Be aware of challenges with surgical hospitals

There are some distinct challenges to building and operating a surgical hospital, proponents warn. One of the biggest is the cost, they advise. And conversions aren’t cheap either, administrators warn. Moline, IL-based Trinity Medical Center spent $2 million building an emergency department and $200,000 on other structural changes required for hospitals, such as fire walls, when it converted its Seventh Street outpatient facility to a surgical hospital.

"We needed more space, anyway," says Bonnie Leinart, president of Trinity’s Illinois campuses. "Additional fireproofing would have disrupted care." Surgical hospitals also must overcome legal and regulatory hurdles, administrators warn. For example, Trinity had a law passed that allowed fewer than 100 beds and fewer licensing requirements than traditional acute care hospitals.

Once the facility is built, operations can be a challenge, particular if the owners are physicians who may not have the experience, warns Fred Campobasso, president/CEO of AMDC Corp., a Chicago-based firm that handles real estate project management, development, finance, and strategic consultation. Potential solutions include outsourcing operations with a management contract; bringing in a operational partner to invest money with physicians and/or the hospital; or hiring someone to run the facility who has experience in outpatient facilities, Campobasso says.

Marketing is another challenge, advises Michael Lipomi, CEO of Modesto, CA-based Stanislaus Surgical Hospital, which converted in 2000 from a freestanding surgery center to a surgical hospital. Lipomi is the president-elect of the Fresno-CA, based American Surgical Hospital Association. "We were a great surgery center, well-known in our community and in the country," Lipomi says. "When we converted to a hospital, we faced the big challenges of communicating to the community and physicians that we are an acute care hospital and we can handle major cases."

Managed care contracts can be a hurdle, he says. "Once you’re in a system, trying to renegotiate our contracts, getting them to reimburse us as an acute care hospital and not a surgery center was very difficult," he says. When converting, Lipomi strongly recommends changing your facility’s name. One of the problems his program faced was that "Stanislaus" was retained. "I can tell you we are still having some difficulty with some payers that have a tough time recognizing us," he says. 

The biggest challenge, he says, was to retain the surgery center "culture." The surgery center had about 40, mostly longtime, employees who understood the concept of customer-focused care, Lipomi says. When Stanislaus converted, the facility grew to 135 employees. "It took close to a year to rekindle the culture we had prior to conversion, which was a surgery center mentality — the physician and patient come first," he says. "There’s no such thing as that’s not my job.’"