Wil Schlaff – Opening an ASC: Business Preparation
Here’s what to expect on this week’s episode. 🎙️
On this week’s episode, we’re continuing our De Novo series with ASC Development and Operations Specialist Wil Schlaff. He’s sharing tips for preparing the business side of the house for your new surgery center, and here’s a sneak peek of what we covered:
🏢 Facility Design: It’s essential to start preparations during the facility design phase. Present a functional plan that integrates both the clinical and business flow.
🛠️ Equipment Decisions: Whether to go with new or refurbished equipment is a significant decision. Focus on compatibility, especially with electronic charting software and practice management systems.
💸 Financing Considerations: From capital equipment financing to operational costs, partnering with a hospital or a management company can provide leverage. However, remember that personal guarantees are likely inevitable. Ensuring efficient cash flow and operational budgeting is critical.
🤝 Vendor Relationships: All operational aspects require a vendor, from supplies to anesthesia partners. When choosing, look for reliability, cost-effectiveness, and compatibility with your business’s ethos.
📈 Operational Processes: Before opening, have a robust plan for scheduling, inventory management, and other operational tasks. Efficient software solutions can play a pivotal role in streamlining these processes.
Interesting in learning more about opening a new surgery center? Check out our previous episodes:
• Michael McClain – Opening an ASC: Navigating Payer Contracts
• Wil Schlaff – Opening an ASC: Conducting a Comprehensive Feasibility Assessment
• Dawn Pfeiffer – Ask the Expert: Best Practices for Opening a New Surgery Center
• Beata Canby – Opening an ASC: Managing the Regulatory and Certification Process
• Gregory DeConciliis – Opening an ASC: Clinical Preparation
• Andy Berg – Opening an ASC: Finding Your Dream Team
Find the full episode on Apple Podcasts, Spotify, or YouTube to hear all the details.
Episode Transcript
0:00
welcome to this week in surgery centers if you’re in the ASC industry then
0:05
you’re in the right place every week we’ll start the episode off by sharing an interesting conversation we had with
0:11
our featured guest and then we’ll close the episode by recapping the latest news impacting surgery centers we’re excited
0:18
to share with you what we have so let’s get started and see what the industry’s been up to [Music]
0:27
hi everyone here’s what you can expect on today’s episode will schlaff joins us
0:33
again this week as we continue with our series of episodes dedicated to De novos
0:38
will is an ASE development and operations specialist so he has seen it
0:43
all and today we’re focusing on preparing the business side of the house for your new Surgery Center we cover
0:49
Capital Investments vendor contracts finding the right scheduling and billing software handling HR functions and
0:57
everything in between and in our news recap we’ll cover the latest collaboration between HCA
1:03
Healthcare and Google what’s going on with CMS in nursing homes The Joint commission’s New sustainable health care
1:10
certification program and of course and the new segment with a positive story about a pharmacist in Maui who saved
1:17
hundreds of lives during the wildfires hope everyone enjoys the episode and
1:23
here’s what’s going on this week in surgery centers [Music]
1:29
will welcome back to the podcast yeah Nick thanks for having me
1:35
well last time you joined us about a month or so ago we talked about more up
1:40
front in the denovo planning process we talked about feasibility assessments and preparing for opening from an overall
1:46
planning and feasibility perspective wanted to shift gears today and talk about a later stage in the process which
1:53
is preparing for opening and specifically around the business side of preparing for opening and thinking
1:59
through some of those key operational processes that need to be in place and thought through before you open your
2:05
facility so to get us started here at what point in the process should ASCS into Nova
2:12
iscs consider preparing for opening including some of the key pieces around
2:17
infrastructure equipment you want to have in place in those key operational processes
2:24
yeah that’s an interesting question because it’ll surprise a lot of people that it really starts during the
2:32
facility design phase in any given State Department of Health or health authority
2:39
they’re going to ask you when you submit your plans for approval
2:45
uh certification if they’re going to ask you for a functional plan like an operative
2:51
narrative right and in in addition to when you submit your architectural and MEP plans and this is
2:59
a side note is again you need to pay attention to the crosswalk between State
3:04
licensure and Medicare CMS requirements right because you just need to make sure
3:11
that you’re meeting both okay and so they’ll come back and they’ll ask you
3:17
the functional plan it’s pretty extensive but you really get into the clinical in the back office in front
3:26
office actually the flow of the business uh and they’ll focus on safety risk
3:32
assessments which will include things like infection control risk assessment patient handling and movement fall
3:40
prevention medication safety behavioral mental health risk security risks Life Safety
3:48
will be addressed mainly in the MEP equipment Management program and
3:53
really focusing too on the circulation patterns for the staff right which is very clinical based the visitors and the
4:01
vendors in traffic patterns to avoid things like cross-contamination and limited limiting patient anxiety like
4:08
you don’t want them going through when there’s a kid crying because he was just had surgery and so you really start
4:15
thinking about the flow of the facility at the design the facility design phase
4:21
right again a good architect that’s worth their weight in gold they’ll walk you through this they’ll listen to you
4:27
and they’ll give you options and recommendations and then you it and then at that point you’re really starting to
4:34
create and customize your policy and procedures got it that’s a helpful sequencing right
4:41
which is design functional flow policies and procedures you know I want
4:47
to come back to those policy and procedures one thing I wanted to hit on is as you think through the process you
4:52
also need to think through equipment and tooling and infrastructure and Capital
4:57
Equipment is a big decision a big purchase is you think about Capital Equipment from a budgeting perspective
5:04
from a financing perspective where does that come into play and what factors
5:10
what would influence that decision well equipment planning is a big part of
5:17
the pro forma and the costs and the startup of the facility right right and
5:24
there’s really two ways to that two perspectives right there’s one
5:30
perspective if it’s a joint venture with a hospital and or third party management development firm or an independent
5:37
facility right I and when it comes down to costs I and the financing that are
5:45
needed the joint venture with the hospital management development is one of the perks right they’re going to have
