Growing Up

Growing Up

TSC’s Jennifer Schraag sits down with Regent Surgical Health’s Thomas Mallon to discuss potential areas of growth within an ASC.

TSC:

Mallon: There are two kinds of growth — growth of volume, and growth of profit. The most important thing is to keep focused on both of them and not sacrifice one for the other. For example, if there’s a fairly busy center and you could add 100 new colon cases or you could add 15 spine cases, the economic effect of the spine cases would far outstrip the 100 colon cases. It would be $200,000 of income vs. $30,000 of income. The wear and tear on the facility and the staff is much greater with the 100 colonoscopy cases.

Every center has its own market — it’s own local area. We found good success with neurosurgery, because neurosurgeons typically aren’t active in surgery centers, and if we can get them active in ours, they don’t do a majority of their work with us, but they do as much outpatient as they can do, and we try to work with the payors to make sure we get paid for it.

TSC: When do you know you need growth, or are ready for growth?

Mallon: When you’ve flattened in profits, and you’ve flattened in cases for a three- to six-month period. Sometimes you’re flattened because you’re flat-out sold out of space — you don’t have the empty, available OR time when doctors want to work in order to get more cases. Then you can look at a relocation or expansion to grow. Those instances are one in 10 or one in 20. More growth can occur by just managing the business tighter, watching the fringe points and moving people through the facility in a more logical way.

TSC: If you want to add new specialties, what are some of the first things you need to investigate internally before making such decisions?

Mallon: Can you get paid for the specialty? Because if it’s a specialty that is not typical for an ASC like lithotripsy, and a high percentage of your patients are Medicare or contracted, you can’t do that specialty. Quite often, neurosurgery and spine surgery is the same way. You have to look at your payor profile — what are they willing to pay you for? Then after you determine that, you can go forward and talk to the physicians about that particular specialty moving into the surgery center.

Another great specialty out there is gastric banding. It’s a bariatric procedure that is an outpatient 45 minute procedure, but it’s primarily a self-pay procedure, because most insurance companies don’t pay for it. So you work with the physician to find out if they have financing for the patients or if the patients have the capacity to pay for this on the day of surgery.

TSC: Any last thoughts, Tom?

Mallon: It’s a great time to be in the industry — with technology and anesthesia drugs, minimally invasive surgery — there’s nothing but blue sky.

Thomas Mallon is founder and chief executive officer of Westchester, Ill.-based Regent Surgical Health LLC. Mallon may be reached at (708) 492-0531 or by visiting the Regent Web site at www.regentsurgicalhealth.com. 

Sustaining Growth for Long-term Success

By Bill Davis

An ASC’s long-term success depends on management’s ability to implement strategies upfront and on an ongoing basis that sustain the center’s revenue growth. The surgery center industry faces constant regulatory, reimbursement and patient access challenges as well as internal issues of physician instability and rising operating costs. Without specific and continuous management efforts to obtain growth, internal and external factors can begin decreasing a center’s profitability and possibly impacting its viability.

Achieving growth objectives will allow an ASC unaffected by negative market factors to exceed expectations. The importance of these objectives increases the more a center is impacted by internal changes and/or changes occurring within the industry. Being in a position to assure this growth is timely depends on the previous attention management has given to growth strategies.

ASC growth is a gradual and continuous effort. Ideally, management will have developed and implemented growth strategies at a center’s inception to ensure the center is in a position to offset problems that arise. Strategies should be reviewed with all partners to obtain partnership- wide understanding of the objectives and efforts to support growth.

Progress on the initial goals should be continually monitored and incorporated into the governing body reporting process. A routine reporting process like this helps ensure that efforts are continual and strategies are modified as appropriate.

Bill Davis is the senior vice president of operations for Titan Health Corporation. Davis may be reached through the company’s Web site at www.titanhealth.com.