proud, active member of the Colorado Ambulatory Surgery Center Association (CASCA) and have been since its inception.  Throughout most of its early years, when the association was forming, those of us in the ASC industry met monthly for lunch and networking.  Because there wasn’t much going on then that directly impacted the regulatory status of Colorado’s ASCs, these meetings eventually waned.  The association became dormant. 

However, in 1993 news broke of looming threats to the convalescent care licensure, the elimination of which would have negatively impacted many of the state’s facilities.   Convalescent care centers were important to patients who needed non-acute extended observation and recovery following their outpatient surgeries.  Without the ability for patients to access convalescent care centers, higher acuity cases could not be performed in the ASC setting. Our state’s ASC leaders rallied.  The association reorganized.  Strong leadership took the helm.  With renewed focus, CASCA prevented the legislation from passing.  ASCs in Colorado won!

That victory was a turning point for our association.  We realized the trade organization was necessary to ensure ASCs remained relevant in our state. Furthermore, the association’s advocacy efforts made it possible for us to remain aware of the issues facing our industry.  

State ASC associations provide government advocacy, education, regulatory updates, and other resources to assist us in running our businesses successfully. To provide these services, the association requires active membership.  Increased representation and participation from ASCs in our state allows us to have a greater voice.   The association survives through membership participation.  Members can, and should be, involved with planning the annual conference, participating on committees, and/or helping with political fundraisers.

Being an active member allows for beneficial change to occur.  It’s important to reach out to legislators (in person, via phone, email, and/or letters) when faced with situations that may impact your ASC’s culture, values, or continued viability.  You, your staff, and your patients are constituents. Our legislators want to hear from you about issues important to your physicians and community.  You can successfully impact the outcome of these issues when you are involved.

They say there is power in numbers.  That power is your state ASC association. 

Here’s how you can get involved:

  1. Contact your state association. A quick Google search should direct you to their website. Or use your connections in the ASC industry to inquire about your association and who you should contact.
  2. Contact your national association, Ambulatory Surgery Center Association (ASCA) to remain apprised of issues and information related to advocacy, government affairs, and education.
  3. Connect with me and/or other members of Pinnacle III’s team to learn more about regulatory updates that may impact your ASC. LinkedIn: linkedin.com/in/lisaaaustin and linkedin.com/company/pinnacle-iii, Twitter: @LisaAustin_P3 and @PinnacleIII
  4. If you don’t like or agree with the direction of proposed legislation or policies, create change by participating in and/or donating to organizations you believe will help your cause.

Lisa Austin – Vice President of Facility Development 

Feb 01
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2016 ASC Industry Year in Review

New White Paper! 2016 ASC Industry Year in Review: 10 Key Takeaways

By ASC Development, ASC Governance, ASC Management, Leadership No Comments

We are excited to release our latest white paper – 2016 ASC Industry Year in Review: 10 Key Takeaways.

As we start the new year, it is worthwhile to examine trends and developments that helped shape the ASC industry in 2016.  These trends and developments will most likely set the tone for 2017 and beyond.

Key industry takeaways identified by our leadership include renewed focus on the migration of inpatient surgical care to outpatient settings and a surprising abundance of de novo development.

While momentum for alternative payment models stalled, the impact of implant reimbursement and increased patient financial responsibility dominated operational discussions.  Challenges presented by nursing shortages, increased regulatory compliance, and the demand for more data continued to be hot topics.

Garnering insights from these areas of focus is important given the prominent role ASCs perform in the delivery of affordable quality care.

In summarizing 2016, our Principal Partner, Rick DeHart, stated:

“From my perspective, 2016 was a transitional year for ASCs.  A significant amount of time was spent focusing on the election and anticipating its impact on the future. Everyone was waiting for much of that activity to finish . . . We may see even more activity in the industry in 2017.  Surgery centers are certainly well-positioned to be the low-cost, high-quality provider of choice for an increasing number of patients.”

To read the full report, download the white paper here: https://www.pinnacleiii.com/white-papers/

-The Pinnacle III Marketing Team

Jan 19
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ASC Development Project

Congratulations! Your ASC Development Project Prognosis is Strong. Now What?