5:51
relationships you’re going to be able to leverage that you’re going to be able to get maybe better terms and possibly
5:57
avoid a personal guarantee from the owners right Physicians do not like personal guarantees and this will be a
6:02
consistent theme throughout the whole conversation here I and so
6:10
you you set up your power equipment I you have refurbed
6:16
options obviously and you have new options right and really the way I like
6:23
to approach this is you want to consider some for refurbing
6:28
you want to save money wherever you possibly can but you don’t want to risk it with certain pieces of equipment
6:34
where it might come back and bite you uh so refurbed equipment as much as
6:42
possible I avoid refurbed equipment with complex electronics and mechanics right
6:49
I think stretchers IV poles click buckets things of that sort
6:56
sterilizers or tables and lights you could consider refurb but you want to
7:02
make sure that they’ve gone through a full refurbed process where they’re
7:07
completely taken apart they’re repainted it’s pretty much brand new okay but it
7:14
obviously doesn’t come with the original manufacturer warranty make sure you have a good warranty in place and then really
7:20
the key is once you get operational with refurb equipment is to make sure you
7:26
have a strong engineer service provider that’s reliable and can get up there
7:32
major piece of equipment goes down you can’t sterilize equipment you can’t
7:38
operate because the operating table isn’t going up and down Etc that’ll start costing you a lot of money so you
7:45
want to be a proactive on that side and then with the new equipment more
7:52
specialized stuff vital monitors anesthesia machines you
7:57
want to make sure that they’re compatible and can be integrated with
8:03
the facilities electronic charting Software System practice management system
8:08
Etc so you want to make sure that they are new models they they can go with
8:14
their Wireless compatible things of that sort super helpful and as you think through
8:21
financing considerations around those are there many different options or
8:26
approaches there yeah there’s a lot of specialized companies that just focus on Capital Equipment financing you can
8:33
obviously go traditional banks that you can usually Finance your equipment lying
8:39
a hundred percent uh equipment will act as collateral they’ll usually want to
8:44
see some financials and things of that sort but again if you have a JV with a
8:50
hospital in a large management company you can leverage those relationships yep
8:56
got it okay so there’s decisions to make in terms of your equipment and where you
9:01
go new versus potentially refurbished so that’s those are some financing considerations on the equipment side
9:07
well what are some other financing considerations for owners and and business owners as they
9:14
are building out their facilities yeah we were talking earlier about personal guarantees and how doctors void
9:20
those back in prior to 2010 there was a lot of non-recourse options out there uh for
9:28
for an example operating lines those non-recourse options don’t exist anymore whenever you’re going to be borrowing
9:35
money for these projects you’re going to have to probably be personally guaranteeing it okay and I think there’s
9:42
two more financing considerations that you need to there’s two more Finance considerations here is
9:49
first off you need to consider Construction and construction notes pretty
9:56
traditional uh and you’re usually going to have to come up with 30
10:01
of that facility build out and we’re just talking tenant Improvement right now I
10:08
and then the other one is the operating line in the operating line
10:14
is actually you need to be very thoughtful behind this and that’s when
10:19
you’re getting into building the pro forma and the financial projections here
10:26
because you’re definitely going to want to come up with 8 to 12 months worth of
10:31
expenses to determine the size of the operating line you never want to go back and have
10:37
to do a capital raise a capital call I
10:43
nobody likes that right I and so you need to be very conservative I consider
10:50
the revenue and expenses and consider the volume ramp up period and also be prepared for unexpected delays I and so
11:00
with that doctors whenever you’re getting in and starting a business they’re going to
11:05
have to invest some money so how do they determine how much cash do they need to put in right
11:12
and really there’s two things you have again as I mentioned the 30 percent the facility build out for the construction
11:17
note yeah and then you have to calculate the startup cost which is going to be prior to licensure right prior to when
11:25
you’re open for business and so you have to add all those things together you get the 30 facility build out costs and then
11:31
you have accreditation licensure application fees architectural fees ASC
11:37
development fees is always a big one legal power inventory because you’re going to want to stock that inventory up
11:43
ahead of time salaries but you’re going to have an administrator in there
11:48
probably six months before licensure a nurse manager Clinical Director for
11:54
three months before licensure materials coordinator and office manager maybe one to two months and then you
12:00
start Staffing up from there and so take those combined add it up your
12:06
startup costs and that 30 build out is typically proportionate among ownership Equity buy
12:13
owners that is the money that they’re going to have to cough up to get into this project
12:19
great I wanted to shift gears Oni here and transition over to some of the key
12:25
operational processes that ASE operators need to be thinking about is they prepare to open and so big operational
12:32
processes like the billing process or the inventory management process what are those key processes that operators
12:38
need to think about and playing around up front the first thing you need to do well one
12:44
of the first things is uh is you’re thinking vendors there’s a lot of service providers supplies equipment
12:51
things of that sort anesthesia Pharmacy the pharmacy Consultants how you’re
12:57
going to handle your medication management Waste Management cleaning services laundry things of that sort and
13:03
again two perspectives joint venture with the hospital you might want to leverage some of those things I leverage
13:11
laundry if you can cleaning services if you can engineering facility Management
13:17
Services if the hospital has it also with large management companies too and
13:25
hospitals vendor contracts I think about first off research to gpos do you have
13:31
the ability to join the hospital’s GPO or that large management company’s GPO
13:37
group purchasing power these are big companies they have a lot of pull but at
13:42
the same time the GPO might not be the best pricing for these supplies and
13:48
equipment vendors right so you also want to look at local contracts and when it
13:53
comes down to hardware and surgical instruments for example local contracts
13:59
usually are better than the gpos because these men vendors have strong
14:04
