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May 2017

How Marginal Gains are Crucial for Surgery Center Growth

By ASC Governance, ASC Management, Leadership No Comments

Over the course of many years, Pinnacle III has been tasked with the evaluation and turnaround of numerous failing or drastically underperforming surgery centers.  In each situation, it was relatively easy to identify the pain points and devise solutions to create marked improvement in the ASC’s performance.  

There are many centers, however, that already operate at an elevated level.  Their investors often ask us if it is possible for these facilities to improve.  

To answer this question, I am reminded of a story from the 2012 Tour de France and London Olympics. In 2010, Sir Dave Brailsford was tasked with improving the performance of the professional cycling team, Team Sky.  Eventually, he was asked to do the same for the British National Cycling Team.  At that time, Britain hadn’t had a Tour de France champion nor had they performed well in Olympic Cycling. Brailsford realized major gains in the realm of world class athletics were difficult to achieve.  Therefore, he focused on the concept of marginal gains aggregation.  He explained this concept as a one percent margin for improvement in everything.  He believed if you improved every area related to cycling by just one percent, those small gains would add up to remarkable improvement overall.

Initially, Brailsford and his team focused on the obvious – tire weight, seat ergonomics, and athlete nutrition.  Then they turned their focus on the far less obvious.  This included pillow choice and its impact on sleep quality, personal grooming habits and their impact on propensity to develop saddle sores, and hand hygiene to avoid illness.  Essentially, they searched for a one percent improvement in every area where they could create impact.  The results, despite some recent controversies, speak for themselves.  Britain’s Team Sky was victorious in the Tour de France in 2012, 2013, 2015, and 2016.  The British National Cycling Team also won 70% of the gold medals at the 2012 games.

I realize Team Sky is not the first or only organization to espouse the benefits of such an approach.  However, as a cyclist and a geek for human performance improvement, I gravitated to this example to illustrate my point.  Other examples that have paid dividends to the concept of marginal gain include David Cameron’s Behavioral Insight Team which improved the wording of tax demands to increase responsiveness.  Or Google testing 41 shades of blue for its advertising hyperlinks, which they claimed netted an extra $200 million in annual revenue.  The examples are endless.

So, how does a successful ASC ensure continuous growth?  We believe the best get better by consistently reassessing where there are opportunities to aggregate marginal gains.  I have written a great deal about culture.  This is another cultural characteristic which we work to ingrain in our partnered centers.

Every member of an ASC’s team can look for ways to identify marginal gains in their day-to-day activities.  Materials management can move more items to consignment.  Nursing staff can suggest the removal of unneeded items from custom packs.  The revenue cycle management (RCM) team can suggest changes to a dictation template to reduce the need for payors to request additional medical records.  Or, they may suggest implementing online bill pay to create an easier medium for patients to submit payments thereby expediting the receipt of receivables.  These are just a few examples of marginal gains that can be achieved through diligent management.  

It’s also important to keep in mind the reverse can be true as well.  A one percent decline in aggregated overtime can have significant impact on a facility’s operation.  The diagram below, adapted from James Clear, as referenced in “The Slight Edge” by Jeff Olson, effectively illustrates this point.

In closing, it’s easy to get caught up chasing the “large whales” – implementing bundled payments, a total joint program, or a re-syndication – to enhance facility prosperity.  But don’t forget to attend to the “small fish” by creating a culture around aggregating marginal gains.  The valleys in an ASC’s growth can be filled by marginal gains.  Doing so ensures the declines aren’t as sharp which leads to a steadier upward slope.  Overall, marginal gains are crucial to an ASC’s continuous growth.

Robert Carrera – President/CEO

ASC Equity

Why ASC Equity Should Be in the Hands of Physician Owners

By ASC Governance No Comments

Investopedia defines equity as, “the value of an asset less the value of all liabilities on that asset.”  Or, in plain accounting terms, equity equals assets minus liabilities.

If the assets of ambulatory surgery centers are its surgeon/physician owners, and the surgeon/physician owners believe in themselves and the case volume they project, why would they consider giving up significant equity in their ASC?

I should qualify my previous statement.  In certain cases, physician owners are not the only assets in an ASC.  Joint venture opportunities are one example. Hospital systems can not only make good ASC partners, but also have the potential to be valuable ASC assets.  They can extend leverage in the market and their payor contracting clout can have significant value.   Additional assets health systems can bring to an ASC are found here.

Surgeons sow the seeds of ASC success.  They are the primary volume drivers to the surgery center.  Therefore, it is our belief that as much equity as possible should be in the physicians’ hands.  

