YANKTON, S.D. - Both in real-time and hindsight, the process of building Lewis & Clark Specialty Hospital and opening the doors in a mere 18 months was fast and furious. Most likely, none of us really understood the depth of commitment that would be required.

That being said, we believe it was one of the best professional decisions we could have made. Our surgical hospital, with two ORs, a procedure room and six overnight beds, has made it over the "hump" of the first six months. We're operating profitably, and our multi-specialty caseload (running at 190 per month) is growing. Best of all, we're delivering health care in a patient-friendly setting that brings to life our beliefs about quality care.

	FACILITY: Lewis & Clark Specialty Hospital, Yankton, South Dakota WEB: writeOutLink("www.lewisandclarkspecialty.com","1","sb") IN SHORT: Although the local hospital initially opposed the creation of this surgical hospital, both facilities have achieved a mutually beneficial relationship.

The beginning of our venture in Yankton, SD, was like many others in the ambulatory surgery industry. It started with a group of physicians, mostly surgeons, who felt there might be a better way to offer patient care. A number of them began meeting for the sake of creating an IPA (independent physician association). They felt they had very little influence on the hospital in our town and even less with insurance companies. They wanted a unified voice and a say in their own destiny.

They tried to initiate a joint venture with the local hospital, Avera Hospital, to build an ASC. After lengthy nonproductive discussions, the hospital rejected their proposal. Although that seemed like a setback at the time, it turned out to be the most energizing moment for our physician group. For it was at that point that our group of physicians decided to move forward without the hospital.

Getting started
Even though our investors and members of the board were a collegial group to start with - Paula Hicks, MD, Myles Tieszen, MD, FACS, and John Willcockson, MD, had worked together, and even had friendships dating back to medical school - it still took them some time to hash out ideas and get everyone on the same page.

ASC Group's affiliated architect showed our group numerous floor plans for surgical centers. Our group toured several affiliated facilities; it was extremely helpful to see their finished projects before finalizing their plan. They tweaked an existing floor plan to fit their needs. ASC Group also interviewed and selected a general contractor out of Sioux Falls, with the group's approval.

Finding financing was also a challenge. ASC Group helped again by putting us in touch with GE Capital. We were able to obtain nonrecourse funding, which means our investors didn't have to personally guarantee the loan. We understand that it's harder to obtain nonrecourse funding now, particularly for projects of this magnitude ($3 million for bricks and mortar, and another $2.5 million for equipment, supplies and start-up capital).

Complex construction process
Partly because of our aggressive, nine-month timeline for project completion, it seemed that we had an inordinate amount of physical problems with the building and grounds that had to be corrected. For example, as the building settled, the doorframes were affected, and some of the doors no longer closed properly. Fortunately, we had an excellent general contractor with experience in building healthcare facilities who was able to resolve this problem and many others without delay. The lesson here is to take the time up front to identify a trustworthy, experienced general contractor, and he will save you time and money later.

In all, things really went our way. The often-harsh weather in our region was unusually mild, and we moved quickly through our timeline. One of our investors took a strong personal interest in the project, and ASC Group assigned a full-time person to the site to keep things moving. This kind of dedication is important for a timely completion and something we'd strongly recommend to any investment group.

Our staff suffered some after-construction problems with building systems. The HVAC and security systems are managed by computer, and it was difficult to master the high-tech components. At the time we designed the building, HIPAA privacy concerns were not so much on our minds, but we wish they had been. The admitting area is large and open, with the patient just stepping up to a counter. If we were to do it again, we'd have some private "cubbies" for patient intake.

Equipment and staff
As the CEO, I can tell you that our staff had a hard time working smoothly with our surgeons. We were faced with six medical specialties and 11 surgeons (we now have 39 physicians on medical staff) who were new to us. It didn't help that I was hired in January and charged with opening the center in April (I would not recommend such a tight timeframe!).

This left four short months to find out what the surgeons wanted and needed, develop the equipment budget, and actually purchase what we needed. We joined Premier buying group because they offered the best discounts. We purchased mostly new equipment, because we did not have the time to adequately research the best sources for refurbished equipment.

Fortunately, finding qualified staff was not a problem, probably because specialty hospitals are the next step in surgical healthcare. The setting is attractive to employees, as well as patients. We placed one small ad in the local paper, and received 400 applicants (in a town of just 15,000 people). The hard part was sorting these out to hire the very best 30 for our staff.

Startup surprises
Medicare certification was more problematic, due to our condensed timeline. We knew it would be a challenge to get our survey done in time, yet some of our managed care contracts were contingent on Medicare certification. I campaigned quite vigorously with the state Department of Health, and this paid off. The state sent a surveyor a day or two after we opened, and we received our certification about a week later.

In our first few months of operation, we faced several other challenges, including:

• Physician preferences. We thought we had what each doctor wanted, but then one would say, "I don't use that kind of trocar '" We had picked apart preference cards, but we didn't always have it right.
• Efficiency. Training and working with new staff members meant slower case times. Unrealistically, some of us expected to achieve immediate efficiency (that we now have).
• Case volume. It was lower than expected, resulting in negative cash flow (we're now comfortably in the black).
• The competition. Avera Hospital closed its medical clinic in Yankton, which had been an important referral source for some of our surgeons. Avera also supported a lawsuit that indirectly slowed down our urology case volume.

Dealing with competition
This brings us back to the relationship with Avera Hospital. Even though Avera chose not to participate in this project, we must acknowledge that the Avera System's great influence in our area continues to make it a significant part of our world. We would advise other independent physician groups planning a project like ours to be prepared for this reality. Here's what to expect:

• Local hospital(s) will consider your facility to be the competition. This will make it fair game for all manner of competitive tactics, from attempting to dissuade surgeons from bringing cases to you, shutting down sources of referrals and influencing public opinion. Remember that corporations compete in this way all the time. In business, doing whatever you can to slow down or eliminate the competition is not only acceptable, it's expected. Don't take anything personally and keep yourself above the fray.
• If possible, maintain a professional business relationship with the hospital. You may need it for tertiary services (such as lab and imaging). We have such an arrangement with Avera and do our best to keep it going because it's mutually beneficial.
• If the local physicians and patients need your services, your facility will do fine. Ask yourself: Have we really done our homework? Are we offering something truly different or better?

If you can honestly answer "yes" to those questions, it's possible for both your facility and the local hospital to survive and thrive. Competition isn't necessarily a bad thing.

Final thoughts
A key to your success will be the cohesiveness of your investor group. In our case, the original 10 investors really had to band together to make the project a success. If we were to do it again, we'd lower our expectation of immediate success and be more realistic about the time it takes to achieve success. And, we'd expect the unexpected.

Overall, we're very pleased with our beautiful hospital, located on an attractive 3.5-acre site. We selected this real estate because it's in a part of our growing community, it overlooks a golf course and it's just off a major highway. But the best part is what's inside. Our pre-op and recovery areas are carpeted and decorated tastefully. Our overnight beds are in private rooms with all the comforts of the Hilton, and meals are served on china, with "real" utensils. When patients are discharged, we give them a robe and a box of candy. These touches mean so much to people (and are in sharp contrast to the institutional feel of a conventional hospital). Add in the genuine caring and people-skills of our talented staff, and you have a specialty hospital that patients hate to leave.