Empowering Physicians One Center at a Time

Empowering Physicians One Center at a Time

By Kelly M. Pyrek

Daniel R. Tasset, president and CEO of Kansas-based ASC Group, LC, has spent much of his career developing ambulatory surgery facilities and consulting to clinicians who wish to own and direct their own outpatient centers. Through working with more than 600 physician partners, Tasset has developed an innate sense of what makes a successful surgery center tick and offers his views on smart facility development.

Q: What are the critical dynamics that are influencing the development of ambulatory surgery centers (ASCs) right now?

A: There are two major dynamics at work currently. The first is often called "consumerism," a trend spurred by the baby boomer generation. These healthcare consumers are affluent, educated, aggressive buyers; they are more connected and more demanding than any other consumer group we've experienced. They want lower-cost healthcare, greater convenience and better outcomes -- all the things that savvy consumers demand, they are demanding in healthcare. As a result, the whole stage gets set for physicians and healthcare providers to meet these needs in the ambulatory setting. The second dynamic involves reimbursement to physicians. Reimbursement has either been stagnant or decreased, and physicians are looking at ways to augment their income -- or at least hold onto it. These two factors account for why we are seeing a huge explosion in the industry right now.

Q: Is the current medical malpractice crisis impacting the outpatient surgery industry?

A: When you look at a physician's revenue you must look at not just what they get paid, but also the expenses associated with running their practice. If reimbursement goes down or their expenses go up, it has the same influence, so malpractice causes physicians and surgeons to search for supplemental income sources such as starting a surgery center.

Q: Acknowledging the continued building boom in outpatient surgery centers, do you think the industry is approaching build-out or not even close?

A: From a very broad perspective I think we are halfway to build-out. Since the creation of the first surgery center in the mid-1970s, about 3,000-plus surgery centers have been developed. Research and statistics tell me we are about halfway there. Before we see true market saturation I think we will be in the 5,000 to 6,000 range. But it's not going to take another 30 years to get there. The longest it will take is 10 years, but probably more like six to seven years to reach build-out.

Q: Do you think concepts like the "healthcare village" or the "medical mall" are the wave of the future?

A: They are driven by consumerism and what the patients are demanding. It's all about convenience. The medical mall and the healthcare village are a continuation of what the consumer is asking for and they will get it. Instead of a lone surgery center or a physician's office, you will see healthcare campuses that contain both of these elements, plus an imaging center, a women's healthcare center, a cancer center, lab and maybe a specialty hospital. We will see what author Regina Herzlinger envisioned in her book Market-Driven Healthcare as a whole bunch of "focus factories" doing what they do best -- focused healthcare in the same physical location. ASCs are just part of that growing trend of hybrid healthcare concepts; they fit right in and will continue to grow. You must look at the future and the future is clearly a campus-type setting with a whole bunch of little focus factories. We are advising physicians to try to buy a site that is expandable, so other healthcare services can go around their surgery center. We advise them not to buy a site where they are by themselves and nothing can be built in the same area. Go for options that allow for growth and expandability.

Q: What is the biggest mistake a physician can make when developing an ASC?

A: The biggest mistake physicians make is overbuilding. They need to start small. I don't know if being too conservative is smart but I tell them to "right size" it at the beginning. It's advisable to start small and add on space and services later, when the practice is more established. They also tend to hire too many employees because they overshoot their initial caseloads. They also think that just because they can run their medical practice with a great deal of efficiency at a hospital, they can expand this to other facilities and it is a different beast -- particularly when they develop something beyond an ASC. A surgical hospital is much more complex than their office or an ASC. Another mistake can be going it alone; they think they can do it with little input from the outside but it's a complex business. Hiring a consultant has real value. Statistics prove that a facility that has a partner who takes care of the business issues while the physician handles the clinical issues performs better in the market. Physicians are starting to ask themselves why they would want to go it alone when someone else can (take care of business aspects) a lot better than they can.

Q: How good are physicians at the strategic planning required to start a surgery center?

A: Physicians are pretty good at knowing what needs to be done. It's just the execution of their to-do list that stumps them sometimes. And largely it's because they're very busy. They are occupied by practicing medicine, so getting the day-to-day business done is the biggest challenge.

Q: What specialties are particularly hot right now?

A: When certain aspects of the healthcare industry explode, we generally refer to it as "low-hanging fruit." So, the most profitable areas of practice are generally the areas that see the most growth -- and that's orthopedics and cardiology, but the rest of the specialties are right in the mix.

Q: Is proposed legislation against the development of surgical hospitals and restrictions on physician ownership having any impact on the industry?

A: If you look at the driving forces of consumerism, proposed legislation is having no effect on the healthcare industry. However, it's having a huge impact on facilities by making them formulate strategies in case something happens legislatively. If certain laws are passed, having a corporate partner makes even more sense because it gives them an exit strategy. In my mind, there is no slowdown at all because the physicians still believe outpatient surgery centers and surgical hospitals need to be developed and it's the right thing to do. Whatever happens, they will have a back-up plan. Every obstacle that is put in front of them represents an opportunity. No one is going to stop what the consumers are demanding -- it's a runaway freight train right now.

Q: What has been the greatest mistake ASCs have made in the past?

A: Some of the outpatient facilities that were built in the 1970s and 1980s can't accommodate what is going to be demanded of them in the future. They couldn't foresee the magnitude of the ambulatory surgery marketplace, not just from a demand standpoint, but from a clinical standpoint. They needed to consider how much more volume could have been done on an outpatient basis if they could have envisioned the technological advances we have today. The size of the ORs are not big enough, and many of those too-small surgery centers can't be converted to surgical hospitals. So, they didn't look far enough into the future, but then again, hindsight is always 20/20.

Q: What is the No. 1 predictor of success when developing an ASC?

A: When we talk to doctors I ask them why they want to start an ASC and I tell them if your primary motivation is because you are mad at the hospital, then you shouldn't do it. If their No. 1 motivating factor isn't providing the highest level of care, we won't do the project. They must be committed to the process and they must have a passion about delivering what the consumer wants. I think they need to understand the dynamics of the market they are in. They must have a good feel for what the payors need and want. They must understand the local acute care hospital and what their issues and needs are and try to create a strategy together. Or maybe it means going off on their own. The most important things are making sure their heart is in the right place and they understand their market.