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Joe Zasa on Writing the 1st Comprehensive ASC Development & Management Book

What were the motivations and strategies behind writing the first comprehensive book on ASC development & management? Becker’s ASC Review interviews Joe Zasa. View Article    


HOPD to ASC Joint Venture Conversion

Top financial issues, regulatory concerns & more Ambulatory surgery centers are becoming an attractive strategy for hospitals. While some hospitals seek to build their own ASCs or partner with an existing center in the market, others decide to transition an existing outpatient department to a joint venture ASC. In this Q&A from Becker’s ASC Review (Nov. 10, 2014) by Carrie Pallardy, ASD Management’s Vice President Mark Babin describes the process of this conversion and offers insight into the most important issues to consider. Q: Why are hospitals interested in converting a HOPD into an ASC joint venture? Babin: Efficiency. Hospitals are certainly becoming better at reducing their operational costs. They are all following strategic plans, benchmarking success factors, reducing patient readmission and are driven to increase patient satisfaction indexes. Payment and census are all predicated on the success of efficiently running a hospital. The same metrics used do not always translate to the surgery center environment. For example, staff within the hospital is often cross-trained, which is critical for multiple service lines but, ideally in a surgery center you will have the nurses and techs specialists with one or two specialties. This decreases turnaround time, reduces operating room times and improves outcomes, which translates to greater availability to do more cases. Also, a surgery center has greater ability to flex staff if needed, saving money when volume is reduced. Close ORs or procedure rooms when not in use and maximize the open ORs on lighter surgery days. Finally, as one last example, there is still the ability to minimize supply costs if the joint venture uses a national management company. Supply costs are always one of the top three expenses and group purchase organization contracting can usually mirror what the hospital costs are via a national agreement with a known surgery center management company.   Physician alignment More than ever hospitals and physicians are having complex conversations about working together to provide quality care in a reduced payment environment. Narrow networks and population health are two new phrases with the common thread of intending to provide a full scope of measurable services. Surgery centers play a key role. More types of cases are moving to the outpatient environment. Hospitals have the understanding that the reduction in reimbursement rates is offset by the increase in volume and loyalty by the physician. It's part of the conversation. Also, a joint venture is generally less risky than a standalone center with no hospital partner and fits the new model of this cohesion with the hospital, physicians and ancillary services. This is not to avoid the long-standing fact that physicians will have ownership in a surgery center. For a hospital not to participate is to lose a significant volume of cases to a competitive surgical facility. The hospital needs to align with physicians to strategically and proactively drive the future of care in their market.   Payer contracts Health plans are requiring procedures be done at an outpatient surgery center. With HOPD rates 50 percent to 60 percent higher than a standalone center they are incented to have patients receive services from a joint venture center. Health plan medical directors are very involved with understanding what procedures will be approved or even may be done without Medicare recognition (orthopedic total joint procedures for example). Differentiating the center is critical in saturated markets where the payer may utilize the supply of surgery centers to its advantage in driving down rates. Something to consider for any center: published bundle payments and cutting edge procedures not being done elsewhere. In essence, health plans view surgery centers as a critical component offered to their patients. Whether a new center provides competitive care or something that differentiates itself is dictated by the hospital, physicians and demands of the payer and market.   