Growth Factors for ASCs: “More” Can Scale, Different Is Different w/ Michael McClain

Erik Sunset: [00:00:00] Hello and welcome back. I’m Erik Sunset, your host of the DocBuddy Journal. Here at DocBuddy, we deliver healthcare solutions that take the pain and cost out of broken workflows. From the ASC to the clinic to On Call at the hospital DocBuddy helps providers create and move data seamlessly. All from the point of care.

Erik Sunset: You can learn more about us and our solutions at docbuddy.com and today we’ve got a great guest, Michael McLean, founder of Left Coast Healthcare Advisors. He has 20 years experience in healthcare, including time as a hospitalist pa, and he is held leadership roles in several large and small healthcare organizations.

Erik Sunset: He’s also a nationally recognized speaker and frequent contributor in the ambulatory surgery space. Michael, we’re so glad you’re contributing to the DocBuddy Journal today. Thanks for joining us.

Michael McClain: Thanks for having me, Erik. This should be fun.

Erik Sunset: Yeah, I’m looking forward to it. I know, uh, we go way back, our organizations do. Before we get into sort of the meat and potatoes of the episode today, we were just talking about the TV show, The Bear.

Erik Sunset: Uh, so before we get to that point, what else should [00:01:00] listeners know about you?

Michael McClain: Oh, you know, I’m like, I think I’m the poster child for not figuring it out the first time. Um, you know, I had a few different pathways to get here. You know, I never thought I’d be a consultant in this space. And I think that’s pretty reminiscent of a lot of people in the ASC industry. Um, maybe you started in hospitals or, you know, maybe you started as a, A nurse in a, an E, an E R.

Michael McClain: Um, and a lot of us kind of migrated here. I talk about sometimes the ASC industry is hospital refugees. Uh, and we migrated into the space because it was fast moving and you could make decisions quickly and you get to be the chief and cook and chief cook and bottle washer. Um, and so even though I’m, I guess you could argue at a point in my career where, um, I could do a lot of things.

Michael McClain: I’m still here because this is fun. Um, but I didn’t think it’s, I didn’t, I certainly didn’t start here. I didn’t think I’d be here.

Michael McClain: So

Erik Sunset: [00:02:00] I haven’t heard that one, refugees from the hospital and that kind of ties in. I’ve had a number of guests in recent episodes that have come on to talk about leadership and culture at the ASCs. And, you know, it’s kind of, it seems to me as an outsider, you know, I’m on the vendor side of the ASC space among other places of care, but sort of a common refrain is that you have an administrator leave and, Hey, we’ve got this great charge nurse or director of nursing, or this person in our ASC who’s doing Never held a role like that, but they’re the one that’s who we want to lead this organization.

Erik Sunset: So that way you just said it makes a ton of sense and kind of crystallizes it for me.

Michael McClain: yeah, absolutely. Um, I mean, I was a PA running my hospitalist group in a large Catholic health system and had some buddies who were orthopods starting in ASC who said, you want to leave that hospitalist practice and help us. And I’m like, I don’t even know what an ASC is. You know, but uh, too many nights and weekends and my wife being a trauma [00:03:00] nurse, I never saw her.

Michael McClain: The idea of, you know, what was sold to me, which all of us as ASC administrators know was not a nine to five job. But what was sold to me as a nine to five job seemed pretty appealing at the time. And you know, 20, 25 years later. Still doing it.

Erik Sunset: Well, and what you just said, didn’t even know what an ASC was. The common refrain from our good friends at ASCA and all of our state associations is that awareness around the ASC is one of the biggest hurdles to this very rare win, win, win in in healthcare. And that’s kind of a nice segue that part of the reason we’re speaking today is that you will be leading a session at CASA, which is the California, uh, Ambulatory Surgery Association.

Michael McClain: Yeah. Um, one of the great West coast, uh, ASC conferences, um, you know, we’re doing, uh, I’m doing a small session on financial improvement and operations for ASCs. Um, we love being at CASA, being a [00:04:00] West coast organization. We have a lot of, of friends in that space, I would say, former colleagues, current clients.

Michael McClain: Uh, but if you’re going to hit one conference, CASA is it, and that’s That’s the reason that we go. Um, we, we support it heavily. They do a great job. So if you’re free, man, get down to Anaheim. It’ll be fun.