By ASC Development No Comments

When the results of your feasibility analysis indicate your ASC development project is likely to be a successful endeavor, it’s important to ensure your next steps are strategic and well-planned.  Developing a new center involves many tasks.  If you put the cart before horse, you will end up going nowhere.  Conversely, if you forget to harness the horse to the cart, you won’t arrive at your destination with all the essential components.  You must know the timeline, ensure you take each step in the proper order, and proficiently complete the identified tasks in a timely manner.  Here are some of the key tasks to consider on your development journey.

1. Choose an experienced health care attorney.

Hire a health care attorney you trust and/or have worked with in the past to pull together the necessary legal documents.  Having a solid framework in place to guide the ownership structure will be integral throughout the life of the business.  Treat your operating agreement as the entity’s pre-nuptial.  Address items that could be potential roadblocks – how you will add new partners or assist those that need to leave the partnership, for example.  It is much easier to handle these potential issues at the outset, rather than at a time when clearer heads may not prevail. 

2. Devise a plan for the physical space.

Do you want to build from the ground up?  Do you already have land?   Or, do you want to rent and remodel?  These are questions to immediately consider.  The cost for tenant improvements versus a new construction project can vary immensely.  Location is a key consideration.  Patients prefer ease of access which includes convenience from main roads, ample parking, and navigation into and out of the facility.   Consider proximity to the surgeons’ practices and hospitals.  Establish a pros and cons list to aid in the decision-making process.  The final decision will have an impact on the pro forma and loan requirements.  Make these decisions early on.

3. Chose the right architect and construction company.

Firms with strong knowledge of the regulations as they relate to ASCs are a must.  Best practice is for your development company, architect, and construction company to work closely with each other throughout the entire design/build process.  This helps ensures a licensable and certifiable building.  Oversight in the following areas is imperative:

A. Budget.

Consider adding a commissioning agent or construction manager to keep bids within range and avoid cost overruns. Research the associated costs in your local community to secure competitive pricing.

B. Value Engineering.

A good general contractor or construction manager will actively look for ways to save money where it counts.

C. Involve surgeons in the design to ensure efficiency in the delivery of care.

Surgeons are your best resource for understanding center needs related to delivery of care. They are also likely paying for the project; it’s vital to keep them involved in the decision-making process.  Collaboration from all parties on where to spend, and save, project money creates greater satisfaction with the final result.  Maintain a record of decisions made to serve as a future reference when someone inquires why something was done a certain way.

D. Involve key regulators in the building process.

Having permitting individuals from the city, county, state, and surveying bodies on site throughout the construction process allows you to proactively identify issues of concern.  Waiting for the occupancy permit can lead to inconsistencies that must be remedied at a potentially significant cost.

4. Establish relationships with financial lending organizations.

The terms offered on a project can vary greatly as can the required guarantees.  Knowing how to effectively oversee this process allows the owners an opportunity to make the best overall decision. Complete a bidding process and interview the key banking individuals you will be working with.  Secure services from financial lenders who work well with your steering committee and board members.  Ask about hidden fees and closing costs.  Find out how business fees will be applied as you ramp up the account.  Often, the bank will be willing to negotiate early in the process to obtain the loan business.

5. Appropriately time the purchase of equipment.

Starting discussions with vendors early on allows for potential price reductions on key equipment when new models are coming into the market.  The prior year’s model is usually less expensive or there may be loaner equipment available for purchase.  Sometimes putting a down payment on equipment allows you to lock in the current year’s pricing.  This happens even if you don’t complete the purchase until the next calendar year.  Organization keeps construction on schedule, prevents delays, and ensures equipment delivery and installation occur at appropriate intervals.

6. Establish a staffing plan early.

An established staffing plan allows for a smoother transition from development to operational management.  Bring key staff members on board early to ensure proper operational structure prior to the opening of the facility.  All staff need to demonstrate skilled organizational processes when surveyed by the state, CMS, and an accrediting body.  A tiered approach to hiring allows for competency and cost effectiveness in those early months of operation.

