THE ASC LIFE CYCLE PRINCIPLE IS A CYCLICAL CONCEPT
THE ASC LIFE CYCLE PRINCIPLE IS A CYCLICAL CONCEPT
When operating an ASC, your success depends on a steady stream of procedures moving through the practice. The more physicians in the practice, the more procedures you need to perform. The more procedures you need to perform, the more you need to understand the ASC Life Cycle principle, which we also commonly refer to as the “three r’s.”
The ASC Life Cycle principle is a circular/cyclical concept that takes into account REFERRALS, REVENUE, REPUTATION. See the figure below.
When operating an ASC, your success depends on a steady stream of procedures moving through the practice. The more physicians in the practice, the more procedures you need to perform. The more procedures you need to perform, the more you need to understand the ASC Life Cycle Principle, which we also commonly refer to as the “three r’s.”
The ASC Life Cycle principle is a circular/cyclical concept that takes into account REFERRALS, REVENUE, REPUTATION. See the figure at right ›
Generally speaking, it starts on top, and moves clockwise, but you will see how it can move in both directions. The basic takeaway in this concept is that you will generate procedural revenue through referrals. These are referrals that come primarily from health systems, but also those that come from patients.
A referred patient will convert to a procedure some predictable percentage of the time. (That depends on a number of factors, including your reputation, which we’ll get to in a moment.) It’s important to be an observer of these important principles in your practice – and it’s something you can task your PA or office manager to track. How many consults turn into procedures? Track this over a quarter to forecast your year. Track this over a year to forecast future years.
Generally speaking, it starts on top, and moves clockwise, but you will see how it can move in both directions. The basic takeaway in this concept is that you will generate procedural revenue through referrals. These are referrals that come primarily from health systems, but also those that come from patients. A referred patient will convert to a procedure some predictable percentage of the time. (That depends on a number of factors, including your reputation, which we’ll get to in a moment.) It’s important to be an observer of these important principles in your practice – and it’s something you can task your PA or office manager to track. How many consults turn into procedures? Track this over a quarter to forecast your year. Track this over a year to forecast future years.
And since procedures equal revenue, you can also have those metrics help you forecast year on year growth needs. Every procedure will yield a fairly predictable revenue, and you can also use these valuable KPIs to determine what your procedure mix should be. [This helps when you’re recruiting a new physician to the practice, or thinking about bringing in other practice areas, such as physiatry/therapy.]
Once you have achieved a certain revenue threshold, the reputation of your ASC will invariably change. The practice that’s booked for months in advance will be perceived as an “in-demand”place for particular surgical procedures. The practice that’s only got two procedures in the OR during a week is likely in trouble. Notice how this is a delicate balance: you want to be perceived as a thriving practice, but you also want to maintain a steady stream of referrals – the health systems in the area will want to ensure that their referred patients can be seen and treated in a timely manner. But they’re not likely to refer to the practice that’s “wide open.” So tread carefully here and maintain a balance between very busy and available for referrals. This is also an excellent meter for determining when you need to expand the practice.
Reputation can also be influenced by the marketing you are executing. Generally speaking, patients will go where they are referred by their GP or hospital, but they are more likely to inquire about – and even request a consult at – a practice that’s more visible in the market. If you’re not marketing, you may miss out on a stream of prospects that could have turned into procedures.
There’s no need to rush this cycle – a typical ASC has to build up a reputation over a period of years – but the sooner you understand and maximize this principle, the sooner you have the opportunity to reap the benefits it can provide.
And since procedures equal revenue, these metrics can help you forecast year on year growth needs. Every procedure will yield a fairly predictable revenue, and you can also use these valuable KPIs to determine what your procedure mix should be. [This helps when you’re recruiting a new physician to the practice, or thinking about bringing in other practice areas, such as physiatry/therapy.]
Once you have achieved a certain revenue threshold, the reputation of your ASC will invariably change. The practice that’s booked for months in advance will be perceived as an “in-demand”place for particular surgical procedures. The practice that’s only got two procedures in the OR during a week is likely in trouble.
Notice how this is a delicate balance: you want to be perceived as a thriving practice, but you also want to maintain a steady stream of referrals – the health systems in the area will want to ensure that their referred patients can be seen and treated in a timely manner. But they’re not likely to refer to the practice that’s “wide open.” So tread carefully here and maintain a balance between very busy and available for referrals. This is also an excellent meter for determining when you need to expand the practice.
Reputation can also be influenced by the marketing you are executing. Generally speaking, patients will go where they are referred by their GP or hospital, but they are more likely to inquire about – and even request a consult at – a practice that’s more visible in the market. If you’re not marketing, you may miss out on a stream of prospects that could have turned into procedures.
There’s no need to rush this cycle – a typical ASC has to build up a reputation over a period of years – but the sooner you understand and maximize this principle, the sooner you have the opportunity to reap the benefits it can provide.