Erik Sunset: Can’t speak highly enough about the organization. April Lightenberg is absolutely incredible at what she does. Uh, so just want to reiterate that September 4th through 6, we’ll get a link to the association in the show notes so that if you’re, if you’re out west or heck, even if you’re not, you know, you’ve got a chance to get signed up.

Erik Sunset: It is just a few weeks away, September 4th through 6 for CASA and Michael, I know one of the, one of the core focuses of our talk today is really around awareness of what you’re doing. Be able to holistically at a plan. Uh, for your A. S. C. For your facility. Before we started to record, you said something that [00:05:00] really rang true to me that if you’re if you’re planning to do more at your A.

Erik Sunset: S. C. More of what you’re already doing is just more, you know, that scales pretty credibly. But if you’re gonna be doing something different. That’s not just more. So let’s dive into that a little bit. If we can,

Michael McClain: Yeah, no, no, I’d love to. And, uh, you know, I would say probably the question we get asked the most, um, and not just as consultants, as colleagues, or you’re, you’re sitting at dinner with a, friend whose husband or wife is a surgeon. And when we’re thinking about adding this, what do you think? And you know, like I said, adding more of the same, you can scale, you know, what’s happening.

Michael McClain: Maybe you need a few more nurses. Maybe you need a few more trays. I mean, it’s, it’s a little more predictable. Adding new service lines brings this complexity of changes in payer contracting and reimbursement. And you know, how does it impact anesthesia? How does it change your workflow? Maybe new offices, new equipment, new [00:06:00] vendors.

Michael McClain: Um, and the tendency is to focus on best case scenarios rather than worst case. And unfortunately the reality often is it doesn’t go as fast as you hope. It’s not as easy a transition as you’d planned. Uh, reimbursement doesn’t Turn around as quickly as possible. And it creates more headaches the first two, three, four, six weeks of service. You know, I, I, I love, uh, auto racing, uh, in particular, not Formula one, not NASCAR, but like nitty gritty SCCA, like running around in corners with loud kind of slow cars. And, you know, the key to being a great racer is, is going slow is understanding the track until you really get comfortable with it. And then laying the hammer down.

Michael McClain: And I think the same really applies as you grow your business, which is sometimes you got to go slow at first [00:07:00] to really understand the landscape before you can really go fast. And so we really push on a. our colleagues, friends, clients, much of their chagrin. Sometimes they want to go faster. Um, but you really need to do some of that.

Michael McClain: Slow down, check all the boxes and then hit the accelerator.

Erik Sunset: we didn’t plan this out, but Michael, once upon a time, uh, you’d have been surprised to hear that I was one of those guys, you know, going through the cone track, you know, in a relatively slow vehicle, and you could always tell the contenders because their first lap through was, as you described, nice and slow, let’s get a lay of the land and then subsequent laps.

Erik Sunset: Got faster and faster and faster. So that’s wise words. Good crossover there. Good carry over.

Michael McClain: Now, if it’s got four wheels and a, and a, Preferably eight cylinder engine. I love it.

Erik Sunset: Yeah, you and me both. To bring us back to our focus here, one of these, one of these new things for the ASC, or [00:08:00] relatively new, are, uh, cardio procedures coming off that inpatient only list. So for some facilities, that’s going to be very, very new. And heck, even for your, your surgeons, your cardiologists, it’s going to be new performing these procedures in the facility.

Erik Sunset: That news has sort of died down a little bit. We’re going to talk about AI and healthcare, you know, towards the end of our show here. But at the beginning of 2024, cardio off the IPO, that was, you know, big, bold font across all of the news sites. What, what’s happened? What’s changed? What’s coming? What do you see?

Michael McClain: You know, it’s interesting. Um, and this is kind of the, gives me a little bit of opportunity to lean into, you know, that clinical background as a, as a hospitalist is that. Many cardiovascular services in my mind, both clinically and operationally fit super well into an ASC. Uh, they’re predictable. Uh, you have a reasonably low, uh, comorbidity.

Michael McClain: Um, now that you have Medicare removing some of the restrictions, taking them off an [00:09:00] IPO list, allowing for ASC reimbursement, there’s a lot of opportunity there. The challenge is, it’s a very different specialty, um, than your typical surgical specialty. Uh, and so from a, from a clinical management standpoint, it requires a lot of change.