relationships specific with the surgeons and it does come down to surgeon preferences too and they will be
14:11
considered right but even though put surgeon’s preference aside you always want to get at least three competitive
14:17
bids right and then you can use that to cram down pricing even further right and
14:23
then also there’s rebate programs you’re going to want to compare those to the discounted rates for the contract a lot
14:31
of these guys let’s say soft tissue graphs things of that sort you’re going to need a refrigerator storm right you
14:38
may be able to get a nice refrigerator out of there with some Wireless capabilities so they can track temperature and things of that sort so
14:44
you don’t have to worry about managing that and they might just give it to you because you’re going to be buying their graphs right and and while you’re
14:53
operating too it’s important to note that you’re going to want to cross-reference these
14:59
contracted rates keep track of that rebate program make sure you’re getting paid what you’re supposed to and make
15:05
sure that you’re getting the prices per unit that you’re contracted that with them for I and also with the rebate
15:13
program it can be a substantial amount of money right and if you’re coming up they usually break it down from like I
15:20
don’t know four percent uh rebate upwards to eight percent if you spend a certain amount of money and if you’re
15:26
coming up to that rebate date where they put the stake in the ground and you’re supposed to have spent that certain
15:32
amount of money I you’re going to want to ask and say hey can I buy another
15:37
twenty thousand dollars in whatever because we know we’re going to use these uh so I can make that date and jump up
15:46
to the next level of rebate you might be able to give go from six to seven percent just if you’re buying ahead of
15:51
time right those are some things to consider on the that side let’s see here
15:57
anesthesia a lot of times the anesthesia groups
16:03
depending on whether they have crnas uh and it’s going to be relationships it’s
16:09
going to be relationships with the joint ventures with the hospital there’s and sometimes it’s hard to find anesthesia
16:15
and so you and you want to make sure that you’re going to be able to work with these guys they’re going to be on
16:20
your medical staff they may be a medical director so I think that personal relationships are important there too
16:27
um and then you do want to keep track of all these contracts so build yourself a
16:32
simple vendor grid that shows the terms of the contracts the payment terms when
16:37
the contracts are up for Renewal so you’re prepared to negotiate them on the next round fantastic and so we talked
16:44
about Capital Equipment we’ve talked about Supply vendors anesthesia what
16:49
about software what what role does software play in enabling some of these key processes that that ultimately run
16:57
your ASC technology has come such a long way software plays a huge role in how
17:03
operations are and how efficient they are and the softwares that you’re going to want to consider you’re looking at
17:09
inventory practice management electronic charting scheduling billing
17:14
those types of functions uh the best way to do that is to reach out to other
17:19
facilities and inquire about their experiences and their preferred software
17:25
platforms visit other facilities and obtain first-hand experiences and then
17:31
also consider the cost uh when you’re negotiating out and getting bids for
17:37
these software programs perhaps they’ll discount during the facility startup
17:42
period think about the integration abilities how intuitive it is let your
17:48
current staff members demo it get their feedback get the doctor’s feedback think
17:54
about reporting capabilities um available dashboards and ask for your
18:00
colleagues out there about support services and things of that sort the support services is really important
18:07
especially during the development of facility absolutely and you touched on their
18:14
billing and the billing process and if we take a step back and think about the overall revenue
18:20
cycle and preparing to get set up that’s likely a pretty big decision right in terms of hey how do we set up
18:27
our revenue cycle do we use an outsourced provider do we think about doing it in-house
18:32
how do you advise de novo facilities and owners to think about that revenue cycle decision it’ll be one of the largest
18:40
expenses uh for operating this business if it’s a joint venture over the hospital and or management company they
18:47
will probably want to provide that service and you’ll be contracted with them and that will probably be in place
18:53
when you sign that development agreement and they’re very good uh but you do pay
19:00
for it and centers of collected receipts typically in the four four and a half range if
19:07
independent personally in my opinion I would recommend Outsourcing revenue cycle management you if you want to save
19:14
a few bucks you’re going to end up with maybe one or two individuals and I just
19:19
don’t see them handling it efficiently there’s too many moving Parts in the revenue cycle management and
19:26
there’s a lot of expertise that is needed in each individual part now you may be able to cross-train them for
19:33
reformed individuals out they can cover them but they’re not going to be as good things like pre-verification
19:39
authorization coding implant tracking other reimbursable charges that may be out
19:46
there processing clean claims then you have AR management and follow-up this
19:51
stuff is so time consuming and also communicating patient liability and that
19:56
cash management side collect up front you’re also going to have to track bad debt and overpayments and then you might
20:04
even have to think about out of network billing which is even more time consuming so
20:10
again I mean I would recommend finding a very good third-party service provider
20:17
to handle your revenue cycle management and it’s one of the reasons why you know
20:22
these established management development companies are around because they know how to do it really well
20:29
absolutely great well we’ve covered a lot of topics across the spectrum of preparing for
20:34
opening from a business perspective from a process perspective anything that we haven’t talked about
20:40
yet that you think is super important if HR functions
20:50
think about third party and just because it’s it can be get messy and
20:57
administratively development of strong policy and procedures are gospel and
21:04
must be filed to ensure efficient front office workflows back office workflows
21:09
Etc and make sure during your ramp up period
21:15
you you’re in a cash burn operational mode right keep accurate daily cash
21:21
balances and forward-looking cash flow projections and take into consideration
21:27
obviously your fixed costs and average out the past variable expenses keep it
21:33
conservative and make sure that you have an adequate amount of cash in the bank
21:39
to get you through the ramp up period it’s a great tip and certainly one that
21:45
you’ve I’ve heard you underscore several times during our conversations is that initial operating budget and making sure
