Monitor utilization to ID nonproductive surgeons
Deadweight. Deadwood. Nonproductive. None of these adjectives are very flattering, and surgery center managers avoid using these terms to describe members of their medical staff; however, the reality for physician-owned surgery centers is that none can afford to have surgeons on staff who don’t bring cases to the center.
This issue isn’t just a financial one, says Henry H. Bloom, president of The Bloom Organization, a consulting and development firm for surgery centers. "I’ve managed centers in which this situation exists, and I’ve found that if investing partners are receiving distributions from surgery center profits but are using other facilities for their procedures, resentment among the partners is bred, and other partners begin to think about performing procedures at other facilities," he says. A general feeling of, "Why should someone else benefit from my commitment to the center when they have no loyalty?" does not create a good work environment for anyone in the facility, he adds.
From a regulatory perspective, you have to stay aware of anti-kickback laws that protect physician owners when they perform at least one-third of their surgical procedures in a facility in which they own, says Joshua McKaye, Esq., an attorney with McDermott Will in Miami. Safe harbor laws that define protections for physicians can be invoked as a reason for a physician partner to increase use of the center or opt to sell his or her shares back to the corporation, he says.
At Santa Barbara (CA) Surgery Center, "We don’t use any safe harbor, or anti-kickback laws, as negotiating points with our physicians who are not productive," says Michael Sawyer, administrator. Because his participation agreements are based on level of investment rather than numbers of cases, Sawyer does not believe that the safe harbor argument is the best for his center.
"What we do focus upon up front is the likelihood and the good intention of the surgeon to use the center," he says.
Make sure that the surgeon’s specialty, location, and patient base make him or her a good candidate not only as an investor, but also as a surgeon practicing in the center, Sawyer explains. "You will encounter some situations in which a surgeon plans to use the center, but as the facility is developed, plans change and it may not accommodate the surgeon’s needs."
For example, Santa Barbara has one investor who is an ophthalmologist who specializes in retina procedures. "Three years ago, we planned to accommodate his needs, but we didn’t know that the equipment would be so expensive and the reimbursement would drop to a level that it is not feasible to offer the service," Sawyer says.
The best way to deal with nonproductive surgeons is to craft your partnership agreement carefully, says McKaye. "I recommend that the governing document address the issue of deadweight physicians by contractually identifying events that can trigger a buyout of the physician’s investment," he says. "A failure to perform one-third of procedures at the center, or even a majority vote of other partners when a partner fails to attend meetings or meet other obligations of the contract, such as quality assurance activities, can be two triggers."
Peer pressure among the physician owners can be very effective, says Bloom. "These physicians are all involved in the community, are usually friends or members of the same country club, and don’t want to be seen a disruptive to a business venture," he explains. "If one partner is not meeting the contractual obligations, the other partners can vote that by not meeting the obligations, the nonproductive partner is not good for the business."
If the partnership agreement is specific about expectations and consequences of not meeting obligations, then approaching a nonproductive physician is straightforward, Kaye says. Buying out the physician’s share of the business at a fair market price is the most common resolution, he adds.
Before reaching the point of buying out a physician’s share of the surgery center, be sure you are monitoring utilization on at a least a weekly basis so you can identify problems early, Sawyer suggests. "If you see a drop in utilization, talk to the surgeon to discover the reason."
Many times you’ll discover a need to educate the surgeon’s office staff to address the problem, Sawyer adds.
If a surgeon is approaching retirement and scaling back on cases, be sure you talk to him or her about encouraging a new partner or the surgeon who will take over the practice to use the center, says Sawyer. Even if your partnership agreement requires that the retired physician sell back shares of the business, the new surgeon may be eligible as an investor and definitely will be able to practice at the center as a part of the medical staff, he adds.
The key to keeping physicians from becoming nonproductive is to communicate on an ongoing basis, says Sawyer. "I carve out one or two afternoons each week to visit our physicians to make sure everything is going well for them," he says. "I also use the time to update them on the center’s activities."
Sometimes Sawyer uses this time to ward off problems and complaints. Recently, he knew that they had a very busy Friday schedule. "So I told a few of our key physicians that were scheduled that morning that the good news was our busy schedule, which was good for our bottom line, but that the bad news was that some operating rooms might not turn over as quickly," he recalls.
He told them that the staff would be doing their best to accommodate their schedules. "The physicians were all surprised that I came to their offices to tell them to expect the busy schedule, but none were unprepared for a busier-than-usual Friday at the center, so there were no complaints that day," Sawyer says.
Deadweight. Deadwood. Nonproductive. None of these adjectives are very flattering, and surgery center managers avoid using these terms to describe members of their medical staff; however, the reality for physician-owned surgery centers is that none can afford to have surgeons on staff who dont bring cases to the center.You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
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