Michael McClain: Not just in the equipment, uh, to be able to image the heart, uh, image the vascular structure and anything you’re placing in there, but the education and training of your nursing staff. Um, quite often rhythm management. Especially if you’re looking at EP or things that are going to potentially impact the heart rhythm, become a much higher priority.

Michael McClain: And, you know, ASC nurses are awesome. My wife was one for, you know, 15 years after her time in the ED. But it’s a change of, of, it’s a change in your work style. You move back to that world of, I got to pay attention to the monitor all the time. Um, but the bigger picture probably is, is that [00:10:00] Medicare is made, is ironically one of the most progressive payers in the land on this space.

Michael McClain: They’re saying, go forth, begin these services. And yet you still have all the various regulations by state, uh, that may limit, restrict, or completely disallow cardiac services. And so, you know, understanding what you can and can’t do, you know, how do you slowly bring it in? Uh, just like we did 20, 30 years ago when we started to bring heavy, you know, heavier ortho or spine, um, start small, get really good at it, add procedures as you go along, uh, and, and build the muscle to be able to do it well.

Michael McClain: But it’s, it’s definitely the rage, but it brings a different, it also brings a different reimbursement. Uh, it brings a different case mix and payer mix because you tend to have patients that are a little bit older. A little bit sicker, a little bit different payer mix, you know, maybe a higher mix of Medicare, Medicaid.

Michael McClain: And so, [00:11:00] some of the standard assumptions that you’d make, hey, I want to add knee scopes, I want to add this. You got to make sure you’re touching on all those different drivers, you know, about what’s the reimbursement, what are the changes to your staff and training, what’s because it’s going to look and feel different.

Michael McClain: Doesn’t mean that doable just means might take a little more time to get in place to be able to really pull the trigger.

Erik Sunset: Well, and to that point where, where Medicare, I guess it’s called CMS, Medicare and Medicaid are saying, go forth and perform these cardiac procedures in the ASC. Um, this is not meant to be a conspiracy theory podcast, but a lot of my background is on the clinic side of EHRs, uh, where meaningful use was, you know, very well intentioned.

Erik Sunset: I think our outcome has ended up pretty good. If you look at it holistically for patients and providers and payers, that was really painful though, 15 years ago for a lot of clinics. So do you see a future where Medicare is saying, yeah, let’s unleash all of these procedures to the [00:12:00] ASC. That way we could maybe get some data.

Erik Sunset: So I don’t want to call it meaningful use part two, but meaningful use for the ASC seems kind of like a logical next step.

Michael McClain: You know, one of my biggest criticisms over the last 20 years is that the ASCs have been left out of that meaningful use, both data tracking and funding to allow for additional digital documentation. And that’s really left us as an industry. two or three steps back. I mean, all you have to do is go to a conference anywhere in the country and ask the folks that are drifting by a booth, do you have any HR or using paper charting?

Michael McClain: And you know, it’s still, uh, I’ve heard numbers as high as 50, 60 percent of ASCs still on paper charting. I don’t know if it’s still quite that high or if it’s moving backwards, but I think we’re moving progressively forwards depending on how you’re looking at it. Um, but I think that, There’s absolutely the opportunity to be able to capture that [00:13:00] data, to be able to present, uh, outcomes.

Michael McClain: I think the challenge that ASCs always have and will continue to have until there’s a more of a formal, meaningful use push, though, is that we provide services for a moment in time, which is that episode of care. And the real value in the data is 30, 60 days down the line, or sometimes even seven days down the line.

Michael McClain: Did you patient? Discharge, go home, go back to their community, and go visit a community ER, and they didn’t tell your surgeon, and they didn’t tell you. Uh, I think that’s the missing link, and I think once those pieces can be connected, ASCs can surge to the front. In terms of, of both data and outcomes, because it’s more than just the episode of care.

Michael McClain: It’s the, it’s the total outcome, but right now, because of, uh, the failure, I think of, of the federal government to help provide a pathway to get us compensated. [00:14:00] We’re playing catch up, but I think this is a great way for them to say, here, go prove yourself. It’s unfortunate that it still means most ASC investors.