21:51
you’re sufficiently thinking through that so we may already have your answer for this but one final question
21:57
we do this every week what is one thing our listeners can do this week to improve their surgery centers
22:08
talked about patient liability is patient education and
22:13
clear communication especially between the professional practice and the
22:19
facility itself communicate clearly regarding patient
22:25
liability the difference between professional fees facility fees anesthesia fees if DME may be involved
22:33
Etc make sure the patients understand this is so so common for a patient to
22:39
get code for their liability on the professional side nobody mentions these
22:45
other service providers right and they think that’s all they need to come up with that is one way to really drop your
22:52
patient satisfaction score and then post-surgery education I think is just as important set these patients
22:58
expectations with pain let them know about physical therapy any kind of
23:04
braces they need to wear training that DME kind of stuff the effects of the anesthesia and the expectations make
23:12
sure that they have a family member available to come and pick them up right these are things that really affect your
23:17
patient satisfaction scores awesome great advice and thanks so much
23:23
will for joining us again today you got it Nick thank you [Music]
23:30
as always it has been a busy week in healthcare so let’s Jump Right In in our
23:36
first story I’m excited to share with you the latest collaboration between HCA Healthcare and Google so HCA is the
23:44
largest for-profit hospital chain in the U.S and they are currently exploring ways to reduce its clinicians
23:50
administrative burden through the use of generative AI now their partnership with
23:56
Google began in 2021 initially focused on data privacy and security but this
24:02
year the two organizations expanded their collaboration by exploring ways to integrate Google’s generative AI into
24:10
hca’s workflows so a pilot project that started in February has 75 doctors and four HCA
24:18
emergency departments using an app from augmedics
24:24
a-u-g-m-e-d-i-x on their phones and this app captures conversations with patients
24:30
and transforms those conversations into clinical notes which Physicians can then review and finalize
24:37
now natural language processing and medical dictation is nothing new that’s
24:42
existed for a while but with Google’s generative AI it’s intended to enhance the process and doctors are encouraged
24:49
to verbalize more to one provider richer input for the AI and then two improve
24:56
the patient’s understanding in real life so kind of has dual benefits and so far
25:01
during the pilot the clinical notes are requiring 50 of the work to be done through Ai and 50 to be done by a human
25:09
or medical scribe but the hope is to reach a point where AI can actually create 75 to 80 percent of the clinical
25:16
notes thus reducing that administrative burden and next up HCA intends to develop an AI
25:24
system for generating reports during nurse handoffs so I’m curious how you
25:30
feel about this pilot and kind of the projection of AI and how it’s being used
25:35
you know reducing the administrative burden and possibly using it to generate reports for nurse handoffs sound like
25:42
good ideas to me but would love to hear your thoughts on our LinkedIn page as well
25:48
Switching gears it wouldn’t be a week of news without addressing staffing issues
25:54
in some sort of way so here we go 81 of nursing home facilities Nationwide
26:00
currently fall short of the proposed CMS Staffing thresholds so a few weeks ago
26:06
CMS introduced their guidance in response to long-standing concerns that inadequate Staffing levels and excuse me
26:13
negatively affect the care the residents receive at nursing homes
26:18
so the rule would require nursing homes to have a minimum of 0.55 RN and 2.45
26:26
Nurse Aid hours per resident per day and then also requires them to have an RN on
26:32
staff 24 hours per day seven days a week and in light of current Workforce
26:38
shortages industry leaders have argued that the CMS Staffing proposal which
26:43
would be the First Federal Regulation mandating specific Staffing levels for nursing homes is unobtainable and the
26:50
result would be displacing hundreds of thousands of residents if the nursing homes had to close due to lack of
26:57
Staffing to meet the new guidelines and lastly they argued that attracting
27:03
more RNs and nursing assistants would cost the industry an estimated 40 billion dollars over the next 10 years
27:10
which would ultimately end up coming out of the pockets of public and private payers including residents and their
27:16
family members so my grandma was in a nursing home for the last few months of her time here so I
27:23
fully support any legislation that fights to make nursing homes safer and properly staffed
27:30
it’s a noble cause for sure but if the workforce just doesn’t exist what do you
27:36
do and how could they even end up enforcing this legislation even if it does pass if there the workforce isn’t
27:44
there and they can’t meet the numbers does it do more harm than good if the nursing homes end up closing so lots of
27:51
unanswered questions unfortunately but I think we can all at least appreciate that the attention that the Biden
27:58
Administration is giving to nursing homes for the first time and speaking of noble causes the Joint
28:05
Commission has rolled out a brand new sustainable health care certification program for hospitals
28:12
so starting January 1st 2024 U.S hospitals can apply for the voluntary
28:17
sustainable health care certification and it’s open to both Joint Commission
28:23
accredited hospitals and those that aren’t as well as critical access hospitals the hope is that the
28:30
certification will bolster sustainable practices and diminish greenhouse gas emissions and aside from all that what’s
28:37
in it for the hospital is that it’s believed that the hospitals would benefit from cost savings better staff
28:44
retention and potential Federal incentives now while this certification is not for
28:50
ASCS yet The Joint Commission did launch the sustainable Health Care Resource Center Online which is a hub of
28:57
strategies tools and solutions to help you in your green Journey so we’ll
29:03
include a link in the episode notes directly to that Resource Center if you want to check it out and then if this is
29:09
something that is important to you we actually did a podcast episode back in December of 2022 with Adam Hornback
29:16
about ways to reduce waste at your ASC and increase recycling so I would recommend checking that out
29:23
and to end our new segment on a positive note a few weeks ago when the Maui wildfires were active Dr Corey lahano I
29:32
apologize if I’m pronouncing your name incorrectly I was receiving tons of voicemails and texts from patients who
29:38
were in trouble because their medications had been inside their homes when the homes had burned down and there
29:45
was no Pharmacy available to them so many of these patients require medication for their diabetes heart
29:51
health mental health other issues so Dr lojano and his team who have had a local
