It's a growing trend: Hospital off-site centers
Trend predicted to continue into 2012
By Stephen W. Earnhart, MS
CEO
Earnhart & Associates
Austin, TX
While it is difficult to surprise me anymore, I discovered that in 2011 we opened more not-for-profit, freestanding, off-site hospital surgery centers then we did actual for-profit surgery centers. In looking at our current workload and "pipeline" projects, it looks like the trend is going to extend into 2012.
Huh!? Who would have guessed?
It actually makes a lot of sense for the second decade of the 2000s.We are noticing that fewer surgeons are investing in surgery centers, building them, or leaving the hospital security blanket to become involved.We are also seeing more surgeons becoming employees of the local not-for-profit hospitals, thus removing the threat of competing with the local hospital.
The continued uncertainty over Obama-care is killing many surgery center projects as potential investor surgeons are nervous about the elections and potential impact it could have, not only on their practice, but on the industry as a whole.The murky waters are having an effect.We have seen that far fewer surgeons are willing to make a $60,000 to $150,000 surgery center investment for a reasonable ownership share.While usually that money comes back to them within a few years, it is still a tough check to cut.
Hospitals, while not flush with cash, certainly have more than surgeons to invest in new facilities.With more surgical procedures going outpatient, investing in a physical/hospital operating room expansion is questionable.While probably not completely accurate, I understand that adding one operating room to a hospital environment is close to $3 million. Assuming that hospitals typically add three operating rooms at a time, it is far less expensive and much less disruptive to build a five-operating room surgery center with investors financing the leasehold improvement in the rent at a fraction of the cost.
Granted, there is no opportunity for the hospital to joint venture such an expansion, which is key to many surgeons, but the surgeons are less willing to put up the cash anyway, assuming the facility is in a convenient location for them and their patients.
If we take the surgeons at their word, the vast majority of them favor a time-efficient surgical environment over a distribution. Clearly that is not 100%, but in interviews with more than 5,600 surgeons on their preferences, an efficiently run surgery environment with rapid turnover and a caring, personable staff is their number one motivator for where they do their surgery.
Not all satellite hospital surgery centers are successful. After reviewing many of them, the key success indicators are design and staff.
Using the same (dare I say it?) boring architects to design the new facility is not a good idea. The reason many hospitals are inadequate in handing outpatient surgery is that they were designed around inpatient cases. There are many architects who have extensive experience in outpatient services, especially ambulatory surgery centers, who can add exciting features. Take the time to interview them.
Simply building a state-of-the-art new hospital outpatient department and rotating the existing hospital personnel usually will not bring success. No, it will not! The new facility requires dedicated, hand-chosen staff that the surgeons help identify. You want hungry, marketing, motivating staff — that means they smile! — working in your new center. Don't settle for less.
Managing the facility is up for grabs. Some hospitals can do it quite well. Other should stick to the experts and let them run it for them.
If the hospital has an exclusive agreement with an anesthesia group, chances are they will provide that service at the new location as well. Like the staff at the center, anesthesia staff needs to be hand-picked, as not all anesthesiologists are the same. You know what I mean!
Other pluses include ample parking in the new location, direct patient access to the facility, ability to retain hospital reimbursement, no "profit sharing" with surgeons (and no costly investment for the surgeons), improved patient satisfaction, and lastly and just as important, the ability to replace the outgoing outpatient cases with more intensive inpatient volume.
Get cranking! [Earnhart & Associates is a consulting firm specializing in all aspects of outpatient surgery development and management. Contact Earnhart at 13492 Research Blvd., Suite 120-258, Austin, TX 78750-2254. E-mail: [email protected]. Web: www.earnhart.com. Twitter: @SurgeryInc.]
While it is difficult to surprise me anymore, I discovered that in 2011 we opened more not-for-profit, freestanding, off-site hospital surgery centers then we did actual for-profit surgery centers. In looking at our current workload and "pipeline" projects, it looks like the trend is going to extend into 2012.You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
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