Michael McClain: Are writing paychecks, uh, you know, writing checks to get the data a

Erik Sunset: Sure. And, you know, to be, to be fair to the ASC space and our physician owners, uh, you know, other stakeholders, if you’ve already bought four or five or six softwares, EHRs for your clinic, and. You know, if you found one you liked, you wouldn’t have bought the next one. And the next one, the next one. It would be really hard for me to, if I put myself in the shoes of the surgeon to go, yeah, let’s, let’s go spend another six figures.

Erik Sunset: And I don’t just spitball in here. You know, there’s only so many options on the ASC space, but let’s go write another six figure check for something I don’t want to use. I don’t have to use, and nobody’s telling me to use. I mean, that’s a

Michael McClain: hundred percent agree

Erik Sunset: tremendous value. Um, through that, Supply chain or stakeholder chain at the, at the ASC.

Erik Sunset: So pre op [00:15:00] post op PACU, but then you have the surgeon who in general is sending off dictations to be transcribed to come back as paper. You know, that’s, that’s a tough sell. I do not envy our friends at the major EHRs in this space.

Michael McClain: it, it, it’s a really tough sell. And what’s, what’s what we have to remember, um, about most. Physician investors in an ASC is that their primary business is their practice. Their primary business is not the ASC. ASC is in, in, other than situations where they have a real, uh, a really valuable ASC, which there are many of them.

Michael McClain: But many physicians really look at the ASC as a secondary source of income. And so it’s offsetting the, the beating they’ve taken on the professional side. And so it’s harder to maintain a second business with 90 or 120 or 180 days cash on [00:16:00] hand and to reinvest in technology both in your primary business and in a secondary business of which you might only be a small percentage owner of.

Michael McClain: Um, and so I think that the, the balance, uh, of the scale when it comes to investment and technology in the ASC space starts to lean towards how do you better utilize what you have? Uh, versus scrapping and starting over again and again. And, you know, we, I, uh, I was recently at a, uh, at a conference and I was asked the question about, you know, so, you know, what, what EHR do you want to drive to, or what’s your choice?

Michael McClain: And I’m like, my first question is why, what, what are you not getting that you need to get? Figure out the workflow first, then go shopping. And unfortunately, sometimes I think it goes the other way, but understand what your needs are before the pen and checkbook or the EFT comes out.[00:17:00]

Erik Sunset: Well put that that really lays it bare. And that’s, that’s one of the, the talking points we wanted to cover is looking at drivers around different factors before acting. I know one of the ones we kind of flirted with it to this point, but reimbursement as a driver. Sort of as the baseline assessment for any ambulatory project.

Erik Sunset: So either reimbursement or ROI. And I had it put to me this way by a physician that there can never be ROI for a software, uh, because it’s not an asset. It’s just something that you pay for on a P and L. And I thought that was pretty. Pretty witty if it’s stuck with me, but when you’re looking at reimbursement as a driver, as the baseline assessment, what are, what are some of the pro tips?

Erik Sunset: What are some of the pitfalls that you see and help your clients avoid?

Michael McClain: Yeah. You know, especially when it comes to growth. Um, I mean, I, I think, I think the baseline comment is, It’s the most important piece of your business, how you get paid, [00:18:00] how much you’re paid, how quickly you’re paid. It should be one of the highest focus points of your administrative service model, which is How you get paid.

Michael McClain: And so it takes a lot of resources, whether it’s rev cycle, pair of contracting support, et cetera. So understanding a, what you get paid and how you get paid should be your first priority. If you understand that then, then you’ve put together and most ASCs are actually quite good at understanding what they get paid for the services they have.

Michael McClain: As you think about adding a service, then it becomes, okay, what are we realistically going to get paid with the new service and understanding Your existing agreements might not cover new services, or if they do, maybe it’s only a portion of it. Maybe it’s going to require changes in billing. Maybe it’s going to require changes in how you manage your claim submission because there’s new, [00:19:00] either new rev codes, new exclusions, etc, that you have to understand.

Michael McClain: And the one that I see gets missed all the time is Even if you’re pretty confident you’re going to get paid, it still quite often will take 30, 60, 90 days to get the first payment for the first new procedure. Because it’s a new claims process, especially if you’ve had to change something on a contract, it takes a while.

Michael McClain: And so it’s not enough to just Make sure that you’re getting your costs plus a margin. Uh, everybody asks me what’s the best rate you can get costs plus a healthy margin. You know, should never accept cost as a reimbursement. I mean, that’s, you can’t reinvest in your business, but if, even if you’ve negotiated, you’ve done your homework, you know what you’re going to get paid.

