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Not for the Faint of Heart
Now that it's up and running, this doctor loves his surgery center. But it wasn't easy.
Douglas Lavenburg
Publish Date: October 10, 2007   |  Tags:   Facility Construction and Design

When I look back on the experience of building and opening an ASC, I'll tell you candidly that it's not for the faint of heart. The process is complicated, frustrating, time-consuming and expensive.


That said, I'll also tell you that building an ASC was the best business decision I've made. In just a few years, it has taken my practice to a level that most likely would have taken two decades to achieve. The ASC has enabled me to increase my practice income, as well as expand services into profitable cosmetic procedures such as skin resurfacing. Once you have the facility, you can roll-on, roll-off equipment as needed to offer services that benefit your patients, your practice, and the bottom line.

Back in 1998, we were pioneers in our area with the idea of a single surgeon-single specialty ASC. I say "we" because, for the ASC project, I partnered with an ophthalmology group that already owned a surgery center in a community some distance from mine. This group offered a good deal of know-how and capital. The deal was that it would acquire a perpetual, 25 percent ownership of the ASC. I was to earn my 75 percent share through labor.

It seemed like a win-win situation then, and it still does now. My one word of caution is that you should only undertake such a partnership with friends-and I don't use that term loosely. Every aspect of your relationship will be tested by the complex process of building an ASC.

The first step was locating the ASC. I already had a successful ophthalmology practice in Newark, Del., but at that time, Delaware required a Certificate of Need for surgical beds. The CON process seemed too costly, so I looked just a few miles south to neighboring Maryland, which had no CON requirement for centers of this size. We selected a location about 12 miles away in Elkton, Md.

We then proceeded to make two mistakes that cost us later.

First, we hired contractors who were very experienced, but also based very far away. Six months later, when we had problems, we found that they were reluctant to return. Looking back, we should have specified a "withhold" in the contract in case the work was not completed. We also should have used local contractors. In general, if I were doing it over, I would be very careful to create a paper trail with all vendors, with written commitments to completion dates.

Our biggest "learning experience" was yet to come, though. We took the inspection process a little too much at face value, perhaps lulled by the state's simplified approval process. Our understanding was that we just needed to build the center to comply with local and state building codes, and then have the fire marshal inspect it.

We did the above, and received our occupancy permit in January, 1999. We then called to arrange our Medicare inspection. At that time, we were asked if we'd had our fire inspection. We said we had, and assumed we were "good to go" with Medicare patients, even though we didn't have a provider number. A representative from the Medicare office informed us that we could begin business if the inspection was completed, and a Medicare number was in process,

What we didn't realize is that Medicare has its own fire inspection, at its own direction. In March, another fire marshal showed up, this time representing Medicare. We passed the inspection, and received our Medicare provider number. Unfortunately, Medicare disallowed about 30 cataract procedures done in February and March. We had plenty of paperwork to back up the claims, but it was a no-go-we "ate" the surgeries.

My advice is to take your Medicare inspection and approval very seriously. Colleagues tell me that today, facilities wait four to six months for Medicare inspection. During this time, you will not be reimbursed by Medicare for any procedures. Be sure to factor this into your timetable and budget.

Along the way, we learned a few other things:

  • Leasing equipment is better in some ways than buying. We bought, and once the sale was completed, had trouble getting service. Unless you have very deep pockets, it's probably better to partner with the vendor and pay for the equipment over time, as it makes money for you.
  • You'll have many more staffing headaches with an ASC. Although our center is separate from our practice, it's also integral to it. Make sure you have an accomplished practice manager who can build an entire team to operate the practice and the ASC together.
  • Information exchange will be incredibly important, particularly if you have more than one location. Invest in excellent software and hardware that gives you access to patient information wherever you are.

Probably the best overall advice I can give is to partner with someone who has built an ASC before. Even though we did not avoid every mistake, we still were able to get through, and get the center up and running. Consultants, group practices, and health care facilities often are willing to partner with you for a stake in the center. This is well worth it, because it can be the difference between building an ASC and not building one-and I'm glad I built mine.