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Business Advisor
The Art of Recruiting New Surgeons
Chris Bishop
Publish Date: July 13, 2008

Is your surgery center near capacity and as profitable as it could be? Physician-owned surgery centers are projecting 3.3-percent volume growth this year and corporate-partnered ASCs are projecting 3.8-percent growth, according to a survey of 200 ASCs published in February by Deutsche Bank. You can do better than this. The key to filling your operating rooms might be recruiting additional doctors.

We all agree that more doctors are better. So why do we invest so little time pursuing them? First, it's not simple. Second, we flinch at the term "salesman." However, we're all salesmen. You're constantly selling yourself as a highly proficient surgeon, nurse or administrator. Every day, you're convincing patients that they're in the most capable hands for an upcoming procedure. So get out there and start selling your center to potential physician-investors. Here are 10 steps to grow your surgeon-investor list.

1. Determine your capacity. In our facilities, we often project that we can perform between 2,000 and 2,500 general anesthesia cases per operating room. If your facility has two ORs, your capacity goal could be 4,000 cases. Say you're performing 2,200 cases and for the next 12 months would like to increase your volume by 1,000 cases to 3,200. These additional cases usually are performed at a higher margin because much of your overhead is fixed. Your lease payment, liability insurance, taxes and administrator salary, for example, remain fixed whether you do 2,000 or 10,000 cases.

2. Assess your market. Grab a map and identify your "service area." This will be different in each area based on the local physician population. For example, we have facilities in rural areas where we recruit in a 40-mile radius and facilities in metropolitan areas where our service area is just 5 miles.

3. Identify your market. Pull out your "high-tech" list: the Yellow Pages. Look under "surgeon" and the specialties you're targeting. I've used the Yellow Pages on many occasions to create a comprehensive list of surgeons. Then I pare down the list by talking with the following sources:

  • Physician-partners. Partners are often your best sources. They know who is a fine surgeon and performs a knee arthroscopy in 30 minutes and who needs two hours. Take things with a grain of salt, however, as personality conflicts can skew a physician's perception of a colleague.
  • OR staff. They probably have worked with other surgeons in your area and can provide valuable insight into your more highly desirable surgeon-targets. They also might know which physicians are hard to get along with and which habitually shows up late.
  • Anesthesia providers. Because they provide anesthesia at multiple sites, these people have a good idea of who is fast and who is not. Anesthesia providers usually enjoy working in the more efficient ASC environment because, like surgeons, they're paid by the patient, not by the hour.

4. Target certain specialties. You may also want to prioritize your specialties based on recent changes in Medicare reimbursement. For example, orthopedic and GYN are among the specialties where a substantial rate increase will be phased in over the next four years. In orthopedics, knee arthroscopy is going from $550 per case in 2007 to about $1,200 in 2011. We're also seeing new procedures included, such as minimally invasive knee arthroplasty. Historically, surgical centers haven't targeted gynecologists, but these reimbursement changes merit a closer look in order to help fill your ORs (see "What's New in Gyn" on page 68).

5. Draft physicians to help you. Once you have the support of your physician-partners, enlist their help in recruiting the target-physicians. I've found that physicians are excellent in explaining the clinical and qualitative benefits of a facility, such as their patients' experience with friendly staff, easy parking and on-time starts. However, it's my belief that physician-investors are very uncomfortable with financial explanations.

This is where you'll truly exceed your worth as chief executive. You understand the financial details of your center because you live with the cold, hard numbers every day, on top of all the clinical, HR, legal, regulatory and psychiatric hats that you wear. At this point, you'll need to work with your accountant, appraiser or healthcare attorney to calculate the fair market value of the units you'll create for new investors based on the formula amount detailed in your operating agreement.

6. Make a lasting impression. Don't make a "sales call" until you're prepared. If you're a seasoned recruiter, you may only need one trial run in front of a mirror. However, if this is new for you, prepare, prepare, prepare. The more prepared you are, the more you exude confidence. You may even inject a little of the old "Saturday Night Live" humor, and say to yourself: "I'm good enough, I'm smart enough, and doggone it, people like me!"

Prepare three to five questions for the surgeon that require him to explain his current frustrations. Find out what's important to the physician and take notes. Ask him things such as:

  • What's your average turnover time?
  • Could your block times be better scheduled?
  • When a procedure is scheduled for 7 a.m., are you incising skin at 7 a.m., or does this simply mean that you attempt to have the patient in the room by then?
  • Does your current surgical facility treat your patients like royalty?

This accomplishes three things. First, it will ease your anxiety because the physician is talking about challenges that you know your facility has mastered. Second, it helps you identify the surgeon's true hot buttons, which for you are sales opportunities. Third, it shows this prospective investor that you've prepared for the meeting.

Then ask him to rank his top two or three concerns and explain how you can better meet his needs. Don't go overboard. A rookie sales professional's mistake is listing every single benefit of your ASC. A surgeon doesn't make his decision based on benefit Nos. 4-50. If you can meet his top three needs, he'll be interested. My absolute best sales calls have usually lasted less than 10 minutes.

7. Show you're serious about moving forward. Explain that your center is profitable (or at least nearly profitable) and that his participation will benefit the center. Have a confidentiality agreement on hand in case the physician is interested in evaluating your offer. At the same time, ask for the physician's surgery information so that you can identify his block time needs.

Wait until after he has performed cases at your center to provide the physician with a simple financial summary of your center. This gives him time to review the confidentiality agreement and request any changes that he feels are necessary.

Determine what equipment you'll need for the procedures he'd bring to the center. Obviously, you're not going to completely retrofit your facility for one surgeon, but you can work to accommodate him, including taking the new equipment list to your current partners for approval, should the surgeon decide to join you after the trial period.

8. Ask for credentials. Give the physician your credentialing package. Since it takes as long as six weeks to verify the key documents of this package, you might consider issuing temporary privileges based on your personal verification of several key items. The company we use to verify these packages charges around $115 for standard review and an additional $30 for an expedited option.

Once the physician is credentialed, require a minimum 60-day trial period during which you'll monitor his usage of requested block time, how he treats the staff and how he fits in with your clinical team. This period also lets the surgeon trial the center and make sure that it meets his expectations as well as the needs of his patients. Rent or demo equipment needed during this time before deciding to purchase or lease.

9. Agree on a slice. If the prospective investor passes all your tests and he still seems interested, then recommend to your center's physician board that you offer the physician a partnership. We often offer one-half or two-thirds of a share. We feel that the new investor doesn't merit a position equal to that of the founders, who took the greatest risk. At the same time, the center's need for capital may also determine the percentage allocated for new physician-investors. In the Medicare world, you can't legally eat what you kill. Remind prospective investors to base their decision on the quality of service they receive in the ASC, as well as earning an attractive return on their investment.

10. Make an offer. Have your healthcare attorney generate a buy-in package for the prospective investor that includes copies of the operating agreement, the management agreement, the current financials (including any debt that the investor may be required to guarantee and his pro rata percentage) and a discussion of the risk factors. Request that the surgeon, upon review of this package, sign, invest and become an integral part of the center's operation. It will result in a true win-win situation for everyone.

120 days from today
How many of today's 5,000-plus surgery centers are as profitable as they could be? How many are even near capacity? Some would say that new surgeon recruitment is the surest strategy to grow an existing facility. Now that you have a game plan for recruiting surgeons, don't delay. If you begin today, you should anticipate a minimum of four months to close your first surgeon-investor.