1. Evaluate your options to build new or relocate thoroughly and realistically to make sure you have a compelling reason to build new and move. Engage experts in the process; include your architect, accountant, realtor, physicians and administrator.

2. Evaluate your state regulations to determine your options. For example, find out if you can move the ASC’s existing license without any delay in cases and payments.

3. Run the numbers. Use current financial data to be realistic and thorough in your projections.


Title: Senior Vice President of Operations Facility Name: Surgery Partners City: Kansas City State: Missouri

What are your top three pieces of advice for ASCs looking to build new or relocate?

Make sure you have a compelling reason to build new and move. Building a new ASC will cost more because of the tenant improvement costs and will likely increase the cost of rent. As a high-level estimate, for an 11,000-square-foot, four-OR ASC, the tenant improvement costs to build new will be in the $2.5–$3.3 million range, depending on local market conditions and specs. The full-service lease rate could also increase $10–$20 per square foot. From our experience at Surgery Partners, some of the compelling reasons to

build new include: ■

You need to grow and expand the center, and the current physical location is extremely dated and/or landlocked.

The current ASC is hindering your ability to recruit new, younger surgeons seeking a safe, efficient place to do surgery that is also a beautiful facility they believe will help them grow their practice.

■ You are introducing new service lines requiring larger ORs, such as spine. ■ Your lease is terminating and the landlord will not renew.

■ ■

The current facility will likely not meet or be grandfathered in under anticipated new Life Safety Code requirements.

The renovations needed in your existing ASC would force you to close for an extended period, and not only is this costly because of lost revenue, the impact to the surgeons who likely will not be able to find adequate OR time elsewhere would be too detrimental to their practice.

Evaluate your state regulations to determine your options. Most states allow your ASC license to transfer to a new location once your state health department has approved the facility as meeting local, Medicare life safety and other requirements for ASCs. This information is critically important to know as you consider your options and plan your relocation. If your license will transfer, you could potentially move your ASC over a long weekend with no operational downtime. You also might be able to avoid payment delays from Medicare or other third-party payers. If your state has Certificate of Need (CON) restrictions, you should make

sure any renovation, expansion and/or relocation does not require a new or amended CON.

Run the numbers. The decision to stay and renovate or to move will come down to many factors— some objective (new volume, new specialties) and some subjective (overall sentiment of the physicians, a belief that if you build it they will come, yearning for a beautiful new facility). Develop proformas for staying and renovating and for building and moving to help you make an informed decision. Include new revenue from new specialties and cases, as well as hard and soft costs for both options. Building and moving is, obviously, a very significant and time-consuming process, and do not forget the significant increase in real estate taxes. Whether you own the building or just lease it, you will be paying the real estate taxes. New construction can add $10 per foot to your occupancy costs.


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