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Developing a Spine-driven Ambulatory Surgery Center: The Essentials for Success
Posted in Surgeon as Entrepreneur | Nov 2010 | Comments (0)
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Co-authored by Catherine Kowalski
Spine Focused Ambulatory Surgery Centers (ASCs)
Spine procedures in the outpatient setting are becoming more prevalent. With advances in technology and anesthesia, we are seeing a steady migration in spine from the inpatient to outpatient setting. It makes perfect sense – patients enjoy the advantages and ease of having procedures done at an outpatient center, while physicians enjoy the efficiencies they experience over the hospital setting. Further, when planned appropriately, a spine program can be financially beneficial for the partnership. While all of this sounds great, it does require careful planning and implementation.
One must consider whether physicians are open to performing outpatient spine procedures and gauge their experience in performing minimally invasive spine surgery. The medical staff needs to accept the concept and the differences between the outpatient surgery center and the hospital setting. We suggest building your program around a physician or group that has been performing minimally invasive surgery (MIS) and is comfortable in that skin. That confidence and experience will rub off on everyone.
Financial Analysis
The cornerstone of any business plan is financial analysis and what it reveals for potential investors. It’s imperative to have a thorough understanding of each element that drives the business financially. Developing an ASC relies on the understanding that surgical case volume drives project scope, which drives construction, equipment and working capital costs and thus, determines the capital and investment needed to develop and operate the ASC. Let’s examine some of the critical points related to the cost of a project, and the investment required.
Project Scope. Be careful to not overbuild a facility beyond its capacity. This is perhaps the number one reason for failure. It’s easy to overbuild, which creates undue stress on the financial performance of the ASC. It’s better to under-build initially and plan future expansion. Approximately 600 spine surgical cases annually will justify one operating room.
Surgical Case Volume. This information defines the scope of the facility and determines the net revenue. It’s vital to accurately analyze the surgical case volume by CPT code. Determine the universe of surgical cases by physician and always calculate the net case transfer to the ASC, factoring in issues that discount volume, including insurance contracts, regulatory limitations, hospital politics, convenience, scheduling and surgeon preference and behavior. For a conservative analysis, consider 50 percent of the surgical case universe.