Relevance in the market A joint venture plays into the big picture of staying in front of the changes in healthcare. Opening the surgical services to investors/physicians allows the administration at a hospital to have another mechanism to keep a pulse on their market, competition and coming changes. Q: What are the biggest financial considerations in this type of project? Babin: Without question equipment and working capital are the biggest financial considerations. More often than not the new LLC joint venture will be purchasing the existing equipment from the hospital, whereby the value was derived by a third party. Additionally, there will be new equipment necessary for new service lines or to replace outdated equipment. Our most recent projects had values of $1.5 million to $2.2 million with additional equipment needed of $500,000 or more. What is attractive is most of the equipment is purchased at a fraction of the original cost and the JV has the option of purchasing all or a portion of the existing equipment. All of this should be structured under a five year to seven year capital lease with pro-rata guarantees from the owners or a hospital guarantee with a guarantee fee charged to the physicians. Some of the value of the equipment may be considered as equity from the hospital. Working capital will come in the form of equity from the physicians and provided all of the hospitals equity is not a consideration from the value of the equipment the hospital will put in cash as well. Additionally, a working capital facility must be in place with a bank, usually the one providing the equipment lease. There should be enough working capital and availability in a line for a minimum to cover the first year of operations with a comfortable cushion. Q: Is the resulting joint venture typically between the hospital and a management company or are physicians offered buy-in opportunities? Babin: ASD believes the best model is with physicians and the hospital for the reasons I mention above. ASD can maintain an ownership percentage, but its nominal and usually in the event there is a shortfall on the physicians' side. The hospital dictates what percentage the split should be. Some want to maintain control and will take a greater than 50 percent stake. Others prefer the physicians have majority. Regardless, the boards of every surgery center are split evenly between hospital and physicians with a Medical Advisory Committee comprised completely of physicians. Q: What are the major regulatory concerns in this type of project? Babin: Ensuring compliance with the safe harbor rules under the anti-kick back regulation and making sure that there is no unintended inducement by the hospital toward the physicians. Share prices, the facility lease (provided the hospital is the landlord or master tenant), lease of hospital employees, fair market rate if the hospital is leasing equipment. These are just a few examples and we require all clients seek advice of counsel if there is ever a question. Without exception our hospital partners are hyper-vigilant when it comes any interaction with their physician partners. Q: Are there any common mistakes you've seen made during this process? Babin: Converting a surgery center creates its own set of challenges and usually it is the things that are outside of your control that create the biggest issues. An example is the accreditation surveys and the timeline for receiving the Medicare number. These things you cannot control affect the timing and happen when the center is the most vulnerable. The key is preparation. There is no one way to convert an existing center and the punch list of things that must be done is more than 200 items long. Some consistent considerations are: Are the employees unionized and how will that translate to a new non-union center? What positions need to be eliminated or added? When was the asset purchase agreement finalized and have the interested physicians reviewed the list? Is there a clear understanding of what physicians will join and is there a steering committee? Is the contracting team at the hospital engaged with the project? Will they work with the management company to secure desirable contracts? Will the center need to close or can it stay open with a defined date to "flip" and will it need to be run as in tandem for a period of time as an independent ASC and a department of the hospital? Q: What is your advice for ensuring the transition runs smoothly? Babin: There must be a plan set in place and a timeline with specific action items addressed along that timeline. Set the expectation and build in a time buffer. The hospital administration and key physicians must make up a steering committee and be fully engaged. Key members of the staff that will stay on after the conversion need to participate and contribute to ideas and tasks that need completion. Engage the payers very early on in the process. If they are informed and get excited, they will begin contracting after accreditation and before receiving the Medicare number. This cannot be done soon enough. Early dialogue also uncovers potential issues with getting contracted. Make sure there is a detailed review of the business operations. Knowing what systems have to be replaced, implemented or shared with the hospital (right down to the telephones) has to be addressed early on to consider cost and time to replace and train personnel. Talk to key physicians regarding what changes are required in the surgical environment. Turnaround times, personnel and equipment considerations are vital. Start times are key to physician satisfaction and unless addressed and known to change it will be difficult to get physicians interested as partners.


