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How to Maximize Your Ambulatory Surgery Center’s Contribution Margin


Dr. Andrew Schoenfeld, who spoke on a panel at Becker’s Annual Spine, Orthopedic, and Pain Management-Driven ASC + The Future of Spine Conference about the future of ambulatory surgery centers (ASCs), said it best: “The single most important thing to staying competitive in the market is efficiency.” 

Running a successful and profitable ASC requires surgeons and staff to act as efficiently and strategically as possible. However, doing so is challenging when faced with obstacles like constant underutilization of the operating room, a heavy administrative burden, and a highly competitive industry to keep up with.

That’s why healthcare professionals review and analyze several financial metrics to help them make the most strategic business decisions possible and optimize their ASC’s performance. The contribution margin, which is defined as revenue minus variable expenses, is a critical metric for measuring ASC profitability and cost-effectiveness. 

Typically, it’s advised that surgical centers maintain a contribution margin of 30 percent or more to be successful for the long haul—but doing so is easier said than done with so many important factors to consider. Here’s how to maximize your ambulatory surgery center’s contribution margin and position your business for long-term success:

Consider Your Surgery Center’s Capacity

First, consider your ASC’s capacity in terms of both surgeries and physical space. What is the current volume of surgeries in the market? What is an appropriate case volume to ensure needs are being met while also maximizing your contribution margin? How many cases (and which specialties) can your surgery center accommodate?

Asking the right questions and gaining a more thorough understanding of your surgical capacity will help avoid unwelcome reductions to your ASC’s contribution margin due to underutilization of the operating room. Instead, make informed decisions regarding which surgeons and specialties will be scheduled most to maximize your contribution margins.

Determine Which Cases Are Most Profitable

Another step to maximizing your ASC’s contribution margin is to determine which procedures, specialties, and surgeons generate the largest contribution margin, which varies greatly. The surgical specialties most often served in ASCs include:

  • Ophthalmology
  • General surgery
  • Otorhinolaryngology (ENT)
  • Orthopedics
  • Gastroenterology
  • Pain management
  • Plastic surgery
  • Urology

Once you recognize which procedures, specialties, and surgeons are generating the most revenue after subtracting any variable costs, you can further define your strategic priorities, allocate OR time accordingly, and make informed decisions regarding your ASC. You can also optimize your surgical specialty mix to increase your contribution margin and your ASC’s overall profitability. 

For example, orthopedic surgeries usually see a much higher net revenue per case than pain management or gastroenterology procedures. However, pain management and GI cases might be best used to fill the gaps in the existing ASC capacity.

Make Data-Driven Operational Decisions 

Using your learnings on capacity, specialty areas, and surgical staff, you can make changes to optimize your operations and improve the health of your ASC business. For example, if pain management procedures are not bringing in enough revenue, you may want to target higher contribution case types to optimize your total contribution margin and strategically fill in unexpected financial gaps.

Or, after reviewing each surgeon’s contribution margin, surgeons with the highest contribution margins per OR hour should have maximum allowable OR time. This way, your top performers are making the most of their time in your facility. Be mindful of inflated contribution margins or outliers that have a tendency to skew data, such as unusual medical situations that impede productivity and/or increased operational costs.

Speaking of operational costs, remember to consider your supply expenses as well. Certain specialties, such as ophthalmology, typically have higher supply costs than others. Recognizing where you’re losing out on supplies—and making changes accordingly—will help decrease your expenses, and in turn, increase your ASC’s contribution margins.

Maximize Your Contribution Margin for Lasting Success

Utilizing data to build forecasts, plan for the future, and anticipate potential obstacles will enable you to make smarter decisions regarding your business. After compiling your data and using it to inform your decisions, consider developing a strategic marketing and physician recruiting plan to attract the specialties and cases that will help you ultimately optimize your overall contribution margin.

By analyzing ASC data and adapting your strategy and business plan as necessary, you can gain an in-depth understanding of both your service line and surgeon profitability—and ultimately maximize your contribution margin for lasting business success. Unsure of where to go next? Amblitel partners with ASCs like yours to help elevate performance and improve profitability. 

Book your free consultation to talk about your goals and how we can help meet them.

Strategic Planning for Ambulatory Surgical Centers