Michael McClain: If you’ve maybe added carve outs, whatever, you’ve got it ready to go. It’s still a process, an administrative process on the payer side. [00:20:00] And so you may take 90 days to get that first payment processed correctly. And there’s nothing worse than you just bought a bunch of equipment. You’ve staffed up, you’ve got a lot of educational costs.

Michael McClain: You’ve just put a lot of money into a new growth area and those checks aren’t coming yet. And so being able to budget accordingly for how long it takes to support that new reimbursement model coming in, uh, being aware of that and just getting it in the budget. Plan for it.

Erik Sunset: And, and by the way, if I can be so bold to add to everything that you just laid out there, all the, the waiting you’ve invested in X, Y, and Z place. And by the way, you don’t have the staff to be calling that pair daily, uh, or failing daily weekly to ask. Where’s our money? You know, it’s in black and white here on the contract, where is it?

Erik Sunset: Um, that is a critical component to this game and staffing is just so lean for surgery centers now.

Michael McClain: And it, and it’s gotten unfortunately in many communities, especially on the West coast, [00:21:00] where so much of our labor costs are driven by our tech brethren. No offense to the doc buddies on the call. Um, but it’s really had an adverse impact on salary and wages in tech hubs. And so, you know, I’m Seattle based.

Michael McClain: A lot of my clients are up and down the West Coast. The labor drivers on the West coast quite often aren’t, you know, ASAs used to compete with hospitals or used to compete with, uh, other areas for labor. Now they’re competing with Google. Uh, you know, now they’re competing with Amazon. Now they’re competing with other much.

Michael McClain: higher compensated, uh, clinical folks. And so to keep your staff, you’re paying more and more money. So those staffing shortages are more pronounced, uh, especially in the West Coast and you’re right, we’re already lean. I mean, that’s, that’s, we pride ourselves at being lean. Um, but during times of change that there’s still a labor intensity that has to be applied.

Erik Sunset: Yeah, [00:22:00] there’s, uh, at the end of the day, there’s a lot that can still be automated for ASCs in general using technology. Uh, but I’ve heard it put this way, you know, medicine is a hands on business. It takes people. You cannot have machines doing everything or software doing everything.

Michael McClain: Right, right. The software is a tool. Um, and it’s how you apply it and where you apply it to get really open the door, but it has to be driven by sort of the knowledge of the workflow in the first place

Erik Sunset: And continuing down, uh, continuing down that path, Um, one of the other things that you shared before we started to record was around clinical drivers, uh, focusing on patient requirements, evaluating service demand. I mean, to me, what we just said, you’re asking about market research, you’re asking a facility to perform market research to a degree.

Erik Sunset: How do they do it? Who’s going to do it? And can you have a reasonable expectation for timelines?

Michael McClain: that, you know, that’s a, you know, we talk about how do you understand your market? Um, [00:23:00] you know, and, and I, I spent a number of years doing payer contract negotiations directly for large and small IFCs for hospitals as well. And, you know, a lot of what drives the market. Is, is, you know, what your neighbor is or isn’t doing, uh, and what they have or have not agreed to get compensated for it.

Michael McClain: And so you, in a, in a new market, in a growth area, you never want to be the last person to add a new service line. You want to be the first. Well, you want to be the second. Let somebody else work out all the big kinks, and you come along in the second position. But you’re absolutely right. As an ASC, you’re an administrator sitting at a desk, and you’re trying to understand, how do I figure out who else is doing this?

Michael McClain: Because the internet search may not be helpful. Um, you know, there’s no shortage of, of, Uh, vendors online that you can reach out to and say, Hey, can you give me [00:24:00] information and everybody will, but can you really call through that information? Do you have the time and resources to get through it? And so it becomes really difficult to understand the market.

Michael McClain: Uh, your surgeons still are quite often your best. um, divining rod for where the market is going, um, because they’re seeing what their colleagues are doing. They’re talking about what’s happening in their markets. Um, but again, you have to, you have to carry that with a little bit of a grain of salt because it’s still about the reimbursement marketplace because If everybody’s doing something, you know, you’re going to add toenail removals.

