4 Business Mistakes to Avoid at Successful Orthopedic Surgery Centers

Here are four common situations to avoid in profitable orthopedic and spine practices.

1. Failure to bring in complex, high-paying ASC cases. In order to succeed, an ASC needs to change and develop when necessary, Rob Murphy, founder and CEO of Murphy Healthcare Group and founder of ASC Turnaround Group, says. "Failure to constantly bring in more complex, higher-paying ASC cases puts the facility behind the curve," he says. "This would be the equivalent of running a restaurant with the same limited menu year after year." He says in order to maintain strong ongoing profits, ASCs must make sure to stay ahead of the competition by adding profitable procedures that may not be available elsewhere. Examples of these cases include complex spine procedures or total joint replacements.

2. High staff turnover rates. High turnover rates can decrease a practice's profitability because of the time spent on training the new staff member rather than on treating and recruiting new patients. It is not good enough for physicians to just find staff member who can fill the position; the new hire must be a good fit for the practice. One area where many physicians run into hiring problems is by not having or creating insufficient job descriptions. Nicola Hawkinson, CEO of SpineSearch, a recruitment and educational company with a focus on spinal practices, who is also a nurse practitioner, says that she had been hired by a physician who was unsure what her job description was. Due to a lack of an accurate job description, the job that needed to be done wasn't being accomplished, and the lack of a defined position became frustrating to Ms. Hawkinson. "The problem could have been easily remedied with an accurate job description," Ms. Hawkinson says. "With an accurate job description all three parties involved win. The doctor has a highly efficient staff, the employee knows exactly what is expected of them, and the patient receives optimal care." Ms. Hawkinson has found that through her experience in the field by helping practices define job roles and create optimal staffing methods, profit margins can be increased. "Before hiring, a physician should identify gaps in the workplace and assess what is needed in the daily workload," Ms. Hawkinson says. "Determine what needs to be done or needs to be done more efficiently."

By taking the time to determine exactly what position needs to be filled can save practices money. "This way, you won't end up hiring an office manager for $75,000 when you can hire a clerk for $35,000," she says. Michael H. Cox, PhD, CEO of Central Maine Orthopedics in Auburn, Maine, notes that in 2007 CMO was experiencing a turnover rate of 50 percent when he joined the Practice. "To address the turnover rate, I took a page from Al Stubblefield's 'Journey to Excellence' and put hiring decisions into the hands of the employees. Subsequently, CMO has reduced the turnover rate to nearly zero. This changed because employees have a vested interest in the success of the new employee, and the interview process is focused on behavior and character rather than skill," he says.

According to Dr. Cox, human resources and the related department manager at CMO create a short list of candidates for a position, which may include some phone or in-person interviews. The short listed candidates are then scheduled for interviews with an employee interview team without managers present. The employee group makes the recommendation on the hiring and Human Resources do the follow-up. Dr. Cox notes that CMO employees who do the interviewing have been trained on the legalities and processes of interviewing. "Employees have ownership of the process and are selecting a colleague who has the right character and integrity for the center," he says. "Because the employees understand the method and are sincere about the approach the chances of picking the right candidate is improved considerably."

3. Paying for implants before using them. Larry Teuber, MD, president of Medical Facilities Corp., says implants should always be held in consignment, meaning implants on the shelves in your facility should be the property of the vendors. "Most people hold implants in equity, meaning the vendor will deliver the implants, then slip in and put five implants on the shelf and bill the facility and book the sale to collect commission," Dr. Teuber says. If implants are held on consignment, the vendor owns the implants until the surgeon uses them in surgery and generates a use slip.

4. Physician-owners forgetting to prioritize the ASC. Once the ASC is up and running one to two years and the honeymoon is over, frequently the partnership will stop acting cohesively, says Joyce K. (Deno) Thomas, senior vice president of operations at Regent Surgical Health. The physicians start picking on each other and undermining one another by doing things like comparing case revenue or commenting on one physician's caseload or number of low paying patients a physician treats. Eventually they may even suggest kicking out physicians or will want preferential treatment for those physicians they think are producing more for the bottom line. That will rip apart a partnership in a facility incredibly fast.

Your physician partners have to stay good businessmen, level-headed and thinking together as a team rather than as an individual. When you select your board members, who can help control this issue or put a stop to it, you need to critically look at partners who have a good, level head. Look at who is going to be the best [leaders] for the facility because they're good businessmen rather than putting in the most popular physicians or the physicians doing the most cases. This may help to get away from the in-fighting.

You also need to have an administrator who can do reality checks and isn't afraid to step up to the physicians and say things like, "every case that comes here helps contribute to the bottom line and pays the rent;" "When you're on vacation, the rent still goes on;" and, "As long as the cases contribute to the bottom line and we have the capacity, we are going to be a facility that recognizes the value of every person." An administrator needs to be somebody who is your champion and can maintain that level head.

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© 2011 Murphy Healthcare Group Also d.b.a. as ASC Turnaround Group. All rights reserved.