Has your surgery department lost business to ASCs?

3 strategies thriving ORs are using to win back case volume

The following content is sponsored by Surgical Directions.

Recent research from Health Care Management Review confirms what hospital executives have known for years. Hospitals in markets with many ambulatory surgery centers have disturbingly high exit rates.

When surgeons migrate cases to ASCs, hospital net income is in danger. Executives and trustees often don't know how to respond. How can hospital ORs compete with surgeon-owned ASCs?

The key is to understand the surgeon point of view. Surgeons today are struggling with lower personal case volumes, lower payment and lower income. Most are spending more time in the office to generate cases. All surgeons are subject to higher quality requirements.

Simply put, ORs that help surgeons overcome these problems are able to win significant case volume back from ASCs. These ORs not only hold their own against smaller centers, they are often able to drive ASC volume down to the point of forcing competitors to exit. To transform your OR into a competitive surgical services provider, focus on three core strategies:

1. Help surgeons be more productive
ASCs excel at treating surgeons like customers. Surgeons are able to access the scheduled easily, start surgeries promptly and end their day on time. To compete, hospital ORs must provide the same level of efficiency and service. Here's how:

Make scheduling easier. In most hospital ORs, the block time system is poorly designed. Short blocks and lax rules create large, un-fillable gaps in the schedule. Surgeons have a hard time scheduling cases even though utilization is low. To fix this problem, set a minimum block length of eight hours and require physicians to maintain 75 percent utilization. Hospitals that strengthen block rules are able to provide more surgeons with "premium access" to OR time.

Help surgeons optimize patients for surgery. Surgeons devote significant time and resources to preparing patients for surgery and coordinating clearances. Leading hospitals have created protocol-driven preadmission testing departments that assume responsibility for patient preparation. Enhancing your PAT processes will save surgeons time and give them greater assurance of a good outcome. Surgeons respond by bringing more cases to your OR.

Get surgeons in and out quickly. Delays and cancellations are frustrating for surgeons. Enhancing your PAT process will reduce late starts and canceled cases by ensuring patients are ready for their procedure. In addition, several innovative ORs have instituted a daily huddle — a brief afternoon meeting involving anesthesia, nursing and other stakeholders. Participants examine upcoming cases, verify patient clearance and resolve any problems that could disrupt surgeons' schedules.

Speed up turnover. Long gaps between cases are a major source of surgeon dissatisfaction. Typically, the problem is that OR staff take a slow "step-after-step" approach to breakdown and setup. Hospital ORs can often match ASC turnover efficiency by replacing sequential steps with parallel processes. Dedicated turnover teams can streamline processes even more. In addition, enhance anesthesia service standards and nursing incentives to encourage workday efficiency.

These operational improvements have many collateral benefits. Improving quality through better PAT will boost your OR in the eyes of primary care physicians, leading to more referrals. And block time utilization standards discourage surgeons from taking all their profitable cases to ASCs, creating a better payer mix.

2. Help surgeons fulfill their aspirations
One reason ASCs are successful is that they represent a financial opportunity for surgeon investors. To compete with ASCs, hospitals must provide surgeons with rival opportunities to increase income.

One strategy is to help surgeons generate more case volume. First, help surgeons understand how to market themselves to referring physicians. Many surgeons are very reluctant to "sell themselves." Show these physicians how to use in-services and other educational opportunities to build referrals.

Second, support surgeon business by plugging the holes in your hospital's own referral networks. Many hospitals with employed physician networks have not succeeded in keeping surgery referrals in house. Create a policy requiring employed physicians to provide written justification for any out-of-network referrals. In addition, leverage your hospital's physician-hospital organization contracts to capture full surgical volume.

Hospitals can also create new programs that build referral streams for the surgical staff. An employer-based occupational health program, for instance, can generate many referrals for loyal orthopedic surgeons, hand surgeons, spine surgeons and other specialists.

Keep in mind that financial goals are far from being surgeons' only motivation. Historically, surgeons have invested in ASCs for the opportunity to create a high-quality clinical environment. The good news is that hospitals can provide the same opportunity — by giving surgeons "ownership" of the OR.

The most competitive hospital ORs today are run by a surgical services executive committee. An SSEC is a multidisciplinary governance body that puts surgeons and anesthesiologists in charge of the OR. Physician members set strategic goals, establish operational policies and sponsor process improvement initiatives. Hospitals that adopt the SSEC model see dramatic improvements in efficiency, costs, revenue and profitability. They also provide surgeons with a very attractive alternative to ASCs.

3. Help ASC investors exit the market
Many hospitals are now pursuing an emerging strategy for countering ASC competition — acquiring rival ASCs. The right course depends on your market and the characteristics of your ASC competitors. But for many hospitals, acquisition is a sensible strategy.

First, acquiring a well-run ASC may allow your hospital to obtain the efficient outpatient surgery operation that it has not been able to build. You get instant access to market share, reputation and proven quality. Second, an ASC acquisition can often be structured to produce a neutral effect on the hospital income statement. Ownership transition will usually enable the ASC to bill under hospital rates, providing revenue enhancements that offset the purchase price.

Hospital acquisition makes sense for surgeon owners, too. Many surgeons who invested in ASCs during the 1990s now want to divest as they prepare for retirement. Unfortunately, fewer young surgeons today are interested in entrepreneurship. By selling all or part of their ASC interest to a hospital, surgeon owners can cash out now and avoid future capital gains tax increases. In many instances, the acquiring hospital hires the former ASC owners to serve as medical directors, giving surgeons ongoing control of quality and operations.

Start the conversation
The first step to implementing any of these strategies is to get to know the surgeons in your market. Understand their daily challenges, financial needs, professional aspirations and personal goals. This effort should involve not only OR management, but hospital leadership.

The better you understand how to help solve surgeons' problems, the better able you will be to compete effectively for case volume with local ASCs.

Jeffry Peters is president and CEO of Surgical Directions.

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