When to cut the cord with a management company
Also: Moving up, moonlighting, and other issues
By Stephen W. Earnhart, MS
Earnhart & Associates
Question: Our surgery center has a management contract with a well-known surgery center management company. Our board is considering terminating that contract because everything is running well at the center, and they don’t want to pay the high fees per month (6% of net collected revenue). My thoughts, as the administrator, are that I like having the resources in place with the group. When should we terminate an agreement with them?
Answer: There are a number of valid reasons why a center might consider terminating a management agreement, but because "everything is running well" is not one of them. I would argue that things are running well because of the agreement in place that you described. However, there a valid reasons to terminate:
- The fees are too high. Often a center will enter into a management agreement when they first start out and not realize they will be paying as much as they are.
- They are not pleased with the work effort of the team.
- The center is just not "running well."
- The contract in place was too long and should come to a peaceful closure.
All of these can be negotiated with the management company and almost always can be resolved.
Question: Our hospital is searching for a replacement for our operating room department head. She has been here for 15 years and is leaving for another position. The hospital has spent a ton of money to advertise for her position and interviewed nine candidates. I am one of those candidates, and I am getting upset that they do not see the merit in me. I have been a loyal assistant to her for 10 years. I do not understand why they did not give the position to me to begin with and save all this time and money. Everyone says I am qualified. Is this common?
Answer: You want to be hired by the hospital because you are the best candidate, not because everyone thinks you are. It is very common for the hospital to do what they are doing to "find out what is out there" and to see what qualifications other candidates might have. This also is a good time for them to understand more the requirements of the position. You want them to do this so you will be hired as the best candidate — not the only candidate. (P.S. She got the job three weeks later at a pay rate higher than her predecessor!)
Question: There are a number of us who work at the hospital that have been approached by the surgery center across the street to work per diem with them. Most of us work four 10-hour shifts and can fill in at the center. They (the surgery center managers) are willing to pay us more money than the hospital for per-diem work. This sounds good to all of us who are looking to work another day per week. However, the hospital is telling us that they would "frown" very much on any employee that moonlights at the center. We plan on doing it anyway, but we were curious as to your thoughts.
Answer: There is actually more to this story than the above question reflects. All of the nurses above were paid a large sign-on bonus just eight months before this became an issue. The hospital administrators’ position is that they do not want the staff working an additional eight to 16 hours per week and then being too tired to fulfill their obligations to the hospital.
I think the biggest issue here is that the hospital is upset with the surgeons who left to build the ASC to begin with, and now they are upset that the same surgeons are "cherry-picking" their staff. The hospital administrators think that the nurses working there would be disloyal to the hospital.
I told the nursing staff that I agreed with the hospital on this issue and that if the nurses were looking for additional work hours, they should give the hospital the first option. They did approach the hospital and are working more hours in the hospital operating room and postoperative care unit (with overtime), and everyone seems happy with the outcome. Well, almost everyone.
Question: I need to have our surgery center, which is a joint venture with a hospital, accredited by an agency. Since we are associated with a hospital, do we have to go with the Joint Commission [on Accreditation of Healthcare Organizations]?
Answer: No. You can go with the Joint Commission, American Association for Accreditation of Ambulatory Surgery Facilities (AAASF), or Accreditation Association for Ambulatory Health Care (AAAHC). They are all acceptable by payers and are recognized as having deemed status by the Department of Health and Human Services.
[Editor’s note: Earnhart & Associates is an ambulatory surgery consulting firm specializing in all aspects of surgery center development and management. Contact Earnhart at 3112 Windsor Road, Suite A-242, Austin, TX 78703. E-mail: email@example.com. Web: www.earnhart.com.]