Are ASCs in for another rough Q1?

By Carrie Pallardy This article is reprinted from Becker’s ASC Review Harsh winter weather and underwhelming financial results were the hallmarks of the first quarter of 2014 in the ambulatory surgery center industry. Winter is threatening to bring another round of record low temperatures in 2015, and the challenges of 2014, if anything, have intensified. How can ASCs prepare for the new year? 2014 retrospective The opening quarter of 2014 was undeniably difficult for the ASC industry, but if nothing else it can serve as a lesson for the times ahead. Here are key points from the first quarter results of eight public ASC companies. AmSurg. AmSurg's revenue increased marginally, 2 percent from $258.2 million in the first quarter of 2013 to $263.1 million. Same-center revenues declined 2 percent. Foundation Healthcare. Foundation Healthcare's revenue was up 18 percent to $22.1 million for the first quarter of 2014. Hospital Corporation of America. HCA's net income inched upwards 0.9 percent to a total of $347 million. The company's net revenue had a larger bump of 4.6 percent to $8.83 billion. Medical Facilities Corporation. MFC reported $72.9 million in revenue, consistent with the amount reported in the first quarter of 2013. Northstar Healthcare. Northstar reported a 194.1 percent growth spurt in net patient service revenue, from $4.1 million in the first quarter of 2013 to $12.1 million. Surgical Care Affiliates. SCA's total net operating revenues, excluding centers the company does not own a controlling interest in, increased 2.1 percent to $196 million. System-wide net operating revenues rose 8.7 percent. Symbion. Symbion's revenue rose slightly from $130.38 million in the first quarter of 2013 to $133.97 million in the opening quarter of 2014. United Surgical Partners International. USPI reported consolidated net revenues of $145.3 million, compared to $145.1 million during the same period in 2013. The majority of these companies reported flat financial results or slight increases in revenue and income. AmSurg, SCA and USPI all made reference to the impact severe winter weather had on patient volume and financial performance in the news releases announcing the quarter's results. Aside from winter woes, ASC companies had to contend with the onset of high deductible insurance plans and expanding effects of healthcare reform. What to expect in 2015 Though predicting the future of healthcare is an uncertain exercise, the new year is just around the corner. Many forces that will shape the upcoming first quarter are already at play. High deductible plans, just beginning to roll out in 2014, will have an even greater impact in 2015 as more patients become insured and select these types of plans. "We will see a state of flux as high deductible plans gain traction," says Joe Zasa, managing partner of ASD Management. Patient volumes may suffer another dip in the opening of 2015. While ASC leaders may not have control over when patients with high deductible plans decide to schedule elective procedures, they can compensate. For example, ASC physicians can schedule heavy Medicare case loads for early in the year, as Medicare deductibles are not nearly as high as the $5,000 or more deductible plans that are rapidly becoming commonplace. If another brutal winter is in store, ASCs can steel themselves for an onslaught of cold and possible closures. For example, Charlotte (N.C.) Surgery Center closed in winter of this year due to weather, but was able to reopen and perform 44 scheduled surgeries without missing a beat with the help of an online pre-admission solution. Healthcare reform is not only affecting providers, but is also reshaping the payer landscape. Payers are facing the same fierce pressures to cut costs and produce quality results. "Many centers were lulled by their 'success' when reimbursement for out-of-network claims was very high," says Mr. Zasa. OON volume, while still leveraged in some markets, is drastically dwindling. More and more ASCs are making the move to in-network. Armed with the knowledge, in part, of what lies ahead for the beginning of 2015, ASC leaders can prepare their centers. "Each ASC is different and must find its niche. It must find ways to grow, recruit and be more efficient," says Mr. Zasa. The best positioned ASCs and companies will be those that shoulder a certain amount of risk. Whether that risk is a gamble like AmSurg's acquisition of Sheridan and Surgery Partner's acquisition of Symbion, a new joint venture or narrow network participation, diversification can pave the way to a stronger first quarter and overall 2015. © 2014 Becker’s ASC Review. Reprinted with permission from Becker’s ASC Review. BeckersASC.com