29:57
pharmacy for over six years decided to start filling prescriptions without any
30:03
insurance information co-pays and they ran everything for free but after about a week they were able to work with the
30:09
insurance companies to put in overrides temporarily and get everything back on track but due to their selflessness Dr
30:16
lohano and his team were able to save hundreds of lives over the course of a few weeks which of course just would if
30:22
they weren’t able to do that you know would have added on to the tragedy that the wildfires had already brought so
30:28
congratulations and thank you to Dr lohano for getting his patients the help
30:34
that they need and that news story officially wraps up this week’s podcast thank you as always
30:41
for spending a few minutes of your week with us make sure to subscribe or leave a review on whichever platform you’re
30:47
listening from I hope you have a great day and we will see you again next week
30:56
foreign [Music]
welcome to this week in surgery centers if you’re in the ASC industry then
0:05
you’re in the right place every week we’ll start the episode off by sharing an interesting conversation we had with
0:11
our featured guest and then we’ll close the episode by recapping the latest news impacting surgery centers we’re excited
0:18
to share with you what we have so let’s get started and see what the industry’s been up to [Music]
0:27
hi everyone here’s what you can expect on today’s episode will schlaff joins us
0:33
again this week as we continue with our series of episodes dedicated to De novos
0:38
will is an ASE development and operations specialist so he has seen it
0:43
all and today we’re focusing on preparing the business side of the house for your new Surgery Center we cover
0:49
Capital Investments vendor contracts finding the right scheduling and billing software handling HR functions and
0:57
everything in between and in our news recap we’ll cover the latest collaboration between HCA
1:03
Healthcare and Google what’s going on with CMS in nursing homes The Joint commission’s New sustainable health care
1:10
certification program and of course and the new segment with a positive story about a pharmacist in Maui who saved
1:17
hundreds of lives during the wildfires hope everyone enjoys the episode and
1:23
here’s what’s going on this week in surgery centers [Music]
1:29
will welcome back to the podcast yeah Nick thanks for having me
1:35
well last time you joined us about a month or so ago we talked about more up
1:40
front in the denovo planning process we talked about feasibility assessments and preparing for opening from an overall
1:46
planning and feasibility perspective wanted to shift gears today and talk about a later stage in the process which
1:53
is preparing for opening and specifically around the business side of preparing for opening and thinking
1:59
through some of those key operational processes that need to be in place and thought through before you open your
2:05
facility so to get us started here at what point in the process should ASCS into Nova
2:12
iscs consider preparing for opening including some of the key pieces around
2:17
infrastructure equipment you want to have in place in those key operational processes
2:24
yeah that’s an interesting question because it’ll surprise a lot of people that it really starts during the
2:32
facility design phase in any given State Department of Health or health authority
2:39
they’re going to ask you when you submit your plans for approval
2:45
uh certification if they’re going to ask you for a functional plan like an operative
2:51
narrative right and in in addition to when you submit your architectural and MEP plans and this is
2:59
a side note is again you need to pay attention to the crosswalk between State
3:04
licensure and Medicare CMS requirements right because you just need to make sure
3:11
that you’re meeting both okay and so they’ll come back and they’ll ask you
3:17
the functional plan it’s pretty extensive but you really get into the clinical in the back office in front
3:26
office actually the flow of the business uh and they’ll focus on safety risk
3:32
assessments which will include things like infection control risk assessment patient handling and movement fall
3:40
prevention medication safety behavioral mental health risk security risks Life Safety
3:48
will be addressed mainly in the MEP equipment Management program and
3:53
really focusing too on the circulation patterns for the staff right which is very clinical based the visitors and the
4:01
vendors in traffic patterns to avoid things like cross-contamination and limited limiting patient anxiety like
4:08
you don’t want them going through when there’s a kid crying because he was just had surgery and so you really start
4:15
thinking about the flow of the facility at the design the facility design phase
4:21
right again a good architect that’s worth their weight in gold they’ll walk you through this they’ll listen to you
4:27
and they’ll give you options and recommendations and then you it and then at that point you’re really starting to
4:34
create and customize your policy and procedures got it that’s a helpful sequencing right
4:41
which is design functional flow policies and procedures you know I want
4:47
to come back to those policy and procedures one thing I wanted to hit on is as you think through the process you
4:52
also need to think through equipment and tooling and infrastructure and Capital
4:57
Equipment is a big decision a big purchase is you think about Capital Equipment from a budgeting perspective
5:04
from a financing perspective where does that come into play and what factors
5:10
what would influence that decision well equipment planning is a big part of
5:17
the pro forma and the costs and the startup of the facility right right and
5:24
there’s really two ways to that two perspectives right there’s one
5:30
perspective if it’s a joint venture with a hospital and or third party management development firm or an independent
5:37
facility right I and when it comes down to costs I and the financing that are
5:45
needed the joint venture with the hospital management development is one of the perks right they’re going to have
5:51
relationships you’re going to be able to leverage that you’re going to be able to get maybe better terms and possibly
5:57
avoid a personal guarantee from the owners right Physicians do not like personal guarantees and this will be a
6:02
consistent theme throughout the whole conversation here I and so
6:10
you you set up your power equipment I you have refurbed
6:16
options obviously and you have new options right and really the way I like
6:23
to approach this is you want to consider some for refurbing
6:28
you want to save money wherever you possibly can but you don’t want to risk it with certain pieces of equipment
6:34
where it might come back and bite you uh so refurbed equipment as much as
6:42
possible I avoid refurbed equipment with complex electronics and mechanics right
6:49
I think stretchers IV poles click buckets things of that sort
6:56
sterilizers or tables and lights you could consider refurb but you want to
7:02
make sure that they’ve gone through a full refurbed process where they’re
7:07
