Over the past decade more patients are choosing ambulatory surgery centers over hospitals for surgical care.
For patients, choosing an ASC means their recovery is in the comfort of their own home. Instead of extended hospital stays, outpatient surgery allows for the patient to have more control over their recovery process. And in many cases, this benefits both the surgeon and patient. Outpatient surgery means eliminating the costs of staying overnight in a hospital.
But also for the surgeon that means working traditional workday hours. By not managing staff and services for 24/hours, surgery centers can manage lower costs.
There are several reasons that patients and surgeons can benefit from an orthopedic ambulatory surgery center. However, this space is rapidly changing.
Surgery center administrators have less red-tape and corporate oversight working in an ASC. They also have freedom to try new technologies and implement new strategies. This means that trends inside orthopedic surgery centers are always changing.
Surgeons are constantly looking for ways to monetize their practice. Meanwhile administrators are looking for ways to streamline workflows while cutting costs.
Private Equity Investments in Orthopedic Ambulatory Surgery Centers
Today, doctors are investing in surgery centers and taking more of a role in the management.
Private equity is a form of financial investment that takes place outside the publicly traded stock market. In this scenario, investors gain ownership within a private company. This form of investment is growing in many different sectors. It’s estimated that $1.2 trillion in the U.S. has been invested into private equity.
For doctors, investing back into their surgery center makes sense. This is one way for doctors to personally diversify their holdings. It also allows a different form of control and involvement within their employer.
A variety of surgery centers noticing the upward trend of private equity investments. Yet, orthopedics is a particularly interesting investment.
Why is Orthopedics a good candidate for private equity?
For one: the demand for orthopedic surgery is high, and continues to grow. According to the U.S. Bureau of Labor and statistics, orthopedics is expected to grow 3% from 2021-2031. That may not seem like a major growth percentage, but there are more than 23,000 openings for physicians and surgeons each year.
With the aging baby boomer population and high demand for surgeons, this makes the perfect scenario for an investor. It’s predicted there will be long-term sustainable growth in orthopedics specifically.
Investing private equity into surgery centers also gives surgeons different paths for the future. Surgeons investing within their facility is an effective way to continue growth. This is important as reimbursement rates continue to climb and competition steepens.
Several surgeons holding private equity within their surgery centers were surveyed, asking about their satisfaction in the investment. Of those surveyed, 85% say the investment is exactly what they expected or better, which is a high satisfaction rate.
Most of the surveyed surgeons are pleased with their investment. But, there are certain things to consider when deciding whether or not to invest in private equity.
Longevity of career at the facility is part of the decision making process. Also, would the investment be tax-efficient for the individual investing? What is the anticipated practice growth are things to consider before investing?
One thing to note, a private equity investment company cannot invest in an orthopedic center. Typically a third party company is formed alongside a formal agreement to put money back into the practice.
Analyzing Key Performance Indicators for Surgery Centers
Another trend that both surgeons and administrators will hear about more regularly are hitting key performance indicators. KPIs help determine whether the surgery center is effective. As surgery rates continue to increase, efficiency is key in running a modern surgery center.
REVENUE CYCLE KPIS
Reducing days from surgery to billing is a key performance indicator that many surgery centers measure. Closely monitoring the average days to bill will reduce denials, lost payments, and even increased sales. But, the ultimate perk is getting paid faster.
Most surgery centers have a goal of 45 days between service to billing. Most insurance companies, with a few exceptions, take longer.
CASE VOLUME INCREASING
Sure, more cases means more income. But, most ambulatory surgery centers want to increase caseload without burning out surgeons. In fact, this can mean more up-front work for administrators and increased communications with patients. By creating a surgical schedule that is more efficient, surgeons can increase caseload with ease.
But, patients need reminders to show up early. Surgeons need to spend less time on paperwork such as post-op dictation. And there needs to be less lag-time between cases.
Setting a benchmark for this is difficult because it varies on specialty. However, implementing efficiency software can be an initial tactic to determine the measurable KPI.
DECREASING POST-OP DICTATION TIME
One goal should be for all surgery centers should be to complete dictation in a timely manner. One KPI should be to complete all dictations within a 24 hour period. The risk of lagging on dictation is a delay of payment
Learn more about how to hit all of these KPIs here.
Continued Growth in Technology
Many healthcare executives are growing tired of hearing about the necessity of robotics, augmented reality, and other futuristic devices. However, these driving technologies are here to stay, providing higher case loads, assistants for surgeons, and overall improved training.
The market for robotic surgery is expected to increase to $14 Billion globally by 2026. Robotics are expected to help reduce readmission rates. This is accomplished by providing surgeries with smaller incisions, less blood loss, and higher accuracy.
However, as previously mentioned costs are continuing to rise for surgery centers. It can seem impossible to invest in robotics or augmented technology with budget challenges.
But yet, there are ways to reduce costs and ultimately afford this size of investment. Here are a few strategies to help reduce costs in order to invest in robotics.
Healthcare In 2024
As we continue to work in the new year, exciting innovations will come to light and new trends will take priority. Knowing options as far as private equity, managing employee KPIs, and finding ways to invest in technology will help this year be productive and successful.