Becker's ASC Review

23 Sign up for the FREE Becker's ASC Review E-Weekly at www.beckersasc.com or call (800) 417-2035 5 Action Steps for In-Debt Surgery Centers By Laura Miller R obert Carrera, president and CEO of Pinnacle III, discusses five action steps for ambulatory surgery centers struggling with debt. Reconfiguring extra space can be difficult and require upfront resources but may provide significant savings to the surgery center in the long run. 1. Rearrange space if the surgery center is overbuilt. One of the more common issues with surgery centers is overbuilding. Surgeons or developers forego a professional feasibility study and over-project potential patient volume during the planning phase, building too many operating rooms and purchasing too much equipment. These centers quickly find themselves with unmanageable debt. 2. Bring on new partners or investors. When the surgery center needs additional cash flow, it may be time to bring on new physician partners or even partner with a hospital or management company. An additional surgeon bringing cases into the center will raise case volume but also increase expenses and lower the percentage of ownership each surgeon claims. When the surgery center needs a quick injection of cash, bringing in a hospital or corporate partner is often the best bet. "Some facilities are oversized or over-equipped because they were not planned properly from the beginning," says Mr. Carrera. "If the facility was designed for another group, it might encompass too much space for the current tenants. In this case, you could look at closing an OR but you are still stuck with the rent that goes along with it. Another option is to reconfigure the space to reduce square footage." "Look at your options for bringing in additional partners and reducing your capital from those partners to pay down the debt," advises Mr. Carrera. "You can also look at some type of partnership with a hospital or corporate entity to purchase a reasonably large portion of the center and use the capital obtained to pay down the debt." If new partnerships aren't available, surgery centers can consider working with banks or private equity to borrow money. 3. Refinance the surgery center. When surgery centers are underperforming and need to borrow money to get back on track, seek opportunities to refinance debt and spread the payments over a longer period of time. This is also a viable option for traditionally successful surgery centers that are having a difficult time meeting cash flow needs in today's economy or who may have taken out additional lines of credit. "In this case, a turnaround plan is necessary to refinance the center's debt," says Mr. Carrera. "In some situations, looking for a large equity partner may be the only option. Look for a group that can assist you with the refinancing process and bring in some capital." When you approach lenders about refinancing, you must relay why the surgery center was unsuccessful in the past and what you will do differently in the future. LOOKING FOR A HELPING HAND? We have a few... MedBridge is your one stop shop for all ASC and physician practice business needs. With over 13 years of serving physicians and ASCs, MedBridge has developed and solidified the strategies that take your center to the next level. So take a good look at some of our staff, because these are the experts available to serve you. DEVELOPMENT | TURNAROUNDS 121 Gray Avenue, Suite 200, Santa Barbara, CA 93101 • toll free : | ADVISING 1.888.MEDBRIDGE • | BILLING www.MedBridge.md

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