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Opening a New Surgery Center: A Roadmap for Success

By July 5, 2018June 11th, 2019ASC Development, ASC Management
Opening a New Surgery Center: A Roadmap for Success

If you’re planning on opening a new surgery center, congratulations! If all goes well, you will soon provide your community with a high-quality, low-cost option for surgical care. But there’s a lot of work to do before you reach that exciting grand opening. It is said that “Rome wasn’t built in a day,” and neither is a successful ASC.

Before you proceed with plans to open a new surgery center, consider the following list of questions. Knowing the answers will help ensure the facility you picture today is what you end up presenting to your community tomorrow.

New Surgery Center Questions to Answer

Are your partners committed?

A new surgery center is destined to fail if you do not have committed partners. That commitment needs to be short and long-term. Commitment can be gauged in several ways – their financial investment, their case volume, and their participation in research and decision-making.

Once partner commitments are confirmed, you will need a well-structured operating agreement. This agreement should account for potential issues that may arise during the ASC’s development and as the business matures. Getting a group of physicians to verbally agree to partner on a project is one thing. It’s another to obtain their signatures on paper and make their vision reality.

Where will financing come from?

Building a new ASC isn’t an inexpensive undertaking. Expenses that will need to be covered before performing the first procedure include:

  • Construction, either of a new facility or remodeling an existing space
  • Medical equipment and supplies
  • Service providers (more on these in the next section)
  • Computers and software
  • Furniture and fixtures
  • Signage
  • Licenses
  • Staff salaries and benefits

You will also require working capital to cover expenses as you wait for reimbursement for procedures. Before you break ground, know how you will pay for all these expenses – and some unforeseen ones as well. You’ll probably need a mix of debt financing and cash capital contributions from the owners.

Who is on your team?

You’re going to need a lot of help to bring your plan for a new surgery center to fruition. Carefully consider the selection of individuals and teams with whom you contract to fill project needs. These service providers may include:

  • Architect
  • Management firm
  • Engineer
  • Attorney
  • Managed care contract negotiator
  • Recruiter
  • Marketer
  • Website developer

A poor choice of one or more of these service providers may result in serious ramifications. These could include project delays, failed surveys and inspections, poor contracts, and over-staffing.

What is your desired location?

This can be an easy or challenging question to answer, depending upon your circumstances. Do all the new surgery center’s owners practice out of the same building? If so, it may make sense to explore developing the ASC in, or attached to, that building. If that’s not an option, or you’re bringing together owners from multiple practices, you will need to decide whether to build a new facility or move into a remodeled space.

Both options have their pros and cons; weigh them carefully. Do you desire full control over construction of the building and its floor plan? Are you prepared to cover the additional costs (e.g., permits, foundation, connecting water, sewer, and electricity) associated with constructing a building from scratch? Is there an existing space you could remodel and open faster than building a ground-up facility? Will the potential savings of remodeling eventually be offset by building repairs and upgrades? While it may seem counter-intuitive, the cost of remodeling an existing space can surpass that of new construction.

What do you envision for the ASC?

The building of a new surgery center can take many months up to a few years. That’s why planning should consider not only physicians’ current case mix but their future volume projections.

For example, if your ASC will perform orthopedic procedures, are total joints on the horizon? If so, you will need larger operating rooms and additional storage space. If your physicians plan to eventually perform higher acuity cases, will you have the means to accommodate overnight stays (state permitting)? If you anticipate expanding to accommodate future growth, does the location you’re eyeing provide that option?

In the excitement of planning your ASC for today, don’t overlook the potential needs of your ASC for tomorrow. Be careful not to overbuild “just in case.” There’s a fine balance between building for what you need when you open and what you will need to grow.

New Surgery Center Pitfalls to Avoid

We’ve already touched on some of the issues to watch for when planning a new surgery center. Here are a few other pitfalls to avoid:

Don’t make rash decisions. It’s natural to want to break ground as soon as possible to move the project toward completion. But racing to build your new ASC could result in failure to provide appropriate attention to important matters. It’s better for a project to take longer if it means taking time to make educated decisions.

Don’t neglect project management. Building an ASC requires oversight and coordination of numerous moving parts. This adds up to a lot of time and energy. You and your partners may desire significant involvement in managing your new surgery center project. However, juggling it and a busy practice will likely prove quite difficult. Securing adequate, knowledgeable project support will help ensure nothing is overlooked or rushed.

Don’t underestimate the paperwork. You’re going to need to provide documentation to many organizations throughout the development of your ASC. This includes your state’s department of health, the Centers for Medicare and Medicaid Services, and an accreditation organization. The paperwork can be cumbersome and complex, and you will need to appropriately time its submission to keep your project on track.

Don’t wait to begin staff recruitment. Competition for suitable surgery center employees is high across the country. Recruiting and onboarding the staff needed for the first day your ASC is open will take time. Poor management in this area could leave you shorthanded, potentially forcing you to delay opening or slowing case migration.

Final Key Takeaway

One closing thought. I cannot overstate the importance of involving the right people in the building of your new surgery center. Individuals and organizations who are knowledgeable about what makes ASCs successful can help keep your project on schedule and on budget. Choose wisely!

Jebby Mathew, Regional Director of Operations


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