Our client, GCC Health, operates eight Ambulatory Surgical Centers (ASC) on the east coast. GCC Health has consistently been a profitable organization, but over the past two years, their ASCs’ cumulative revenues have been flat at $400 million/year. The CEO of the company is concerned about this and has hired your firm to increase revenues by 15%.
Background information:
Ambulatory Surgical Centers (ASCs) are healthcare facilities where surgeries that do not require hospital admission are performed. Also known as outpatient surgery centers, they specialize in providing same-day surgical care, including diagnostic and preventive procedures.
Key Features of ASCs:
Outpatient Care: Patients arrive, undergo surgery, and are discharged on the same day, without needing to stay overnight.
Common Procedures: Procedures performed at ASCs typically include minimally invasive surgeries, such as cataract surgery, endoscopy, colonoscopy, arthroscopy, and some cosmetic and dental surgeries.
Cost-Effectiveness: ASCs are generally less expensive than hospital settings. They reduce costs by streamlining care, avoiding overnight hospital stays, and requiring fewer personnel.
Efficiency: With a focus on specific procedures, ASCs often have faster turnover times and more efficient scheduling compared to hospitals.
Regulation and Accreditation: ASCs in the U.S. are regulated by the Centers for Medicare & Medicaid Services (CMS) and can also be accredited by organizations like The Joint Commission or the Accreditation Association for Ambulatory Health Care (AAAHC). They must meet strict standards to ensure patient safety and quality care.
Patient Safety: ASCs have a strong safety record and often provide specialized surgical teams. However, because patients are discharged the same day, ASCs typically handle low-risk cases where complications requiring hospitalization are unlikely.
Growth: ASCs have been rapidly expanding in recent years due to increasing healthcare costs and a demand for more convenient care options. Technological advancements, such as minimally invasive techniques, have also contributed to their growth.
Business model:
ASC revenue is equal to the number of procedures performed in the facility by the expected reimbursement per procedure. Each ASC will have a different number of doctors in different specialties. Each specialty can bring in a different number of patients and they have different reimbursement rates.
What are the possible solutions to increase revenue?
ASC Expansion - 1:
The company has suggested expanding their services to one of the three cities - Nashville, Indianapolis and Charlotte. Assume that the number of doctors in Charlotte is 30, Indianapolis is 25 and Nashville is 16 in the ASC.
Given the number of doctors and the doctor per speciality, which city would serve as the best entry point for the company?
ASC Expansion - 2
Let’s assume that orthopedics bring 15 patients/month, neurology is 10 and gastroenterology is 12. Also attached is the reimbursement rate/patient.
How much revenue would the city you had chosen contribute to the overall revenue of the company?
Does expanding to that city achieve revenue growth? If not, what can be done?
Bringing additional revenue:
The company can bring in 2 urologists who bring 8 patients/month at each of their current sites. What’s the additional revenue?
Would the addition of the urologist specialty to GGC Health’s offerings supplement the revenue enough to meet the new goal?
Does it meet the goal when added to the revenue from the city expansion recommendation?