You will not find a healthcare project more unique than developing a surgery center.  It is a demanding, rigorous process.  Working with experienced professionals who understand the nuances of each of the above-listed items can alleviate the feared trial and error process if you are undergoing this task for the first time.  Prepare, ask questions, lean on the expertise of others, and collaborate.  These are the keys to success in launching your new surgery center business. 

Lisa Austin – Vice President of Facility Development

Jan 04
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Port Jefferson Surgery Center

De Novo ASC Development Alive & Well: New ASC Construction Underway in New York

By ASC Development No Comments

One of the most rewarding aspects of Pinnacle III’s business is partnering with physicians and hospitals who have identified a need in their immediate community to increase their patients’ access to ambulatory care.  We enjoy lending our expertise to de novo ASC development – building on our partners’ initial concept and ensuring their vision becomes a prosperous reality.

Many of our business opportunities arise from word of mouth.   In 2015, prompted by a recommendation from a satisfied physician client, Pinnacle III met with representatives of John T. Mather Memorial Hospital and 19 community physicians to explore the opportunity of developing an ASC in Port Jefferson, New York.  Upon determining Pinnacle III’s business model and values coincided with their needs, we were invited by the group to collaborate with them on this endeavor.  Ground breaking for the new surgery occurred on November 22, 2016.   

Here is a transcript of the project’s press release:

Surgery center construction underway in Port Jeff Station
by Kevin Redding
November 30th, 2016

With construction officially underway in a secluded lot on Route 112, North Shore residents are one step closer to an efficient and cost-effective surgery center that will provide in-and-out care to its patients while eliminating many of the hassles associated with visits to the hospital.

On Nov. 22, staff from John T. Mather Memorial Hospital and 19 community surgeons stood on the site in hard hats and broke ground on what will be the freestanding Port Jefferson Ambulatory Surgery Center in Port Jefferson Station. The outpatient facility will feature six operating rooms equipped to handle procedures in orthopedics, ophthalmology, pain management, general surgery, neurosurgery and otolaryngology. The project, which cost approximately $12 million and has been in the planning stages for about five years, will be far less expensive to run than a hospital, which means cost savings for patients and the health care system overall. It will also open up more space at Mather for patients that require a more complex procedure and a lengthier hospital stay.

Those involved in the project said they hoped for the facility’s doors to officially open in the summer of 2017. For now, though, they’re just pleased things are finally moving forward.

“As we’ve been saying — at long last,” Kenneth Roberts, chief executive officer of Mather Hospital, said during the groundbreaking. “We’ve been working on this project for a long time now, so we’re very happy to see it finally getting pushed forward.”

During an indoor celebration after the groundbreaking ceremony, Mather’s Director of Orthopedic Surgery Michael Fracchia said he was excited about what the center will mean for the community.

“People love these types of facilities because they can get in-and-out service and it’s truly less intrusive on their lives,” Fracchia said. “If you have something done in a hospital, it’s always an all-day event, no matter what it is. But at the surgery center, you seem to be able to get in and out more efficiently and that saves you personal time, saves money, and saves cancellations. It just makes the overall patient experience so much better.”

Fracchia said the facility will be able to run more efficiently because it won’t need the sort of complex technologies often found in hospitals. A patient might need an intensive care unit or an MRI or CT scan, he said, and while these are wonderful technologies, they’re also expensive and require maintenance. By eliminating these systems, the surgical centers can treat more patients at a quicker pace.

“We want to provide more care,” said Brian McGinley, orthopedic surgeon and president of the project. “We can potentially do more while maintaining our inpatient surgery at Mather. The community will have access here, rather than having to go to Nassau County or into the city.”

McGinley said that while planning the project, the team interviewed many companies that specialize in developing ambulatory service centers around the country. They found a fitting partner in Pinnacle III, a company based in Colorado that has successfully facilitated the opening of comparable facilities nationwide. This will be the first Pinnacle III facility in New York State.

In a press release, Robert Carrera, the CEO/president of Pinnacle III, said the company is excited to partner with and assist the local physicians as well as Mather Hospital in bringing high quality and cost-effective services to the Port Jefferson area.

