The Brief: You wouldn't open a Bakery without planning, strategy, and experienced advisors - so why would you open a Surgery Center without expert advice that could potentially make or break the project?
I peeked into a bakery the other day, not sure if they were open, looking for a donut to allow my brain to keep thinking about surgery centers. The nice lady handling the cash register assured me that they have been open for a couple of months, but they keep the lights off to save money and they had hung a makeshift vinyl sign (on the back side of the building) because the neon types are too expensive for a new business. Not sure why they don't hang it on the front of the building but I didn't ask, at this point. They had only baked a few items because they weren't sure how many customers would come through the door and they didn't want to waste inventory. Makes sense, at this point. The cashier was just sitting there waiting for customers while a few other people seemingly baked and prepared for whatever may or may not happen that day.
Seems absolutely crazy, right? Pour your heart and soul and all of that money into a business without any idea how it was going to perform, overstaff it, worry about paying expenses as important as utilities and don't even let people know that you are open??? Who would do that???
ASC investors. Every single day. And honestly, that scenario is more the norm than the exception.
Most physicians that invest in surgery centers do so as they are seeking an opportunity to investment in a business in which they work. This is no different from many small businesses that are started by a craftsperson. Most people that start businesses do not start them because they are experts in business...they are experts in the service or good, such as baking, not the actual nuts and bolts of the business. Bakers need business guidance sometimes (obviously), and so do many physicians. And just like opening and owning a bakery (X1,000...) surgery center development requires expert guidance.
Develop a business plan with a detailed proforma - before you sign a lease or invest a dime, make sure you have a realistic proforma. Know how much money you will have to invest. How much do you need to borrow, and can you borrow that much? Is the ROI worth the risk? Not a single number in that proforma will be correct, but with accurate assumptions and expert advice you will know if the ASC is something in which you want to invest.
Ensure you have the right partners - like minded partners, including physicians, hospitals and private investors, are key to a successful business. Make sure you are on the same page with everything from culture to equipment. Hard feelings come from expectations not being agreed upon initially, so get on the same page before you begin.
Understand your options (and tradeoffs) - As a surgeon at the top of your game you will have ASC options. (Invest in an existing center? Create my own?) And many decisions to understand. (How many partners do I need? Should I build or lease? Is it best if I partner with the hospital? Bring them in now or JV later?). Hire an expert to make sure you have thought about every aspect of the investment and put your time and money in a place that will be the most enjoyable and profitable. As the Stones said, you can't always get what you want, but...and I'm paraphrasing here...make sure you get what you need.
To most I'm sure these things seem simple and obvious, but the thrill of starting a new business can be overwhelming and the high fives and good times are quickly replaced by cash calls and angry tones if you don't pay attention to these things early and often. I don't know anybody who would buy a house without an inspection, but I've helped many a physician after they have signed a lease without one. So if you are thinking about developing or investing in a new surgery center and find yourself asking the question - "Why do I need these guys?"...you probably do.
The donut was fantastic by the way.
Visit www.alignasc.com to learn how Align may be the right fit for your ASC.