Same-Day Surgery Manager

Are there alternatives to building a surgery center?

By Stephen W. Earnhart, MS
Earnhart & Associates
Austin, TX

There are times when a freestanding surgery center is not feasible. Some of the more significant reasons include:

Certificate of need (CON).

Many states will not allow surgery centers to be built based upon an assessment of need for such a center if a quantifiable need cannot be proven. For example, a center may be allowed to be built if there aren't enough current operating rooms at other facilities to handle the amount of surgery.


With the collapse of the "subprime" lending market, it is becoming more difficult for surgeons and surgery centers to raise the capital for such a center. The average cost of a surgery center, not counting the land and the building, is often in excess of $5 million. It's not an endeavor for the faint of heart.

• Reimbursement changes.

While some procedures are enjoying a reimbursement increase, others have taken a dramatic decrease. There are some potential surgery centers out there that have a high specialty mix of the reduced reimbursement cases that make it not financially feasible (although it can still be politically feasible) to move forward.

• Unwillingness of hospital partner.

More hospitals are balking at the prospect of sharing the revenue of outpatient surgery with their surgeons. While they would like to partner, the loss of the outpatient surgery revenue could be catastrophic to some smaller hospitals.

At the same time, most hospitals need more surgical space for their growing demand. Often, they are constructing new operating rooms and surgical pavilions to have a more cost-effective alternative to high-cost inpatient surgery.

So, what are the options? Clearly surgeons are looking for increased efficiently in the workplace. Our own data show that efficiency in operations is the No. 1 reason surgeons want a surgery center. Hospitals obviously would love to increase their efficiency as well, but it is not inherent in most busy hospital surgical environments. Practices and attitudes need to change in order to become as efficient as we would all like to become.

Many of the surgeons involved in the development of surgery centers are in the building stage of their surgical practice or winding it down. Both parties are concerned about taking on the debt of investing in a surgery center and have fears of continued cutbacks in reimbursement.

Again, what can be done to satisfy all these issues? While it will not work for all, there is an alterative that we have found to be successful: Construction of a new surgical "pavilion" or outpatient department that does not allow for physician ownership, but is overseen and managed by a professional surgery center management company. The surgeons are included in all aspects of the design of the center (monthly meetings), so they include what excites them and drives the center to be patient- and surgeon-friendly. So many hospital surgery departments are designed around the needs of the hospital and their staff (oh, yes they are!) that often the surgeons do not feel they have or had a say in the development.

The surgeons need to be incorporated in all aspects of the management of the center. We have countless meetings with the surgeons and the staff to make sure the new surgical environment acts and feels like a freestanding, highly efficient facility. Just by including the surgeons and staff in the process drives the center to become more efficient, thus also making the center more profitable for the hospital. A win-win-win-win scenario.

(Earnhart & Associates is an ambulatory surgery consulting firm specializing in all aspects of surgery center development and management. Contact Earnhart at 1000 Westbank Drive, Suite 5B, Austin, TX 78746. E-mail: Web: