Private equity from surgeons & actively tracking KPIs for your orthopedic ambulatory surgery center.
Probably the biggest trend in orthopedics over the past decade is the rise in patients choosing ambulatory surgery centers over hospitals for surgical care. Outpatient is the new in-patient when it comes to surgery.
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 a more traditional workday hours and costs are saved on not running the facility 24 hours each day.
While there are several reasons that patients and surgeons can benefit from a specialized orthopedic ambulatory surgery center, this space is rapidly changing. With less red-tape and corporate oversight, surgery center administrators have the 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, while administrators are looking for ways to streamline workflows while cutting costs.
Private Equity Investments in Orthopedic Ambulatory Surgery Centers
One modern trend that surgeons are noticing is that 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 of 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. Not only is it a way for the doctor to personally diversify their holdings, but allows a different form of control and involvement within their employer.
While there are a variety of surgery centers in different specialties that are noticing the upward trend of private equity investments, orthopedics is a particularly interesting investment.
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. With growing reimbursement rates met with competition challenges that surgery centers face, surgeons investing within their facility is an effective way to continue growth.
Several surgeons who held 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.
While most surgeons are pleased with their investment, there are certain things to take into consideration when deciding whether or not to invest private equity back into your surgery center. Longevity of career at the facility in question, if the investment would be tax-efficient for the individual investing, and anticipated practice growth are things to consider before investing.
One thing to note, a private equity investment company cannot invest in an orthopedic center. So, typically a third party company is formed as well as 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 or KPIs to 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. By closely monitoring the average days to bill can also reduce denials, lost payments, and even increased sales, and, of course, the ultimate perk is getting paid faster. Most surgery centers have a goal of 45 days between service to billing for most insurance companies with a few exceptions as workers’ compensation can 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 dictation to be completed 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