Large ASC management companies often request larger portions of equity. Their rationale is typically based on two premises.  First, that they will work harder for the success of the entity if they hold a significant ownership share.  And second, that the services they bring to the center justify this type of equity position.  We’ve found this is not necessarily the case.  Consider the following:

  • Management contracts based on a fee-for service provide the same, or even greater, incentive for the management company to perform. If a management company isn’t delivering results, their own profit margin suffers.  Eventually, ASC ownership will seek management expertise elsewhere.
  • No management company would advise their on-site management team to work harder, or put in less effort, based on the level of ownership held.  
  • The leverage a management company brings in terms of vendor contracts or payer arrangements are not enhanced by equity levels.

There is something else to think about when considering giving up sizable equity.  If the relationship with the management company does not work out, it is very difficult and costly to buy-out or disengage that partner.   A more thorough discussion of the non-equity management model from the perspectives of physician/hospital joint ventures, is available here.

In some cases, giving up additional equity makes sense.   This is true when investing partners need a large amount of capital to build a facility and they simply do not have the financial wherewithal to pull that capital together.  In this case, it behooves physician owners to give up only what’s needed to finance the project – nothing more.   

It may also make sense for the facility to surrender equity when the contracting clout of the large equity partner results in a significant return on that equity in the form of enhanced managed care contracts.  For example, if a center is going to give up 25% of their equity, the contracting clout should return 35% in improved reimbursement.

The success of an ASC comes from physician partners utilizing the facility.  The more equity the surgeons/physicians have, the more invested they are in ensuring the ASC’s success.  This is the best way to maximize ASC prosperity.

Rick DeHart – Principal Partner

IT Checklist

This Checklist Can Help Keep Your ASC’s IT Network Secure and Data Protected

By ASC Management No Comments

It doesn’t take much for cybercriminals to gain access to a network.  A click of a link in an email.  The opening of an attachment.  A visit to a compromised website.  The use of outdated software. A lack of proper security software.  The list goes on.

Once cybercriminals breach your network, immense damage can occur.  At a minimum, you may need to go partially or entirely offline.  In a worse scenario, they may steal sensitive financial and/or clinical data.

Recovering from a breach can be a slow process, and an expensive one at that. Expenses can add up quickly when you take into consideration the cost of:

  • investigation,
  • remediation,
  • patient notification (and coverage for potential identify theft and credit monitoring),
  • legal fees,
  • regulatory fines, and
  • business interruption and associated loss.

To help keep your surgery center’s network secure and cybercriminals at bay, consider performing regular information technology (IT) audits. These audits, which examine your IT systems and software, can help identify security weaknesses.

Here is a checklist of some critical IT security-related questions to answer. Speak with your internal IT director and/or outsourced IT vendor to ensure each audit area is addressed.   

Network Security Protection

  • Do we use anti-spyware software?
  • Do we use anti-malware/malware detection software?
  • Does our security software filter malicious code from websites?
  • Does our security software process emails through anti-spam and anti-virus filtering?
  • Do all servers and workstations have the proper security software installed?
  • Is security software current/updated?
  • Do we have processes to keep security software current/updated?


  • Do we have a firewall installed?
  • Is our firewall configured securely? (Note: If the firewall is using factory default settings, it is likely not secure.)
  • Is the firewall functioning as designed?

Network Access

  • Is all remote access to the network authenticated and encrypted?
  • Do we use physical security controls to prevent unauthorized access to computer networks and data?
  • Do we have access controls in place with role-based assignments?

Internet Access

  • Do we have internet access restrictions in place?
  • Do such restrictions block potentially harmful websites?

Wi-Fi Access

  • Is Wi-Fi configured to prevent unauthorized server access?
  • Is Wi-Fi configured to provide public internet access without server access (i.e., a second setup)?

Software Updates and Patches

  • Do we have a process for receiving notices of available security patches and upgrades?
  • Do we have a process for installing and testing critical security patches?
  • Do we have a process for identifying software that stops receiving support?
  • Do we have a process for effectively replacing software, if necessary?

Security Assessment/Testing

  • Do we have a process for performing regular testing of our cybersecurity measures?
  • Do we have a process for performing an annual, full system security assessment?
  • Do we have a process for effectively responding to security incidents (e.g., hacking, viruses, and denial-of-service attacks)?

Be Diligent

Cybercriminals are lurking, waiting for an individual or organization to make a mistake.  While you can’t keep cybercriminals from targeting your ASC, you can make your center a less appealing mark.  Ensure network security is a priority. This will put you in a better position to avoid breaches, catch potential weaknesses early, and make cybercriminals look elsewhere for their next victim.

Diane Lampron – Director of Operations

IT Software Conversion

Managing Your ASC’s A/R During an IT Software Conversion

By Revenue Cycle Management No Comments

Your ASC has decided to take the plunge and transition to a new patient accounting system.   This is no small task.  It requires thoughtful research and planning to make sure the transition is as smooth as possible. 

