Is Your ASC Investment Profitable? 3 Ways To Tell

Is your ASC investment profitable?

If you own all or part of an ambulatory surgery center, you’ve invested a lot of money, energy, and time in what is essentially a small business. So how do you ensure your ASC is being managed well on top of everything else you do as an ophthalmologist?

Make sure you spend some time every month or every quarter looking at your ASC’s books and benchmarks, say Stephen Sheppard, CPA, COE and Erin Malloy of Medical Consulting Group, who presented an OOSS University session at AAO 2015.

Here’s what you should expect to see from your ASC’s financial manager:

1. Income statement. Also called a profit and loss statement or P&L, this report summarizes the revenue your ASC brought in, the operating expenses, and the net income. It’s a “dynamic” document, Malloy explains, so it can change month-to-month or quarter-to-quarter.

Seasonality affects most ASCs, with most seeing their heaviest caseloads in Q4 and their lightest caseloads in Q1

It’s smart to analyze months or quarters within a larger context—comparing a quarter to the same quarter the previous year, for example. Why? Seasonality affects most ASCs, with most seeing their heaviest caseloads in Q4 and their lightest caseloads in Q1, says Sheppard. Q4 is typically heavy because Medicare patients have met their deductibles and they “want the second eye done,” Sheppard says.

2. Balance sheet. While the income statement is “dynamic,” the balance sheet is a “static” look at your ASC’s financial health. It factors in assets such as inventory and uncollected A/R, as well as liabilities such as mortgages and debts.

3. Cash flow statement. This report captures elements from both the income statement and the balance sheet to gauge the “lifeblood of the center,” Malloy explains.

Good-to-Know: Most ASCs use a cash-based accounting system, recording income when it’s actually received and expenses when they’re actually paid. Why? It’s convenient and simple enough for most bookkeepers to handle, Sheppard says. Larger ASCs are required to use accrual accounting, which records income and expenses as they occur, regardless of whether cash has exchanged hands.

Compare Your ASC’s Numbers Against the Norms

If your ASC’s income is lower than you would like, take a closer look at your biggest expenses—labor and supplies, says Sheppard. Most ASCs have 24-28 percent of net collections allocated to buying surgical supplies and drugs, and 22 percent allocated to paying staff.

Tip: If you’re looking to cut supplies costs, don’t waste your energy fretting about cheap stuff like shoe covers, Sheppard advises. Look at expensive or high-volume surgery items, like IOLs, for example, if you do a lot of cataract surgeries.

Photo Credit: reynermedia. Used under Creative Commons license.

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