ASC Turnaround Case Study

By Tom Mallon, CEO

FOR SEVERAL YEARS prior to Regent Surgical Health’s involvement in 2006, the ambulatory surgery center at St Mary’s Hospital in Reno, Nev., was unprofitable. Managed by the not-for-profit hospital, the underperforming surgery center struggled to earn enough income to cover its expenses. The center, while busy with 500 cases per month, was squeezed by shrinking reimbursements, certain unprofitable surgical specialties and rising costs. Six months after the hospital brought in Regent Surgical Health, the ASC started to thrive with the addition of a spine program. In 2005, a group of physicians, led by neurosurgeon James Lynch, MD, approached the hospital’s management about teaming with Regent to revitalize the ASC. The physicians were impressed with Regent’s model that allows majority ownership and control by the doctors and the many services it could provide them. The Surgery Center of Reno was formed in February 2006 by a syndicate of 22 physicians owning 75 percent; St. Mary’s, which retained I 3 percent ownership after selling the facility to the center; and Regent The ownership model was an LLC with five surgeons, the CEO of St Mary’s and one Regent partner serving on the board of directors. Renovations to the 17,000-square-foot facility created five operating rooms and a procedure room. The improvements facilitated additional specialties of spinal neurosurgery, bar iatric surgery, urology and pain procedures through the addition of new equipment According to Lynch, Regent’s leadership improved the center’s payor contracts, boosting revenue and developing a more efficient and cost-effective operating philosophy, which in turn contributes to an enhanced level of patient care.  The outpatient surgery center now operates from a strong business platform, which includes reduced supply costs and the benefits from competitive bidding. Financial results have been strong. During the first year, the center generated a 50 percent return on investment; by the end of the 14th month of opening, the facility has had a 110 percent return on investment.