From Office-Based Practice to ASC: 5 Pitfalls to Avoid

February 3, 2015
Anna Gengel

Looking to make the leap from an office-based medical practice to an ambulatory surgery center? Avoid these five common mistakes.

A growing number of physicians are either migrating their office-based practice to an ambulatory surgery center (ASC) model or expanding their practice to include an ASC. And if not, odds are that they've probably given it some serious thought. And it's not only GIs, ophthalmologists, and spinal specialists that are making the move.

The office-based practice has grown more challenging over the years. Issues include the demise of out-of-network revenue streams, the material decrease in managed care professional fees, the reduced access to in-network patients driven by payers who are increasingly focused on clearly defined provider networks that offer greater clinical integration, increase in patient copayment responsibilities, and the broad enforcement of office-based accreditation coupled with CMS requirements that penalize physicians for a lack of meaningful use and quality reporting. In short, costs have climbed steadily while revenues have fallen rapidly. And while there are numerous benefits to the ASC model that help to push back the onslaught, the transition or expansion is not without its pitfalls.

Here are the five most common mistakes made by physicians making the transition to the ambulatory surgery center structure.

1. Expecting the process to be quick and without obstacles
In "certificate of need" states such as New York, the process typically takes between 16 months and 18 months. Financing, real estate issues, and state department of health approvals are just three of the areas where delays can happen.

2. Expecting to be successful without the use of outside professionals
Doctors cringe at patients who say they "Googled" their symptoms and insist on a course of treatment that at best is off base and at worst is downright dangerous. Well, when it comes to ASC development, don't be that person. It's the rare breed of doctor who is an expert in his or her given medical field and equally an expert in the areas needed to launch an ASC, which includes regulatory, construction, real estate, and financing. Most physicians have a hard enough time handling the supervision of these outside professionals while maintaining their existing office-based practice. It's next to impossible for them to also play the roles of banker, lawyer, ASC compliance consultant, and construction crew chief.

3. Not understanding the enormity of the ASC launch process
Launching an ASC requires a substantial commitment from the participating partner physicians. ASCs are beneficial for patients, for health insurance companies, and for the physician owners themselves, but they take a tremendous amount of work to get off the ground. Among the areas that need to be addressed when creating an ASC are legal "partnership" agreements, construction of a new facility, creating an IT infrastructure, staffing, compliance issues, and financing issues.

4. Choosing the wrong vendors, outside consultants
It's not just enough to rely on outside professionals and vendors, but care needs to be taken in hiring the right ones. Attorneys and accountants may have experience in supporting office-based medical practices, but do they have ASC experience? Those with ASC experience are in a better position to navigate the nuances that come with developing an ASC. Even when considering an ASC development/management company and the architectural firms, look at the types of ASCs they've previously developed and where they've developed them. Do they have experience working in your specialty? Every state department of health's rules and regulations are different. Do these firms have experience in your state? The best choices usually have experience in the local market and are familiar with state compliance rules.

5. Failure to utilize outside financing to bankroll ASC development
 Some physicians – and by some, we mean too many – believe they can and should bankroll the launch of a new ASC themselves, and save on interest and finance fees. That means participating doctors will either pool their personal funds or use cash flow from the existing office-based practice. Both are major mistakes. When physicians' personal funds are used, there's a tendency to cut corners. It feels like the money is coming directly out of the doctors' pockets, because, well, it is. Cutting corners leads to mistakes, and mistakes lead to delays, and delays mean lost revenues. Using available cash or profits from the office-based practice will put undue pressure on the practice itself – the same practice that provides these physicians (and their staff) with the livelihoods until the ASC is fully functioning. When you consider that a small percentage of ASC development is abandoned somewhere in the process, it becomes even more apparent that putting undue risk on the office-based practice makes little sense.

It's important for physicians considering the move or expansion to an ASC remember that there are a multitude of resources available to them as they begin the process, including management and development companies, the national Ambulatory Surgery Center Association (ASCA), ASCA state chapters, and a slew of conferences and webinars.

Anna Gengel is vice president of operations at Frontier Healthcare, overseeing the daily operations of each of Frontier's ASC centers and those in development, focusing on facility management, quality of care, patient flow, staffing, marketing, EHR engagement, and preparation for New York State Department of Health and CMS site surveys. E-mail her at agengel@frontierhh.com.