The Making of Great ASC Board Members & Administrators

12 Key Concepts By Laura Dyrda This article is reprinted from Becker’s ASC Review Leadership can make or break a surgery center. The best centers have strong administrators and board members who motivate and guide the entire organization toward success in the future. 1. Vision. A clear vision will help the leader guide others effectively. "Leaders see the solution or goal and clearly define it," says Joe Zasa, managing partner of ASD Management. "Vision keeps you focused, fueled and helps you finish." These three "F's" — focus, fuel and finish — embody the best leadership qualities: Focus — When vision is so compelling you cannot become distracted. But self awareness is also important. "Focus on the task but keep a third eye on yourself," says Mr. Zasa. "Be spatially aware." Fueled — Communicate vision effectively to set the tone and provide positive reinforcement. Leaders can say, "I've watched you, and I like what I see. If you follow our plan and work hard, you will succeed and achieve results." Finish — Don't quit, even when the going gets tough. "There are peaks and valleys in life. Hanging in there despite setbacks and interference and finishing strong is the solution," says Mr. Zasa. "If your vision is so compelling, it will drive you and force you to hang in there and not quit. If you persevere by finishing, you will generally be rewarded." 2. Perseverance. Perseverance is especially important because even when efforts don't succeed, the ability to avoid quitting and finishing strong projects an important message to staff. "Since we become what we think of ourselves, it is imperative that you don't quit because finishing builds confidence in yourself and gives you the best chance to succeed the next time," says Mr. Zasa. 3. Communication. Communication becomes a second key concept to relay your vision to others and bring them onboard to work toward a common goal. "It is essentially that you get people to buy into your vision," says Mr. Zasa. "The more you communicate and the more they understand, then the more they care, and if they care, there is no stopping them. Roll with the tide, not against." Key tenets for effective communication: Set clear and concise expectations Project genuine and realistic optimism Infuse confidence into the vision Be a storyteller "People retain stories," says Mr. Zasa. "The best speakers are those who tell stories and paint pictures with words, not PowerPoint presentations." 4. Encouragement. When carrying out your vision, encourage others and do for them, not for you. Treat everyone fairly, but not necessarily equally because people are all different. This shows leaders care about their team and could limit conflict and bad feelings. "Make people feel special, but do this genuinely," says Mr. Zasa. "They must genuinely know you care about them. When they don't want to disappoint you, you are succeeding. Additionally, don't contradict people. They will take it emotionally and you can't ever reason with them. It's okay to disagree; it's not okay to be disagreeable." 5. Loyalty. Leadership is influencing people toward a common goal, and leaders who take the time to understand their team and express loyalty will reap the benefits. "Take up for your people. If they're on your team, have their back and be their advocate," says Mr. Zasa. "You must care about your people, create that connection, be accessible and constantly let them know you care about them." 6. Respect. Emotional bonds can motivate team members toward the common vision and produce outstanding results. Respect each other by paying attention to new ideas, thoughts and life events to strengthen this bond going forward. "The highest complement that you can pay someone is to give him or her your undivided and uninterrupted attention," says Mr. Zasa. "Respect each others' opinions and get input before making decisions. Your people are part of your team and a part of the process." 7. Recruitment. Since team members play such an integral part in a strong organization, it's important to recruit well. "Recruiting, vision and execution wins championships," says Mr. Zasa. "Be a fisherman for the right people." Don't tolerate complacency. Figure out whether employees are content or committed to the organization. "We need those who are committed and demand it," says Mr. Zasa. 8. Empowerment. Once the right people are in place, empower them so they can build confidence and assert themselves to help the organization grow. Teach them to identify leadership and motivate others around them. "Motivation is for a particular moment and is important, but empowerment can last a lifetime," says Mr. Zasa. "Recruit well, give them a clear vision that they understand, and then let them do their job. Delegation is the ultimate in levering." 9. Lead by example. If leaders set good examples for their employees and team members, they can demand others do things write and work hard as well. Additional key qualities for strong leaders include: Transparency — Show vulnerability and transparency to build trust. Love — "You can't coach them if you don't love them," Eddie Robinson once said. Kindness — It doesn't cost anything to be nice, but it costs a lot to break your word or be malignant. Honesty — Tell people the truth to show integrity Accountability — Recognize your mistakes and take responsibility to endear team members "Hard work builds confidence and hones competence," says Mr. Zasa. "Additionally, show class and humility. You are who you are, not what you do. Go about your business with class. Show your class all the time and demand it from those who rely on you." 10. Competence. Those who rely on you should also respect you and come to you with their problems. Colin Powell once said "When people stop bringing you their problems, you are done as a leader." Show you are competent with proficient preparation and work. Have a plan and vision and then focus on execution on the micro as well as macro level. "Keep selling your vision but also be sure to focus on the small tasks; the daily things you need to do to win," says Mr. Zasa. "Doing the small things right adds up to big wins and fulfillment of your vision." 11. Focus. Mr. Zasa employs the W.I.N technique, which stands for "What's Important Now." Keep an open mind to change with time and strive toward success. You can barrow ideas from the best in the industry — as well as thought leaders in other industries — to guide your team as a successful whole. 12. Put the team first. When leaders realize lifting up the team becomes most important, they'll be able to accomplish work much more effectively. "When you realize that power or influence begets responsibility for others and not personal gain, you separate yourself from other leaders and move into a select group," says Mr. Zasa. "Do for others and enjoy watching others succeed and grow — it is so much more rewarding and enriching." © 2014 Becker’s ASC Review. Reprinted with permission from Becker’s ASC Review. BeckersASC.com


What Can Football Teach Us about Surgery Center Management?