The doctors all agreed on the project’s mission: to provide cost-effective quality health care to as many people on the North Shore as possible.

“You come in here, you drive in, you get taken care of and you don’t have to go through all the hoops that you would at a hospital,” Port Jefferson-based general surgeon Nicholas Craig said. “The doctors have all been in the community for a long time. We not only work here, we live here, so you get taken care of by people who care about their community … and when you care about your community, you care about the people in your community, and that’s what this is all about.”

The high traffic, fast-paced New York market has yielded a desire for more localized, high quality health care in New York’s diverse communities.  Pinnacle III is exploring other opportunities on the eastern seaboard.  For more information on the de novo development services we provide, visit https://www.pinnacleiii.com/asc-management/de-novo-development/ or contact Trista Sandoval at tsandoval@pinnacleiii.com or 970.492.6059.

Dec 09
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Boulder Surgery Center

When Your ASC Outgrows Your Physical Space

By ASC Development No Comments

Boulder Surgery Center has experienced steady growth since its inception.  The ambulatory surgery center (ASC) opened in 2005 in the heart of the Boulder community with a vision of becoming an orthopaedic-focused surgery center of excellence.  It quickly established a foothold in the community and became a center of choice for many orthopaedic patients.  Eleven years later Boulder Surgery Center is a bustling facility.  Due to robust case volumes, highly aligned physician practices, and attentive management, the center expanded and relocated to a newly built, state-of-the-art facility.  It is the premier location for outpatient orthopaedic care in Boulder County. 

The new facility is equipped with five operating rooms, one procedure room, and 20 pre-op and recovery bays, including four recovery rooms available for overnight-stays in the facility’s 23-hour care model.  The surgery center’s largest affiliated physician practice, BoulderCentre for Orthopedics, is located directly upstairs, occupying the entire second floor of the new building.

Robust Case Volumes

When the new building project began in 2015, Boulder Surgery Center performed an average of 307 cases per month – an increase of 15 cases per month from 2014 and an increase of 25 cases per month from 2013.  Increased case volume led to increased prosperity.  The exemplary care provided by Boulder Surgery Center physicians and staff was steadily gaining recognition in the Boulder healthcare community.  This became part of the equation which led to the plan to expand into a larger physical space.

Highly Aligned Physician Practices

Boulder Surgery Center hosts specialists in orthopaedics, including hand, pain management, podiatry, and sports medicine.  In April 2016, Boulder Surgery Center’s two largest orthopaedic practices, Boulder Orthopedics and Mapleton Hill Orthopaedics, merged to form BoulderCentre for Orthopedics.  Four additional physician practices – Boulder County Foot & Ankle Care, Foot & Ankle Care of Boulder County, University of Colorado Sports Medicine Clinic, and RISE – are also served by the surgery center.

The BoulderCentre merger was a significant step in strengthening physician alignment with Boulder Surgery Center.  The merger placed 13 out of 20 of Boulder Surgery Center’s utilizing physicians in a single practice.  The newly formed BoulderCentre for Orthopedics and expansion of Boulder Surgery Center led to their move into the same newly constructed building.  Boulder Surgery Center occupies the first floor of that building while BoulderCentre for Orthopedics, including the group’s physical therapy office and MRI imaging, occupies the second floor.

Boulder Surgery Center is held in high esteem by its physicians.  The ASC’s physicians think of the facility as an extension of their own practice.  All 20 of the facility’s utilizing physicians are investors in the surgery center.  The ASC’s physicians collectively hold a 50% ownership stake in the joint ventured center, with the local hospital, Boulder Community Health (BCH), holding the other 50%.  Boulder Surgery Center benefits from having the perspectives of their hospital partner, BCH, and management firm, Pinnacle III, in the board room.  The ultimate drivers and decision makers, however, are the physicians.  In this way, Boulder Surgery Center maintains its vision of an orthopaedic-focused ASC of excellence.  The physicians at Boulder Surgery Center enjoy being involved in the process.  As a result, Boulder Surgery Center has become the preferred surgical facility for the invested physicians, contributing to a case volume on which the center can rely. 