completely taken apart they’re repainted it’s pretty much brand new okay but it
7:14
obviously doesn’t come with the original manufacturer warranty make sure you have a good warranty in place and then really
7:20
the key is once you get operational with refurb equipment is to make sure you
7:26
have a strong engineer service provider that’s reliable and can get up there
7:32
major piece of equipment goes down you can’t sterilize equipment you can’t
7:38
operate because the operating table isn’t going up and down Etc that’ll start costing you a lot of money so you
7:45
want to be a proactive on that side and then with the new equipment more
7:52
specialized stuff vital monitors anesthesia machines you
7:57
want to make sure that they’re compatible and can be integrated with
8:03
the facilities electronic charting Software System practice management system
8:08
Etc so you want to make sure that they are new models they they can go with
8:14
their Wireless compatible things of that sort super helpful and as you think through
8:21
financing considerations around those are there many different options or
8:26
approaches there yeah there’s a lot of specialized companies that just focus on Capital Equipment financing you can
8:33
obviously go traditional banks that you can usually Finance your equipment lying
8:39
a hundred percent uh equipment will act as collateral they’ll usually want to
8:44
see some financials and things of that sort but again if you have a JV with a
8:50
hospital in a large management company you can leverage those relationships yep
8:56
got it okay so there’s decisions to make in terms of your equipment and where you
9:01
go new versus potentially refurbished so that’s those are some financing considerations on the equipment side
9:07
well what are some other financing considerations for owners and and business owners as they
9:14
are building out their facilities yeah we were talking earlier about personal guarantees and how doctors void
9:20
those back in prior to 2010 there was a lot of non-recourse options out there uh for
9:28
for an example operating lines those non-recourse options don’t exist anymore whenever you’re going to be borrowing
9:35
money for these projects you’re going to have to probably be personally guaranteeing it okay and I think there’s
9:42
two more financing considerations that you need to there’s two more Finance considerations here is
9:49
first off you need to consider Construction and construction notes pretty
9:56
traditional uh and you’re usually going to have to come up with 30
10:01
of that facility build out and we’re just talking tenant Improvement right now I
10:08
and then the other one is the operating line in the operating line
10:14
is actually you need to be very thoughtful behind this and that’s when
10:19
you’re getting into building the pro forma and the financial projections here
10:26
because you’re definitely going to want to come up with 8 to 12 months worth of
10:31
expenses to determine the size of the operating line you never want to go back and have
10:37
to do a capital raise a capital call I
10:43
nobody likes that right I and so you need to be very conservative I consider
10:50
the revenue and expenses and consider the volume ramp up period and also be prepared for unexpected delays I and so
11:00
with that doctors whenever you’re getting in and starting a business they’re going to
11:05
have to invest some money so how do they determine how much cash do they need to put in right
11:12
and really there’s two things you have again as I mentioned the 30 percent the facility build out for the construction
11:17
note yeah and then you have to calculate the startup cost which is going to be prior to licensure right prior to when
11:25
you’re open for business and so you have to add all those things together you get the 30 facility build out costs and then
11:31
you have accreditation licensure application fees architectural fees ASC
11:37
development fees is always a big one legal power inventory because you’re going to want to stock that inventory up
11:43
ahead of time salaries but you’re going to have an administrator in there
11:48
probably six months before licensure a nurse manager Clinical Director for
11:54
three months before licensure materials coordinator and office manager maybe one to two months and then you
12:00
start Staffing up from there and so take those combined add it up your
12:06
startup costs and that 30 build out is typically proportionate among ownership Equity buy
12:13
owners that is the money that they’re going to have to cough up to get into this project
12:19
great I wanted to shift gears Oni here and transition over to some of the key
12:25
operational processes that ASE operators need to be thinking about is they prepare to open and so big operational
12:32
processes like the billing process or the inventory management process what are those key processes that operators
12:38
need to think about and playing around up front the first thing you need to do well one
12:44
of the first things is uh is you’re thinking vendors there’s a lot of service providers supplies equipment
12:51
things of that sort anesthesia Pharmacy the pharmacy Consultants how you’re
12:57
going to handle your medication management Waste Management cleaning services laundry things of that sort and
13:03
again two perspectives joint venture with the hospital you might want to leverage some of those things I leverage
13:11
laundry if you can cleaning services if you can engineering facility Management
13:17
Services if the hospital has it also with large management companies too and
13:25
hospitals vendor contracts I think about first off research to gpos do you have
13:31
the ability to join the hospital’s GPO or that large management company’s GPO
13:37
group purchasing power these are big companies they have a lot of pull but at
13:42
the same time the GPO might not be the best pricing for these supplies and
13:48
equipment vendors right so you also want to look at local contracts and when it
13:53
comes down to hardware and surgical instruments for example local contracts
13:59
usually are better than the gpos because these men vendors have strong
14:04
relationships specific with the surgeons and it does come down to surgeon preferences too and they will be
14:11
considered right but even though put surgeon’s preference aside you always want to get at least three competitive
14:17
bids right and then you can use that to cram down pricing even further right and
14:23
then also there’s rebate programs you’re going to want to compare those to the discounted rates for the contract a lot
14:31
of these guys let’s say soft tissue graphs things of that sort you’re going to need a refrigerator storm right you
14:38
may be able to get a nice refrigerator out of there with some Wireless capabilities so they can track temperature and things of that sort so
14:44
you don’t have to worry about managing that and they might just give it to you because you’re going to be buying their graphs right and and while you’re
14:53
operating too it’s important to note that you’re going to want to cross-reference these
14:59
contracted rates keep track of that rebate program make sure you’re getting paid what you’re supposed to and make
15:05