3 Essentials for ASC Improvement From Joe Zasa By Rachel Fields This article is reprinted from Becker’s ASC Review "As I watched Alabama win this year's national championship in college football as well as the national championship in 2009, it struck me how similar running a surgery center is to coaching a football team," says Joe Zasa, co-founder of ASD Management. Mr. Zasa grew up in Birmingham and attended the University of Alabama, an institution with an abiding love of football and a storied past in the sport. "I have had a particularly unique window with respect to the football program, and particularly the head football coaches, from Bear Bryant to the current coach, Nick Saban," he says. "Over this time, Alabama had three very good coaches and several mediocre coaches. There are similarities between the coaches who succeeded." According to Mr. Zasa, the "rule of three" applies to both sports programs and to business. The most successful programs have: 1. A system. Establishing a system of operations is the core of a surgery center and a sports program, Mr. Zasa says. "The next time you watch Monday Night Football, listen to the starting lineup," he says. "You will find that most of the players did not play on championship teams, or even the historic great college football programs. They were excellent players in mediocre systems." He says the system for a surgery center has three components: 1) clinical systems, 2) business office and 3) risk management. Each area of the surgery center must have a strict adherence to center culture and strategic direction in order to succeed. Mr. Zasa says when his company approaches a surgery center in need of a turnaround, the problems often lie with systematic failures. For example, the surgery center may not load their contracts into a computer system to track their accounts receivable. The supply area may look like a McKesson warehouse — full of supplies that will never be used but have already been purchased, effectively throwing money away. Employees don't have a defined process for doing their jobs, so they end up dropping claims and forgetting to follow up on collections. The surgery center should have a pervasive culture that touches every area of the facility, Mr. Zasa says. This doesn't just mean purchasing and printing out generic policies and procedures for a small business; it means truly understanding how each role in the ASC contributes to profitability and advising staff members on how their tasks should be performed. Staff members should know how to answer the phone, how to drop claims and how to audit processes to track progress. Mr. Zasa says the surgery center should also have an employee bonus program in place that provides tangible financial rewards for good work. The bonus program should not be a "guessing game": Employees should understand they will reap exactly what they sow. 2. Recruitment. According to Mr. Zasa, the Alabama football program has had a top five recruiting class for the last five years — and they have won two national championships. "This is not a coincidence, but it is a mistake to believe that recruiting players is the solution," Mr. Zasa says. "You must have a superior system and superior execution." This doesn't necessarily mean recruiting "stars" if they won't work with the other members of the surgery center, Mr. Zasa says. "We spend a lot of time with staff members, and we have pre-screening tests to make sure they're a good fit for the center," he says. While a small surgery center can't necessarily implement full-time training for each employee, Mr. Zasa says it helps to have regular on-site training and presentations about the center's culture. Physicians and anesthesia providers should be similarly recruited to work within the "system" of the center, he says. Anesthesia groups should be able to turn rooms quickly, choose appropriate drugs for the surgery center and have a strong interest in the quality aspects of the ASC. "You want anesthesiologists and CRNAs who have an interest in outpatient surgery," he says. The same is true for physicians: Every physician recruited to the center should fit within the center's strategic plan, bringing a needed specialty and an eye towards quality improvement. The physician should also get along well with the other providers at the center. 3. Execution. Execution is about completing a series of small tasks that create success in the long run, Mr. Zasa says. A football team can't win a championship just by thinking about it; the team has to run drills during every practice and concentrate on every individual play in order to succeed. Your surgery center might have a good system and great players but fail because of poor execution, Mr. Zasa says. He says execution comes down to what your staff does on a daily basis. The big picture is useful to keep in mind, but every staff member should primarily be focused on his or her daily tasks. If a team member is distracted by thinking about their upcoming vacation or a fight with their spouse, they will jeopardize the success of the ASC just as a football player would jeopardize the potential to win. "Every day, your staff should be thinking, 'This is the job I need to do today,'" he says. "It's about focusing on what's important now." Over time, completing those small daily tasks will add up into long-term success. © 2012 Becker’s ASC Review. Reprinted with permission from Becker’s ASC Review. BeckersASC.com