Plan for a six to nine month exploratory process to research and demo systems designed to meet the needs of your facility.  Involve as many different stakeholders as possible to assist in making an informed decision.  Determine what system will meet your business needs and accommodate employee workflow. 

From a billing perspective, your primary goal is to avoid a decrease in your center’s cash flow.  To achieve this goal, carefully consider the following: 

Electronic claims/statements

  • Will you continue with your current clearinghouse or switch vendors?
  • What will your new electronic data interchange (EDI) testing process entail? When will testing begin?  How long will the testing process take?
  • If your electronic funds transfer (EFT) arrangement is new, will you enroll online or via paper?
  • Will you stagger payer enrollments based on approval timelines to avoid cash flow lag?
  • Is your statement process paper or electronic? How will the process be affected by the change?
  • Are there any modifications required to accommodate your online bill pay system?

Training needed in advance of the go-live date

  • Coding
  • Charge entry/billing
  • Cash posting
  • A/R management
  • Administrative reporting
  • Is the user manual available and up-to-date?
  • Is there an on-demand training option available for current and future staff?
  • How is training scheduled? On-site or via webinar?   What is the course content and how often is it offered?

Strategy for your legacy system

  • How long will it take to work the outstanding A/R in the legacy system?
  • What will the impact be on staff productivity if they need to maintain dual systems for a predefined period?
  • What type(s) of report(s) will you provide to your accountant to convey the A/R being worked in both systems? Will both systems produce comparable A/R data?  If one system reflects gross receivables and the other reflects net receivables, how will you account for the difference?
  • How long will you maintain the legacy system?

Post go-live support and training options

  • Is additional training available?
  • Does online training exist? How robust is the content? 
  • How responsive are system support personnel?
  • How often are system updates rolled out?

The process of moving to a different patient accounting system can be daunting if you don’t do your homework.  In fact, it can feel like a second job.  Prepare your team by keeping them involved throughout the process.  Employee acceptance is a key component to a successful transition. 

Change is hard, but it is rarely without benefits.  You will likely learn a thing or two about your current processes amid the change.  Embrace the opportunity to tighten things up.  Explore better methods to accomplish tasks in the new environment.   Don’t let anxiety run this project into the ground.   Spend the time required upfront to ensure the transition is a smooth one for your surgery center.

Carol Ciluffo – Vice President of Revenue Cycle Management

ASC Administrator

Successfully Transitioning into an ASC Administrator Role

By ASC Management No Comments

In the spring of 2016, I was approached by my management company supervisor about accepting an interim administrator position at our ambulatory surgical center.  Interested, yet hesitant, I agreed, as his confidence in me to take on the role was genuine and complimentary.  

With a new boss and role ahead of me, the necessity to decipher what was needed to succeed occupied my thoughts.  As clinical director of the surgery center for three years, I understood the importance of leadership and management.  However, I did not possess a complete understanding of the administrator role.  To gain this understanding and to succeed in my new role, I needed a plan.

Success Requires Knowing the Answers

Initially, I needed to understand the expectations.  Specifically, I wanted to gain knowledge about the following:

  • What was the vision of the ASC’s board of directors?
  • How will the management company assist with executing this vision?
  • What was required of me to meet this vision?

Success Requires Knowing Who Has the Answers

To determine who had the answers I was seeking, I needed to build relationships and identify what resources were available to me.  I found myself asking:

  • Who are the members of the management team and what are their roles?
  • How does each role impact the facility?
  • How is each role impacted by the facility?
  • Which members of the team have experience or expertise in which areas?
  • How can I tap into this experience or expertise to create success in my new role?
  • Who are the points of contact for the daily tasks of conducting business (accounting, banking, business insurance, credentialing, etc.)?

Success Requires Knowing the Deficiencies

As I began gathering responses to my questions and utilizing the educational resources available to me, I recognized the importance of assessing my needs.  I asked:

  • Where can knowledge and information assist me in successfully accomplishing the expectations of my new role?
  • Where can I obtain that knowledge and information?
  • What areas within the facility need immediate attention?
  • Are there resources available to address the areas requiring immediate attention?

In my twenty plus years in healthcare, I discovered relationships are an integral and necessary part of success.  This was true in my new position as well.  It was incumbent upon me to reach out for assistance, build relationships, and successfully integrate into the existing management team.  Within the healthcare industry, or any business for that matter, an open mind, patience, and willingness to visualize the big picture all propel an individual’s efforts forward.  An African Proverb states, “If you want to go fast, go alone.  If you want to go far, go with others.”

