6 Common Questions on ASC Syndication and Physician Recruitment: Q&A With Blayne Rush and Curtis Bernstein

Blayne Rush, president of Ambulatory Alliances, and Curtis H. Bernstein, managing director of Sinaiko Healthcare Consulting, tackle six common questions associated with ambulatory surgery center (ASC) syndication and physician recruitment. Q: What is the difference between syndication and physician recruitment? Blayne Rush: Physician recruitment is the process by which we recruit physicians that will do procedures in our surgery centers. When we refer to physician recruitment, we are not recruiting that physician to invest in the surgery center — at least not until we have established a substantial relationship with them. We want them to use the surgery center for their cases. Syndication simply refers to a private securities offering of ownership interest in a healthcare company. You run across this term most often in the selling ownership interest in the surgery center business but you can syndicate just about any kind of healthcare company — surgery centers, medical office buildings, medical equipment companies, and so on. Syndication typically takes the form of a sale of limited liability company units or limited partnership interest, although they can also involve the sale of shares in a corporation. Physician recruitment, in terms of a surgery center, is always part of the syndication process but syndication in not always part of physician recruitment. Q: What does an ASC need to do to prepare to recruit new physicians and/or syndicate? BR: The preparation all depends on what stage of the life cycle that the surgery center is in but a good bit of the process is the same. Let's start the discussion from the pure recruiting physician's angle around an existing and operational center cycle. In the physician recruitment area, one of the first steps is to evaluate the center to see if and why any of the current physicians are not bringing all of their qualified cases to the center and then what the barriers are. Meet with each of the physicians and ask the question: "What can we do differently that will make you more comfortable in bringing all your appropriate cases to the center?" One of the first steps is to understand where the shortfalls are occurring. The reason that this step is very important because going forward, operational inefficiencies will strongly affect recruitment and retention of cases and recruiting new doctors. Some of the typical responses are as follows: • Preferences with equipment or instruments not available at the ASCrn• Investments in another facility or a treatment suite at their officern• Hospital politics/pressures • Confusion around out-of-network vs. in-network contracting at centerrn• Confusion with the facility cost for cash-pay patients • Staff or scheduler non-compliance • Lack of adherence to start timesrn• Lack of familiarity/comfort with ASC staffrn• Lack of transparency — both financially and with executive decisions • Third-party payor contracts • Lack of background research on/compatibility with providersrn• Lack of partner enthusiasm/partner frustration It is imperative that leadership understands that their top priority is to remove as many barriers as possible so that it is easy for the surgeons/physician to perform all of their qualified cases in this center. Create pro formas that can quantify the financial benefits adding only a few more cases per month. Surgeon-owners must clearly see how incremental case volume growth leads directly to higher margins (given that overhead costs are largely fixed when centers are at breakeven). This helps make the case that the investment of their time in the recruitment process is very profitable. Evaluate each surgeon's block times. Some surgeons may be able to or open to being flexible with their scheduling in order to accommodate new physicians. Define the kind of physician you want and can support or how you would support physicians that are not married to another ASC. For example a natural fit for a spine center is to add pain or orthopedics and podiatry. While we at one time could pick and choose what types of specialty docs we wanted to add, this is not the case in all markets. Let's say you have the physical space that could handle GI but no GI equipment, and you are not making a significant profit to be able to purchase GI equipment. Could you recruit, say, three busy GI docs and package them together and they purchase the equipment and then lease it back to the center? You can justify this since the center is not highly profitable. In other words you need to be creative through this process. Determine your recruitment process and who will be responsible for driving it. Put together a plan will help rally the team and get others to buy in. You then will discuss this process with existing partners, physician users and staff. Everyone needs to be on the same page and understand what you are doi