9 oft-repeated questions from the trenches

By Stephen W. Earnhart, MS,
President and CEO
Earnhart & Associates
Austin, TX

I enjoy answering questions from Same-Day Surgery subscribers. I try to return as many as I can, but I may receive as many as 80 e-mails or phone calls per column.

Below are some interesting questions that are typically repeated, so I will share my answers with you this month.

Question: Should I have full-time staff or a mix of full time and per diem?

Answer: This is a no-brainer. Having all full-time staff eliminates the opportunity to reduce your expenses during off-peak hours or seasonal variances. A mix of full time and per diem gives you that flexibility, but it may upset your surgical staff by having rotating staff on their cases. Per-diem staff members don’t have the same loyalty to your program that full-time staff members might give you, but they may be easier to find. As usual, don’t take the heat for this on your own. Meet with your surgical staff and discuss the merits collectively. Obtain their input before you act.

Question: Should I buy equipment or lease?

Answer: Leasing equipment is making more and more sense in the business world. Why buy something that you know is going to fall apart in the near future? Pay more for the leasing fee and budget for the increase rather than the replacement. Overall, it should be cheaper than replacing outdated equipment. In a leasing arrangement, there shouldn’t be any unexpected costs.

Question: Can our surgeons approach our hospital (a not-for-profit facility) and buy into it? By doing that, perhaps we could avoid their starting their own surgery center.

Answer: That makes sense that they could; however, physicians are not allowed to joint venture with hospital outpatient services (including surgery). The physicians and the hospital need to set up an entirely new company, usually a limited liability company (LLC) and use that new company as a vehicle for forming a surgery entity together. That new entity then would obtain a new medical provider number to bill patients for their services. The existing hospital provider number cannot be used.

Question: Should I outsource billing or do it in-house?

Answer: Tough call. Those who outsource are pleased (and displeased), and those who internalize it are in the same boat. The new Health Insurance Portability and Accountability Act regulations are driving more people away from the liability of doing it in-house. But surprise: You, as the institution, still are liable regardless of who does the billing. The cost still is cheaper to do it in-house, and you are not held hostage to your coder or staff. Some of the billing companies are so busy that you lose the customer service that you are striving for internally. That’s the loss of control issue.

The bottom line? Ask your billing company that you are considering to perform an analysis for you of the difference in rates, and compare their rates to doing it in-house. You will find it is very close. After that step, it is a judgment call.

Question: Should my facility undergo physical expansion or expand hours of operation?

Answer: Most facilities that were built five and 10 years ago already have eliminated the cheap option of a physical expansion because there is no longer contiguous space available, or you already have expanded your facility to the maximum. What is left is very expensive. Expanding your hours of operation and days of the week is infinitely more attractive from a cash standpoint than bricks and mortar. If necessary, move block time for the newest investors or users to the later blocks. Combine that change with a per-diem staff, and cha-ching!

Question: We have in our system a vice president who insists that our productively in the operating room reach 100% before he will allow us to hire more staff or expand our services. Right now we are at 78%, and everyone (but him) is happy. Rooms turn over quickly, and the surgeons are not complaining (well, about turnover time anyway). What should we do?

Answer: You are at an ideal productively level. If you go much above that 78% mark, you are going to run into elective cases running late, longer turnover time, and upset surgeons. By being much above 78% to 80%, you are going to lose the ability to flip-flop cases — thus, expanding your day. Ask you VP to visit the operating room, talk to some surgeons, and generally understand what would occur if he insists on this matter.

Question: Should I offer salary increases or profit sharing?

Answer: Salary increases should die a natural death. Pay should be based upon merit and profitability. Clearly, this option will not work for everyone, especially the hospital markets, but the incentive should be the growth of the company and not the individual.

Question: Should I allow new investors vs. a closed shop?

Answer: This is a major issue in most ambulatory surgery centers (ASCs) today. The original investors want to keep the revenue only to themselves, which is a closed shop, even though they are decreasing their own cases. The way to make continuing money in an ASC is to constantly reseed the partnership with new blood. Often, a surgeon who sells part of his or her shares to a new surgeon in town will fare better by the new revenue that person brings in.

Question: Should the administrator of an ASC be an RN or business manager?

Answer: Five years ago, I would have said it has to be an RN. Today, we are probably using 60% RNs and 40% business managers. Surgery centers are multimillion-dollar businesses. It is increasing difficult to find clinical staff with strong business skills. We often rely on a team approach of a business person coupled with a strong nurse manager.

(Editor’s note: Do you have additional questions? Contact Earnhart at 8303 MoPac, Suite C–146. Austin, TX 78759. E-mail: searnhart@earnhart.com. Web: www.earnhart.com. Earnhart & Associates is an ambulatory surgery consulting firm specializing in all aspects of surgery center development and management.)