My integration into an ASC’s existing management team consisted of the following–

  • Knowing the vision of the stakeholders
  • Aligning the facility with that vision
  • Building relationships within the existing management group
  • Researching and obtaining useful resources
  • Identifying areas of improvement
  • Proactively addressing the identified needs

Later that year, having successfully navigated the interim role, I was offered the administrator position. 

In summary, I found Henry Ford’s statement to be true: “Coming together is a beginning.  Keeping together is progress. Working together is success.”

Tara Demuth Fenton – Facility Administrator, Children’s North Surgery Center

ASC Onboarding

ASC Onboarding – Begin with the End in Mind

By ASC Management No Comments

In many ASCs, a new employee’s initial day on the job consists of filling out new hire paperwork, reviewing pertinent portions of the employee handbook, being introduced to other employees, quickly touring the facility, and, well, getting to work.  ASCs are small businesses – no frills, limited time, tightly managed resources, one big happy family.  Showing a new employee the ropes is typically a crash course consisting of several employees disseminating lots of information in a short period of time.    

It’s no wonder new employees experience frustration and dissatisfaction early on.  We’ve thrown them into the pool.  It should be no surprise when new employees struggle – often in many little ways.  Sure, they knew how to swim and made it to the other side safe and sound.  But it certainly wasn’t a pleasant experience. 

This is why many management articles focus on the importance of onboarding.  Onboarding is, essentially, organizational socialization.  It is the process through which new employees acquire the knowledge, skills, and behaviors necessary to integrate effectively into an existing organization.  If you do not currently have a formal onboarding program in your facility, implementing one will go a long way toward increasing employee satisfaction and retention. 

When creating your onboarding process, begin with the end in mind.  Typically, the end goal is to retain highly qualified employees who synergistically enhance your team.  What tasks do you need to undertake to achieve your desired goal?   

Establish onboarding program objectives. 

Here are some objectives to consider:

  • Teach new hires about your facility’s mission, vision, and core values. Avoid having them read about these workplace tenets.  Have your medical director, team leads, and personnel from every department explain how these principles translate into employee behaviors and mindsets.
  • Provide socialization opportunities in the workplace. Arrange for multiple employees to conduct the facility tour.  Let a PACU employee provide them with a tour of post-op.  Allow front office personnel an opportunity to explain the scheduling, verification, pre-authorization, and registration processes.  They will garner valuable insights during these interactions.  Host a welcome breakfast or lunch. Ensure every member of the team has a chance to participate in this informal gathering.  Help new employees feel good about the role they fulfill and who they work alongside. 
  • Educate new hires about the company culture. Review the unspoken “rules.”  Provide insight into facility nuances.
  • Discuss performance standards and expectations. Outline your expectations, how you measure performance, and what it will take to succeed.
  • Teach them how to do the work. Let them know where they can obtain the necessary materials to perform their job.  Identify who they should go to when a problem arises.  Clearly convey whose approval they need before altering a process or changing plans.

Structure your onboarding process with strategic forethought. 

It includes a written plan/checklist tailored for each position.  Some elements of that plan will apply consistently across all positions.  Other plan elements will require a deep dive into position specifics.  Ensure each plan incorporates input from key team members.  Their unique perspectives about what needs to be covered during the first few days, weeks, and months of a new employee’s tenure will lend itself to a comprehensive process.

Take care of logistics prior to your new employee’s first day. 

Expend the time and energy necessary to create user names and passwords to essential software programs.  If scrubs are provided, make certain the correct size is on hand.  Have a locker available to store valuables during their workday.  Provide them with their name tag.  Order supplies for their workstation, when applicable.  Let them know how to obtain additional items they will need to be efficient and effective.

Ensure the process is interactive; not an information dump. 

Intersperse reading materials in small chunks throughout their initial days on the job.  Ask new hires about their preferred learning style and do what it takes to accommodate those style needs.  Allow ample time for them to observe, while still providing frequent opportunities for hands-on practice.

Avoid rushing the process. 

Spread it out over several months.  Plan on spending the initial employment period (30-90 days) focusing on your new hire.  Recognize onboarding takes time which, if executed well, yields a high return on your investment.  Consider assigning a mentor to extend the orientation process in the 6-9 months following the initial employment period.  Finally, follow-up at regular intervals – 30 days, 60 days, 90 days, 6 months, 9 months, and annually.  Use these follow-ups to assess progress and check in with the employee to determine ongoing needs. 

A well-crafted onboarding program leads you to desired results.  In fact, it can serve as an amazing recruitment tool.  So much so that applicants might be queuing up at the door hoping to fill your next vacant position.

Kim Woodruff – Vice President of Corporate Finance & Compliance