Attentive Management

The increased case volumes and the enhanced alignment of the physician practices signaled a market primed for ASC growth.  The pressure to respond shifted to the ASC management firm to position Boulder Surgery Center for continued prosperity.  The physicians were eager to know:  How do we capitalize on the current increases in case volume and take advantage of this opportunity to seize a larger market share?

In the case of Boulder Surgery Center, both the expanding market and an expiring, non-renewable lease agreement compelled the ASC to consider alternative space options for their facility.  Fortunately, the prosperity of the ASC allowed its investors to consider the option of moving into a newly built facility that would allow for customization in the building development process. 

Due to the physician investors’ confidence in the longstanding relationship with Pinnacle III, the center’s ASC management firm, the board chose Pinnacle III’s facility development team to oversee the development of its new surgery center.  The process began with an analysis of the projected volumes, including the addition of higher acuity cases.   After determining the existing center would not allow for the projected volume, Pinnacle III developed a project proforma.  Detailed input from all involved parties was incorporated into the proforma.  After significant review and discussion, the facility’s board of managers concluded moving to a larger location was necessary for future business growth.  While an expiring lease agreement with no option to renew was the reason the ASC had to relocate, the proforma helped investors determine a new, larger facility would need to be built. 

While Boulder Surgery Center was considering the move into a newly constructed facility, BoulderCentre for Orthopedics had already made the decision to move into a new space under construction.  There was available space in this new building that could accommodate the new surgery center.  Thus, the ASC’s board made the decision to relocate here as well, foreseeing synergy and efficiencies between the orthopaedic practice, ASC, and support services which may not have been found elsewhere.  Pinnacle III acted on behalf of the owners, providing oversight of the design-build process.  The management firm’s hands-on guidance of the architects, construction team, and engineers, ensured a licensable and certifiable surgery center.  Keeping the contractors accountable to the agreed-upon budget saved the facility an estimated $100,000.

Pinnacle III also focused on helping physicians sustain case volumes during and after the move.  The physicians were surprised decreased case volume did not occur during the process.

Boulder Surgery Center moved into their new home in August 2016.  Preparing for the move required considerable planning and organization.  Pinnacle III and the ASC’s staff coordinated equipment purchase needs, relocation intricacies, and staffing processes to ensure a successful move.  Jean Day, Administrator for Boulder Surgery Center, remarked, “Under the direction of Pinnacle III’s planning and organization, we experienced a smooth move.”

The Grand Re-Opening

The facility’s physicians and staff were exultant.  This was evident as Boulder Surgery Center & BoulderCentre for Orthopedics teamed up for their Grand Re-Opening Open House Celebration, organized by Pinnacle III’s marketing team, on the evening of October 6, 2016.  Both the ASC and the physician practice excitedly welcomed the Boulder community to their new facility.

At the open house, Boulder Surgery Center hosted many influential members of Boulder’s healthcare provider community.  Attendees included surgery center physicians & staff, physician practice staff members, referring providers in the Boulder Community Health & the Boulder Medical Society networks, hospital administrators, local legislators, third-party payor representatives, medical device representatives, and many others.  The event not only served as a celebration for the physician investors, ASC, and practice staff members, but it also provided a positive boost for business.  Referring providers toured the facility with Boulder Surgery Center specialists, had an opportunity to meet new specialists, and gained confidence in the practice(s) to which they will be sending patients.  A few prospective physician specialists toured the facility and inquired about obtaining credentialing privileges.  A representative from U.S. Senator Michael Bennet’s Office attended and learned about some of the legislative issues facing ASCs in Colorado.

The evening culminated in a toast given by Dr. Drigan Wieder, Medical Director for Boulder Surgery Center, and Dr. James Rector, President of BoulderCentre for Orthopedics.  Both physicians outlined the history of Boulder Surgery Center and BoulderCentre for Orthopedics as well as the vision for the future. 