sure that you’re getting the prices per unit that you’re contracted that with them for I and also with the rebate
15:13
program it can be a substantial amount of money right and if you’re coming up they usually break it down from like I
15:20
don’t know four percent uh rebate upwards to eight percent if you spend a certain amount of money and if you’re
15:26
coming up to that rebate date where they put the stake in the ground and you’re supposed to have spent that certain
15:32
amount of money I you’re going to want to ask and say hey can I buy another
15:37
twenty thousand dollars in whatever because we know we’re going to use these uh so I can make that date and jump up
15:46
to the next level of rebate you might be able to give go from six to seven percent just if you’re buying ahead of
15:51
time right those are some things to consider on the that side let’s see here
15:57
anesthesia a lot of times the anesthesia groups
16:03
depending on whether they have crnas uh and it’s going to be relationships it’s
16:09
going to be relationships with the joint ventures with the hospital there’s and sometimes it’s hard to find anesthesia
16:15
and so you and you want to make sure that you’re going to be able to work with these guys they’re going to be on
16:20
your medical staff they may be a medical director so I think that personal relationships are important there too
16:27
um and then you do want to keep track of all these contracts so build yourself a
16:32
simple vendor grid that shows the terms of the contracts the payment terms when
16:37
the contracts are up for Renewal so you’re prepared to negotiate them on the next round fantastic and so we talked
16:44
about Capital Equipment we’ve talked about Supply vendors anesthesia what
16:49
about software what what role does software play in enabling some of these key processes that that ultimately run
16:57
your ASC technology has come such a long way software plays a huge role in how
17:03
operations are and how efficient they are and the softwares that you’re going to want to consider you’re looking at
17:09
inventory practice management electronic charting scheduling billing
17:14
those types of functions uh the best way to do that is to reach out to other
17:19
facilities and inquire about their experiences and their preferred software
17:25
platforms visit other facilities and obtain first-hand experiences and then
17:31
also consider the cost uh when you’re negotiating out and getting bids for
17:37
these software programs perhaps they’ll discount during the facility startup
17:42
period think about the integration abilities how intuitive it is let your
17:48
current staff members demo it get their feedback get the doctor’s feedback think
17:54
about reporting capabilities um available dashboards and ask for your
18:00
colleagues out there about support services and things of that sort the support services is really important
18:07
especially during the development of facility absolutely and you touched on their
18:14
billing and the billing process and if we take a step back and think about the overall revenue
18:20
cycle and preparing to get set up that’s likely a pretty big decision right in terms of hey how do we set up
18:27
our revenue cycle do we use an outsourced provider do we think about doing it in-house
18:32
how do you advise de novo facilities and owners to think about that revenue cycle decision it’ll be one of the largest
18:40
expenses uh for operating this business if it’s a joint venture over the hospital and or management company they
18:47
will probably want to provide that service and you’ll be contracted with them and that will probably be in place
18:53
when you sign that development agreement and they’re very good uh but you do pay
19:00
for it and centers of collected receipts typically in the four four and a half range if
19:07
independent personally in my opinion I would recommend Outsourcing revenue cycle management you if you want to save
19:14
a few bucks you’re going to end up with maybe one or two individuals and I just
19:19
don’t see them handling it efficiently there’s too many moving Parts in the revenue cycle management and
19:26
there’s a lot of expertise that is needed in each individual part now you may be able to cross-train them for
19:33
reformed individuals out they can cover them but they’re not going to be as good things like pre-verification
19:39
authorization coding implant tracking other reimbursable charges that may be out
19:46
there processing clean claims then you have AR management and follow-up this
19:51
stuff is so time consuming and also communicating patient liability and that
19:56
cash management side collect up front you’re also going to have to track bad debt and overpayments and then you might
20:04
even have to think about out of network billing which is even more time consuming so
20:10
again I mean I would recommend finding a very good third-party service provider
20:17
to handle your revenue cycle management and it’s one of the reasons why you know
20:22
these established management development companies are around because they know how to do it really well
20:29
absolutely great well we’ve covered a lot of topics across the spectrum of preparing for
20:34
opening from a business perspective from a process perspective anything that we haven’t talked about
20:40
yet that you think is super important if HR functions
20:50
think about third party and just because it’s it can be get messy and
20:57
administratively development of strong policy and procedures are gospel and
21:04
must be filed to ensure efficient front office workflows back office workflows
21:09
Etc and make sure during your ramp up period
21:15
you you’re in a cash burn operational mode right keep accurate daily cash
21:21
balances and forward-looking cash flow projections and take into consideration
21:27
obviously your fixed costs and average out the past variable expenses keep it
21:33
conservative and make sure that you have an adequate amount of cash in the bank
21:39
to get you through the ramp up period it’s a great tip and certainly one that
21:45
you’ve I’ve heard you underscore several times during our conversations is that initial operating budget and making sure
21:51
you’re sufficiently thinking through that so we may already have your answer for this but one final question
21:57
we do this every week what is one thing our listeners can do this week to improve their surgery centers
22:08
talked about patient liability is patient education and
22:13
clear communication especially between the professional practice and the
22:19
facility itself communicate clearly regarding patient
22:25
liability the difference between professional fees facility fees anesthesia fees if DME may be involved
22:33
Etc make sure the patients understand this is so so common for a patient to
22:39
get code for their liability on the professional side nobody mentions these
22:45
other service providers right and they think that’s all they need to come up with that is one way to really drop your
22:52
patient satisfaction score and then post-surgery education I think is just as important set these patients
22:58
expectations with pain let them know about physical therapy any kind of
23:04
