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By Stephen W. Earnhart, MS
President and CEO
Earnhart and Associates, Dallas
One of the things I like most about writing this column is the feedback from readers. Many of you have told me that I often serve to validate your thoughts or actions. I like that, as none of us want to feel as though we are out on the edge alone — myself included.
The past two columns on satellite expansion clearly hit home with hundreds of you. I have had a tremendous amount of feedback from many sections of the industry. I thought it might be helpful to share some of the comments from the different sectors with you, as well as some previous questions I’ve received on the subject. I have found that if one person asks a question, there often are many more thinking about it as well. I have tried to use the exact message they sent to me, but for obvious reasons, their names are withheld.
Question. From a not-for-profit hospital CEO in the Southeastern part of the United States: "I agree with your reasons for the expansion of the ambulatory surgery center [ASC] market via a satellite center. We have considered it for some time. After your first article on this series, we had a board meeting of the hospital and, using many of your reasons, decided to begin the process. While the board is in favor of such an expansion, they are not in favor of selling off our surgical business to the surgeons’ in a joint venture. With that understood, can a satellite location be successful in a location 17 miles from our main campus?"
Response. Being in a joint venture with surgeons does not ensure the success of any ASC. If you feel that you have the support of the staff and include them in the planning process, you increase your chances of success via their usage of the center. While you are not going to include physicians in an equity agreement, you can increase your success potential by assimilating many of the positive aspects of a joint equity position such as rapid turnover, on-time case starts, consistent staffing, easy accessibility for patients and users, and receptiveness to surgeons’ ideas.
Question. From an administrator of a surgery center in the Midwest: "We currently have two ASCs up and running. We are planning a third about 25 miles from our original location. Some physician investors in the other two centers are upset that if we build this center, they will lose cases to surgeons who live closer to the proposed new center.’ We are going to do the center anyway, but I don’t know how to respond to their arguments. This can be a nasty group sometimes, and I would like to expand but not anger my investors. Any ideas?"
Response. First, the investors are right. They potentially could lose as users and investors as the existing centers shift cases to the center in order to convenience the center and its patients. Since you have made the decision to move forward regardless, I suggest that you allow a certain amount of equity to be purchased by the original partnership to offset the potential loss of income to investors. (Follow-up: This suggestion worked. The original investors are allowed to purchase up to one-half of 1% in the satellite center.)
Question. From a nurse manager in a mid-Atlantic state: "Thank you so much for these two articles! We have been begging the organization to let us expand to the other side of town. We are overloaded with cases, and our efficiency is significantly less than what it used to be because it is so difficult to post cases and get 6,500 patients out of a center that is 14,000 square feet and has five operating rooms. We now have permission to open a new satellite center, and we couldn’t be happier! (Of course, anesthesia [staff are] upset, but they always are anyway.) Thanks again for validating what we have been saying for two years!"
Response. Most of what I write is only validation to others’ ideas to begin with. Glad it helped!
Question. One more from a surgeon in New England: "Our hospital is adding another surgery center about 10 miles from the current center. This is part of their master expansion plan.’ When the hospital built this surgery center about six years ago, we surgeons had no choice but to use the center, because the hospital restricted operating room space in the main hospital to help its surgery center. We have not been included in any of the decisions on this new center, nor can we participate in ownership (again). The hospital just assumes we will support it.
"One comment that came back to us from administration was, If we [the hospital] build it, they [the surgeons] will come.’ Not this time! It is our plan to boycott the center when it is finished. I would encourage you to urge your readers to include the surgeons in your planning process. Surgeons do not have to be investors, but the last time I checked, hospital CEOs and their vice presidents cannot do surgery — only surgeons can."
Response. None required.
[Editor’s note: Earnhart and Associates is an ambulatory surgery consulting firm specializing in all aspects of surgery center development and management. Earnhart can be reached at 5905 Tree Shadow Place, Suite 1200, Dallas, TX 75252. E-mail: firstname.lastname@example.org. Web: www.earnhart.com.]