Several days after the Grand Re-Opening Open House Celebration, Jean Day stated:

“The open house was a powerhouse marketing extravaganza!  Attendance far exceeded my expectations.  The feedback was so positive I expect Boulder Surgery Center will receive inquiries from professionals hopeful of working here.   Two podiatrists each inquired about the feasibility of performing cases.  They presently conduct all cases at the hospital.  Staff members’ level of pride has been elevated to near euphoria, or perhaps they remain intoxicated by the swell of happiness in their hearts from witnessing such a receptive crowd!”

Conclusion

Boulder Surgery Center experienced steady growth and prosperity over the course of their first decade in business affording physician investors an opportunity to consider:  Is now the right time for expansion?  The board, after pragmatically assessing its options, agreed it made sense to take advantage of space available in one of the community’s new building projects.  Ultimately, Boulder Surgery Center’s board members made a confident decision to expand based on robust and sustained case volumes, highly aligned physician practices, and attentive ASC management.

If your ASC is experiencing sustained growth that is outpacing its physical capacity, a project pro forma is essential to visualize the new business model in an expanded space.  Consider contracting with an ASC solutions company like Pinnacle III to guide you through the process.

Jack Mast – Physician Liaison

Sep 13
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I Want to Develop and Open a Surgery Center, Where Do I Start?

By ASC Development No Comments

Physicians and hospitals alike recognize the role ambulatory surgery centers (ASCs) play in the delivery of quality, cost effective, customer focused health care.  They are a popular business model to employ.  If you are ready to enter into the ASC market, a significant question remains:  Where do I begin?

As is true for most endeavors, developing an ASC should begin with a strategy and plan.  The goal is to not overbuild or under-build your center.  Rather, the goal is to develop a profitable facility with both short-term and long-term growth in mind.  At Pinnacle III, a feasibility analysis is used to assess the potential viability of a project.  It provides a high level, realistic projection of the facility’s financial outcome through the collection of data from interested investors.  The data is used to create the following:

  • Projected revenue
  • Projected case volume
  • Projected case mix, which will determine the medical equipment, staff, and size requirements
  • Estimated expenses
  • Estimated capital
  • Projected profits/losses

This information helps determine whether or not a development project should move forward.

A feasibility analysis is also used to assess a given market’s current managed care contracts. Skipping this part of the process is inadvisable – often, valuable information is obtained during this phase which could very well affect your decision to proceed.   For example, imagine you discover the key PPO for your market contracts with a health care system that operates competing surgery centers.  This PPO might decline the opportunity to align with you believing the current health care system arrangement provides them with appropriate access to care for their customer base.  That lack of expected volume could kill your entire project.

The analysis can be thought of as a “red light/green light” exercise.  A green light indicates the project makes enough sense to proceed.  A red light signifies a project in its current state does not make sense.  It is possible for a feasibility analysis to produce a “yellow light,” indicating that you should proceed with caution.  This could mean that the project would eventually be profitable, but not for many years, or projected net revenue would be marginal at best.  In these instances you will need to go back and see if you can optimize the situation to move the yellow light to a green light.  For example, maybe you need more physicians involved to produce higher revenue numbers or find a way to cut down on real estate costs to minimize your expenses.  The project may not be dead, but it should be postponed until a better outcome is projected.

Some of the things you will want to consider as you move forward into the development phase include, but are not limited to:

  • Do you own land and/or have an existing building? Or do you need to find a site to purchase or space to lease for your facility?
  • What are the capital requirements?
  • What are the legal and regulatory considerations?
  • Should you bring in more specialties that require you to recruit new surgeons?

Beyond just the numbers, conducting a feasibility analysis helps shed light on non-measurable factors that greatly affect your surgery center’s potential for success.  Conducting an analysis may uncover philosophical differences among physicians that could complicate the operation going forward.  For example, one or more of the physicians committed to the project may be invested in multiple ASCs which could severely impact their ability to deliver the case volume necessary to initiate and/or sustain your project.  Because there are many nuanced, potential project pitfalls, it is valuable to consider working with an unbiased, third-party consultant to help uncover roadblocks.

It is no secret the development of an ASC is a complex process. Remember, the feasibility analysis is crucial to proceeding in a thoughtful and objective manner allowing you to avoid costly mistakes and move forward with confidence. Successful planning and preparation help establish the necessary benchmarks that guide your surgery center from initial concept to regulatory certification.