braces they need to wear training that DME kind of stuff the effects of the anesthesia and the expectations make
23:12
sure that they have a family member available to come and pick them up right these are things that really affect your
23:17
patient satisfaction scores awesome great advice and thanks so much
23:23
will for joining us again today you got it Nick thank you [Music]
23:30
as always it has been a busy week in healthcare so let’s Jump Right In in our
23:36
first story I’m excited to share with you the latest collaboration between HCA Healthcare and Google so HCA is the
23:44
largest for-profit hospital chain in the U.S and they are currently exploring ways to reduce its clinicians
23:50
administrative burden through the use of generative AI now their partnership with
23:56
Google began in 2021 initially focused on data privacy and security but this
24:02
year the two organizations expanded their collaboration by exploring ways to integrate Google’s generative AI into
24:10
hca’s workflows so a pilot project that started in February has 75 doctors and four HCA
24:18
emergency departments using an app from augmedics
24:24
a-u-g-m-e-d-i-x on their phones and this app captures conversations with patients
24:30
and transforms those conversations into clinical notes which Physicians can then review and finalize
24:37
now natural language processing and medical dictation is nothing new that’s
24:42
existed for a while but with Google’s generative AI it’s intended to enhance the process and doctors are encouraged
24:49
to verbalize more to one provider richer input for the AI and then two improve
24:56
the patient’s understanding in real life so kind of has dual benefits and so far
25:01
during the pilot the clinical notes are requiring 50 of the work to be done through Ai and 50 to be done by a human
25:09
or medical scribe but the hope is to reach a point where AI can actually create 75 to 80 percent of the clinical
25:16
notes thus reducing that administrative burden and next up HCA intends to develop an AI
25:24
system for generating reports during nurse handoffs so I’m curious how you
25:30
feel about this pilot and kind of the projection of AI and how it’s being used
25:35
you know reducing the administrative burden and possibly using it to generate reports for nurse handoffs sound like
25:42
good ideas to me but would love to hear your thoughts on our LinkedIn page as well
25:48
Switching gears it wouldn’t be a week of news without addressing staffing issues
25:54
in some sort of way so here we go 81 of nursing home facilities Nationwide
26:00
currently fall short of the proposed CMS Staffing thresholds so a few weeks ago
26:06
CMS introduced their guidance in response to long-standing concerns that inadequate Staffing levels and excuse me
26:13
negatively affect the care the residents receive at nursing homes
26:18
so the rule would require nursing homes to have a minimum of 0.55 RN and 2.45
26:26
Nurse Aid hours per resident per day and then also requires them to have an RN on
26:32
staff 24 hours per day seven days a week and in light of current Workforce
26:38
shortages industry leaders have argued that the CMS Staffing proposal which
26:43
would be the First Federal Regulation mandating specific Staffing levels for nursing homes is unobtainable and the
26:50
result would be displacing hundreds of thousands of residents if the nursing homes had to close due to lack of
26:57
Staffing to meet the new guidelines and lastly they argued that attracting
27:03
more RNs and nursing assistants would cost the industry an estimated 40 billion dollars over the next 10 years
27:10
which would ultimately end up coming out of the pockets of public and private payers including residents and their
27:16
family members so my grandma was in a nursing home for the last few months of her time here so I
27:23
fully support any legislation that fights to make nursing homes safer and properly staffed
27:30
it’s a noble cause for sure but if the workforce just doesn’t exist what do you
27:36
do and how could they even end up enforcing this legislation even if it does pass if there the workforce isn’t
27:44
there and they can’t meet the numbers does it do more harm than good if the nursing homes end up closing so lots of
27:51
unanswered questions unfortunately but I think we can all at least appreciate that the attention that the Biden
27:58
Administration is giving to nursing homes for the first time and speaking of noble causes the Joint
28:05
Commission has rolled out a brand new sustainable health care certification program for hospitals
28:12
so starting January 1st 2024 U.S hospitals can apply for the voluntary
28:17
sustainable health care certification and it’s open to both Joint Commission
28:23
accredited hospitals and those that aren’t as well as critical access hospitals the hope is that the
28:30
certification will bolster sustainable practices and diminish greenhouse gas emissions and aside from all that what’s
28:37
in it for the hospital is that it’s believed that the hospitals would benefit from cost savings better staff
28:44
retention and potential Federal incentives now while this certification is not for
28:50
ASCS yet The Joint Commission did launch the sustainable Health Care Resource Center Online which is a hub of
28:57
strategies tools and solutions to help you in your green Journey so we’ll
29:03
include a link in the episode notes directly to that Resource Center if you want to check it out and then if this is
29:09
something that is important to you we actually did a podcast episode back in December of 2022 with Adam Hornback
29:16
about ways to reduce waste at your ASC and increase recycling so I would recommend checking that out
29:23
and to end our new segment on a positive note a few weeks ago when the Maui wildfires were active Dr Corey lahano I
29:32
apologize if I’m pronouncing your name incorrectly I was receiving tons of voicemails and texts from patients who
29:38
were in trouble because their medications had been inside their homes when the homes had burned down and there
29:45
was no Pharmacy available to them so many of these patients require medication for their diabetes heart
29:51
health mental health other issues so Dr lojano and his team who have had a local
29:57
pharmacy for over six years decided to start filling prescriptions without any
30:03
insurance information co-pays and they ran everything for free but after about a week they were able to work with the
30:09
insurance companies to put in overrides temporarily and get everything back on track but due to their selflessness Dr
30:16
lohano and his team were able to save hundreds of lives over the course of a few weeks which of course just would if
30:22
they weren’t able to do that you know would have added on to the tragedy that the wildfires had already brought so
30:28
congratulations and thank you to Dr lohano for getting his patients the help
30:34
that they need and that news story officially wraps up this week’s podcast thank you as always
30:41
for spending a few minutes of your week with us make sure to subscribe or leave a review on whichever platform you’re
30:47
listening from I hope you have a great day and we will see you again next week
30:56
foreign [Music]
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