Strategies For a Turnaround 1

Five Steps Taken by Florida ASC to Remain Competitive This article, which appeared in Becker’s ASC Review, outlines key initiatives taken by ASD Management to successfully turnaround the Surgical Center for Excellence in Panama City, Florida. by Leigh Page The Surgical Center for Excellence in Panama City, Florida, has taken several steps to keep itself on solid financial footing. Sue Glendon, administrator of the two-OR center, identifies five key steps the center has taken in the past 6-9 months. 1. Changed suppliers. The ASC identified about $53,000 in yearly savings for supplies. This involved moving from one vendor to another for a variety of supplies, such as anesthesia tubing. 2. Switched to a new GPO. By switching to a new group purchasing organization, the ASC expects to save almost $20,000 per year. 3. Began working with a reprocessor. For the first time, the ASC is contracting for reprocessing of equipment such as burrs and blades. In an arrangement with reprocessor Medisiss, the cost of reprocessing is half the cost of buying new equipment. It is still too early to estimate the savings, Ms. Glendon says. 4. Adding a procedure room. The center is in the process of getting authorization to build a procedure room for pain cases. Pain cases are currently being done in ORs, making it more difficult to schedule surgery cases there. 5. Looking to add physicians. The ASC currently hosts orthopedics, ENT, dental, podiatry and pain management. It is looking for an orthopedic surgeon or to add a new specialty. While the area has several ASCs, Ms. Glendon says her center has a competitive edge. "We have high patient and physician satisfaction," she says. "Once physicians start working here, they want to stay." © 2010 Becker’s ASC Review. Reprinted with permission from Becker’s ASC Review. BeckersASC.com


Strategies For a Turnaround 2

Five Ways Florida Surgery Center Made Itself Profitable ASD Managements’ Surgical Center for Excellence in Panama City, Florida went from losing as much as $40,000 a week in 2008 to showing better than benchmark profits in 2009. The two-OR center hosts orthopedics, ENT, dental, podiatry and pain management. Sue Glendon, administrator of the nine-partner center, identifies five key ways it became profitable. by Leigh Page 1. Amped up efficiency. The center began to flip-flop ORs. If a surgeon has cases throughout the day, staff sets up one room while he is finishing a case next door. This is especially helpful for orthopedic cases, which take longer to set up. 2. No holds barred on new technology. When the center introduced Olympus equipment for shoulder and knee surgery, it didn't just buy one piece. It bought one Olympus device for each room. This gives us more flexibility in scheduling, Ms. Glendon says. 3. Well calibrated staffing. Ms. Glendon watches staffing levels very carefully so as to avoid overstaffing or paying overtime. For example, when the ASC has a 14-hour day, she brings in per diem staff and avoids overtime. 4. Improved collections. The ASC brought billing and collections in-house in 2009. "While outsourced billing is impressive, we have found that having our own dedicated billing person is a great advantage," Ms. Glendon says. To help the center's one in-house billing person, other business office staff members are cross-trained in billing. 5. Lean inventory. The center has cut back on inventory. This is done by placing frequent orders and using a vendor who delivers several times a week. © 2010 Becker’s ASC Review. Reprinted with permission from Becker’s ASC Review. BeckersASC.com


