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

By January 19, 2017 June 11th, 2019 ASC Development
ASC Development Project

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

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