5 Barriers to Replacing a Volume Leader in an ASC

There are two scenarios in which ASC leadership will typically find itself under pressure to replace a surgeon who contributes significant case volume. The first — and preferable — scenario is a scheduled exiting from the ASC, such as one tied to retirement. Leadership will have the ability to proactively plan for this departure.

The second — and much more difficult — scenario is a sudden departure of a surgeon due to reasons that can include death, illness, relocation, or hospital employment. In this situation, ASC leadership will find itself in a more reactive position, scrambling to find ways to offset the sudden loss of volume.

While each scenario presents its own challenges, there are barriers that can stand in the way of successful recruitment of new surgeons applicable to both. Here are five to watch out for.

1. Equipment, Staffing, and Training

Unless you can find a replacement surgeon who performs the same procedures, uses the same equipment and is willing to work with the same staff as the surgeon you lose, you'll need to take into account any new surgeon's needs. This will likely entail purchasing new supplies and devices, and possibly capital investments if the surgeon requires major equipment your ASC is lacking. The surgeon may desire to bring in some of their own staff. If this surgeon wants to bring new procedures, you will need to ensure clinical staff are trained on how to support these cases and business staff on how to code and bill for them. The cost of adding a new physician can quickly add up.

Even if you're very eager to add a new surgeon, take the time to learn a candidate's needs, what it will cost to address these needs, and whether your budget can comfortably cover these expenses.

2. Share Price

A common obstacle to adding surgeons is the ability for a new physician to buy into the ASC. It's not unusual to see situations with a physician who wants to buy in, but shares are $500,000 and the surgeon carries $250,000 in student debt.

To increase the likelihood of adding new surgeons, ASCs must work to keep that ownership share price at a reasonable figure so it isn't a deterrent for new physicians to get in the door.

Another approach through which some ASCs find success is by securing financing options with a bank of choice. For example, owners finance the purchase of the ASC's building with a certain bank. The agreement includes a stipulation that if the owners do sell shares in the ASC, the bank will give new physicians a preferred rate or overlook financial issues such as student loans.

3. Existing Shareholders

Current ASC owners can stand in the way of adding new surgeons when shares are involved. Some physicians may balk at the idea of offering additional shares without creating more shares because this can dilute their holdings.

4. Hospital Employment

Over the past 5-10 years, hospitals have stepped up their effort to employ physicians. Some employment agreements do not allow physicians to own shares in an independent ASC. These agreements are just one of the factors shrinking the physician candidate pool.

If your ASC enters into a partnership with a hospital, work to keep such language out of physician employment agreements.

5. Operating Agreement

An ASC's own operating agreement can be an impediment to adding physicians. During an ASC's development, owners may be focused on their own, short-term interests. Since there isn't a need for continued investment at the time, sometimes language concerning the new investor process is omitted from the agreement's original structure. When there is eventually a desire to add physicians, the lack of this language could stand in the way. And if any existing owners are opposed to adding new physician owners, revising the agreement to allow recruitment may prove difficult.

When creating or updating an operating agreement, consider the future needs of your ASC.

Learn about how your ASC can overcome the loss of a high-volume physician during my ASCA 2018 session, "Your Volume Leader Is Leaving—Strategies for Surviving and Thriving," scheduled for Thursday, April 12, from 9:10am–10:10am.