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Don’t Go There Doctor. Lessons Learned: Don’t Self manage and Don’t Assume it’s Getting Done!

Ronald A. Duperroir, Principal Clarity

Why is your ASC or Hospital not profitable? Why is the partnership frustrated? Why are there no distributions? Nine times out of ten it is for one of two reasons, sometimes both: The founding physician (s), with good intent, attempted to manage the operations absent of the tools and time to make it successful; and/or 2) The management team, while perhaps proficient in their field, is spread too thin and no one monitors the outcomes or holds them or the staff operationally accountable – the partnership assumes if they do cases (volume) the rest will fall in line as agreed upon.

We have seen this scenario over and over again and we often wonder why some groups of physicians firmly believe they have the time and energy to design, build, operate, and manage a successful ambulatory surgery center (ASC)? Certainly we all want to have the best intentions in mind during the onset and money (management fees) are a driver in this decision. But it goes without saying that ASC management isn’t easy and seasoned administrators/managers know they have their work cut out for them from the start of conception. Be it from the start of the design process, monitoring construction costs, licensing, accreditation, selecting properly written managed care contracts, the price paid for supplies and equipment and successful daily operations. From clinical and financial operations, to customer (patient) relationship management (CRM), staffing and human resource (HR) issues, operating room management (ORM) turnover times, pick list management, equipment maintenance and procurement …. All of which can be leave a team swirling in an abyss of what priorities need to be accomplished in their never-ending list of duties and demands.

Lessons learned – Lessons Shared:

1. The best operating companies don’t do it alone regardless how tempting 6 percents looks; paying six percent to a good partner is better than a cash call

2. Choose a strong management team to partner with; physicians don’t have the time to run a successful practice, render and sustain quality surgical care, maintain strong professional referral networks, and manage a personal life. Add the responsibility of managing an ASC or Hospital and something will break somewhere in the chain

3. Choose your management team wisely; bigger is not always better – knowledge is the foundation, but also look at personality fits.

4. Examine all your contracts line by line and not just managed care contracts; don’t be afraid to say NO!

5. Don’t over build and over equipment your space; you’ll have a huge monthly debt for items you don’t need and will regret for years to come

6. You are in a manufacturing business with a mission to produce a successfully performed procedure (surgeries); in the big picture your are a healthcare manufacture. Think process, product flow, use of resources, and raw materials needed or on hand.

7. Watch the Expense line on your Profit and Loss Statements; monitor, monitor, monitor … then make continuous improvement (adjustments) – remember the feedback loop in all successful manufacturing models

8. Have the ability to know the cost of inventory on hand; if you don’t watch this closely, you will see items stacking up in some of the most bizarre places

9. Understand what a procedure cost from beginning to end; how much does it cost to produce a procedure, what’s your return?

10. Watch those contractual adjustments and daily cash operations; who has authority to adjust, at what amount and when?

11. Understand your accounts receivable (AR); what does it really mean? Do you match your AR with denials, short pays, etc..

12. Ensure there is a process for insurance verification, authorization and collection of deductibles and copayments.

13. Keep your chargemaster current and accurate; this is so very important and so very misunderstood

14. Choose your partners wisely; don’t spread yourself too thin with multiple specialties with a depth of one

15. Choose the right clinical leadership and team; if the clinical environment goes south a chain of negative affects will occur

16. Keep an eye out on working capital; if it is not there challenges begin and evidentially snow ball into operations and the pockets of others

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