By Trista Sandoval and Lisa Austin

 

Aug 15
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What are the Benefits of an Ambulatory Surgery Center Joint Venture for Physicians and Health Systems?

By ASC Development 2 Comments

Joint ventures have become the most common path to developing an ASC. Numerous factors should be considered in preparation for such an undertaking. While it’s important for physicians and health systems to determine if a joint venture is the best option for their market, let’s consider the benefits associated with a joint venture.

Reasons for a Health System to be Involved in a Joint Venture

There are a variety of strategic and economic reasons for a health system to participate in a joint ventured ASC. From a strategic standpoint, health systems may view a joint venture as an opportunity to increase physician loyalty and reduce the risk of physician defection. A well-planned and executed joint venture may create a halo effect thereby improving the relationship with the participating physicians across the entire health system and promoting it as physician friendly.

Another benefit is increased physician satisfaction as surgeons experience the efficiencies of an ASC versus what they may perceive occurs in other environments. A freestanding joint ventured ASC also greatly aids the health system’s ability to recruit new physicians both to, and beyond, the joint venture. While the ASC itself can be used as a recruiting tool for new physicians, the hospital OR time freed up by the removal of the cases to the new ASC can release resources for new physicians or service lines whose access may have been limited in the past due to time or equipment constraints.

Incentive alignment becomes a byproduct of the joint venture. When a health system joint ventures with physicians, there are clear benefits to both parties for alignment in many areas including, but not limited to, service expansion, marketing, and cost reduction.

Beyond the strategic reasons, there are simple economic reasons for a health system to develop a joint ventured ASC. The potential to attract new physicians to the system allows for the opportunity to create referral relationships beyond the joint venture. Freeing up the hospital ORs for more acute cases, without losing 100% of the revenue associated with the less acute cases that have been transferred to the joint ventured ASC, can greatly improve finances for the health system. Operating efficiency is improved by the strategic incentive alignment described above. The efficiencies and cost savings experienced in the joint venture – now familiar to the physicians – allow the health care system an opportunity to monetize them in their own sites of service.

The excellent patient satisfaction scores and comments we receive about our joint ventured ASCs can improve both a system’s reputation and market share in their community. This has become increasingly important with the move toward a more consumer driven health care market.

Reasons for a Physician to be Involved in a Joint Venture

The most prominent strategic reasons for physicians to participate in a joint venture are to secure a strong market advantage, align incentives, and, potentially capitalize on a smoother process to obtaining a certificate of need (CON) where needed.

By partnering with a health system, physicians may gain access to a new patient network or payor which can create an opportunity to increase case volume and revenue. The health system may also have access to a location for the ASC that is advantageous but not otherwise available to the physicians.

Areas where incentive alignments can occur with hospitals are pay-for-performance, allowing surgeons employed by the health system to participate in or use the ASC, bundled payment programs, and participation with risk contracts.

When it comes to obtaining a CON for a surgery center, physicians may have a far easier time working with a health system in a joint venture than going it alone. CON boards may view the working relationship between the health system and the physicians as a positive step toward improving access, quality, and value to the community. Having the system as an advocate rather than a potential adversary is a plus.

From an economic standpoint, the physician’s burden to raise capital and financial risk can be greatly reduced working with a health system in a joint venture. From the credit worthiness of the project to simply spreading the risk across a greater number of participants, having the system as a partner may be advantageous. There may also be means for the health system to help reduce the cost of the overall project through its purchasing relationships with vendors.

The most sought after economic value to the joint venture relationship is in the potential for the health system to improve the managed care contracts or access of the facility versus what it could obtain on its own. While in the past this was more of a given, it has become less of a guarantee over the last few years and needs to be thoroughly vetted as an actual value.

Conclusion

The numerous strategic and economic advantages for both health systems and physicians have led to joint ventures being the most common approach for new surgery center development. While it is important to thoroughly evaluate the merits of this structure within the context of individual markets, it behooves health systems and physicians interested in developing a new outpatient surgery center to explore joint venture opportunities within their community network.

By Robert J. Carrera – President and CEO