Strategies For a Turnaround 3

The following is an excerpt from 20 ASCs Performing More than 10,000 Cases Annually that appeared in Becker’s ASC Review. The excerpt outlines ASD Management’s turnaround strategies to improve the performance and profitability of Kentucky Surgery Center by Jaimie Oh and Rob Kurtz   Kentucky Surgery Center (Lexington, Ky.) Annual case volume: More than 10,000 cases since 2007 Specialties: Orthopedics, ENT, gastroenterology, general surgery, plastics, podiatry, dentistry, pain management, urology, vascular, colorectal, and pulmonary Details: The Kentucky Surgery Center, which opened in December 1986 and is accredited by AAAHC and Kentucky Medicare, is a 28,000-square-foot center with seven ORs and three procedure rooms. This physician-owned facility was started by a handful of surgeons and anesthesiologists and now has more than 100 surgeons on staff. Keys to building/maintaining volume: Administrative Director Glenda Beasley, RN, says maintaining high case volume stems from the staff and physicians jointly providing quality patient care with excellent patient outcomes. "Raising the bar with expectations of only providing care that can be parallel to none is the goal of the center on a daily basis," she says. "Every team member must buy into the notion of bringing their top performance and positive attitude everyday to maintain success on every level." © 2010 Becker’s ASC Review. Reprinted with permission from Becker’s ASC Review. BeckersASC.com


Growing Your ASC, Q&A With Robert Zasa

By Renee Tomcanin Q: Solid business fundamentals are essential to the success of ASCs. What can centers do to ensure their processes are running as effectively and efficiently as possible? Robert Zasa: Case costing remains as important as ever. At our centers, we are currently running some spring housekeeping to see where we can reduce items we buy. For example, we may see a reduction in reimbursement from HMOs when it comes to surgical implants. In this case, we go back to the payor and try to renegotiate rates. We will be honest with the payors and explain that we can't afford to do the cases at the current rates, which will, in turn, force them to go back to the hospitals and pay a higher rate. Often, we will be able to negotiate a new rate. Aside from reviewing case costs and reimbursement rates, we look at all areas of the practice, including staffing costs, suppliers, etc., to see what we can do to get better pricing. Recently, we've been able to work with our GPO to contract for more items on more of discount. We've also shopped distributors to see if we can get better pricing. Overall, though, staffing and supplies account for the biggest variable costs in an ASC, and we make sure we are reviewing these areas. Q: ASCs continue to have concerns over falling reimbursements, as they have in the past. How can ASCs make sure that they are receiving adequate reimbursement on their cases and what should be done to improve these rates? RZ: As with case costing, ASCs should review their reimbursements per case. At our centers, we review one specialty every month so that it becomes a routine practice. We also perform a retroactive contract analysis of the top 20 or so procedures at our ASCs by CPT code. The top 20 codes will typically represent 80 percent of your business at your ASC. Using these codes, we perform a payor breakdown, including case volume per payor, so we can track any disparities among the rates. You want to make sure you have a good sense of what you are doing per payor. For example, you might discover you are doing 200 cases for Cigna at $100 and 300 for Blue Cross at $50. This way you can see what insurers are more profitable for your center and which ones it may be necessary to renegotiate with. ASCs should also receive annual notification of changes in reimbursement from payors, so that they can prepare for significant changes. Q: What opportunities for growth exist for ASCs currently? Are there any new developments or procedures beneficial to service lines in ASCs? RZ: One opportunity we've taken is to go back to our existing physicians to make sure that they are maximizing the use of the center. We have also examined CMS's list of newly approved procedures for ASCs and ask our physicians what they are willing to or want to learn. For example, we had a general surgeon say he was interested in learning new endoscopic procedures. We already had the equipment for other specialties, so it was worthwhile to have the surgeon train on the new techniques and add them to the ASC. Keeping constant communication open with your investors will help you to gauge the interest of your surgeons. Spine and retina also remain popular new areas for growth, and, again, we add these specialties according to physician interest. Retina is now paid by Medicare, so it can be a profitable addition for ASCs. We've had outside surgeons from other ASCs come in and demo these areas for our surgeons, and if there is interest we look into adding the procedure. Q: Reports have shown that more new physicians are choosing the hospital setting over private practice. How can this effect the ability of ASCs to recruit new physicians? RZ: Hospital employment can be good for ASCs that are in joint ventures with hospitals as it means new physicians will continuously be added on to the center. ASCs can also benefit in entering into joint ventures with hospitals, as the recruiting office will see the surgery center as key to attracting new surgeons. For instance, a hospital may be attracted to a new orthopedic surgeon, and the ASC can help bring the surgeon in because it can offer a place where he or she can work and have ownership. © 2010 Becker’s ASC Review. Reprinted with permission from Becker’s ASC Review. BeckersASC.com


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