Michael McClain: Let’s pick, you know, it’s a new fancy way to remove toenails and everybody’s doing it. Chances are the payers have caught on and have already artificially depressed the reimbursement for it because someone didn’t do the homework that you’re doing right [00:25:00] now and they took a rate that’s below their cost.

Michael McClain: And now that’s being touted as the standard. And so that’s why sometimes you really want to move fast, but it’s worth it. It’s there are, there’s great technology. We’ve worked with some of those strategic data consultants that can bring in, you know, with, with

Michael McClain: hospital transparency data and payer transparency data, you can get access to base contract rates for other facilities through some of these vendors, but those are imperfect.

Michael McClain: Um, you know, they don’t include things like multiple procedure logic and things like that.

Erik Sunset: haven’t really, I

Michael McClain: Um, but you can. get some data, but nothing works as well still as picking up the phone and secret shopping. I want to get my knee done. I’m seeing Dr. So and so. Can you give me a price quote? And have your staff call from their cell phones, do a little shopping, see who’s doing [00:26:00] it.

Michael McClain: It’s silly,

Michael McClain: but it’s still sometimes some of the best information that you can get. And then you weigh it out.

Erik Sunset: uh, you kind of, you kind of hinted at this, but that very first step of any facility or any venue of cares revenue cycle is contracting and credentialing and enrollment. And the contracting you, you look at that and you go, I’m not a lawyer. I don’t know what to do with this. I guess we’ll just take whatever they offered.

Erik Sunset: You can’t do that.

Michael McClain: You really can’t, um, you know, uh, quite often the, you know, if you understand, and I spent enough time in this business and we talk about this quite a bit, that. The folks that we engage with on a day to day basis from a payer contracting standpoint are not ASC experts. Um, you know, it’s a little bit of an ego hit when I say this, but it’s true.

Michael McClain: ASCs, [00:27:00] we’re a drop in the bucket from a reimbursement standpoint to a payer. Uh, we’re not nearly, we don’t, we’re, we’re, we’re gaining visibility, but aren’t the dollars involved in an ASC aren’t nearly as large as, you know, the three hospitals in your community and the four large medical groups. I mean, those are multi million dollars.

Michael McClain: per payer per year agreements. And we were arguing over 200, 000 or 300, 000. So the resources that are provided to the people that you’re talking to on the phone at the payer, um, are commensurate with the scale of your reimbursement that they’re providing to you. And so they are not ASC experts either.

Michael McClain: They have a template. They have a bunch of contracts and they’re paid the same way that you and I are paid, which are here’s your targets. Please go get them. So it takes getting a really good relationship, if possible, with your payers to educate them about what’s the [00:28:00] difference. Why is this matter to me?

Michael McClain: And understanding your cost, your true cost, not your ideal cost, not the, I think we could do these in an hour and with only one implant. That’s awesome. That’s at full speed, full scale. When you get it figured out the first few months, what if you’re doing it in an hour and a half, you’re using two implants.

Michael McClain: Um, you know, and that’s extreme. Some people are like, I do that in 30 minutes. Okay. 30 minutes and five implants. If you’re talking shoulders, I mean, but use your math, but plan for the worst case and get those costs covered because You’re still going to run into those situations and provide that information to the payer is here’s why we can’t accept 12 for this total knee replacement.

Michael McClain: And we need to have a better mechanism, but it takes reading the contract. And sometimes it takes an expert, you know, uh, there’s us, there’s others. Sometimes it makes sense to [00:29:00] reach out when time or resources are short on your side. Um, and that’s okay. But in the end, really understand what you’re getting paid, um, and push back if it’s not covering your costs.

Erik Sunset: And it’s, Michael, as part of this pushback, when, um, you’ve got a client or it’s yourself on the phone with a payer and they’re offering that 12 on that procedure and that’s missed the bark by 800 percent or whatever it is, is there any part of this conversation like, Hey, we’re I understand what you’re looking at here seems right to you, but this is better for you and your business as opposed to me saying no.

Erik Sunset: And now you’ve got one less option and you’re going to end up having people funnel into the HOPD and it’s going to cost you, uh, 1800 percent more than what you just offered me. So can we true this up?

Michael McClain: Yeah, and the best, you’re absolutely right. That’s the approach. The, in our experience, it’s all about the timing of when you have that conversation, the time to have that [00:30:00] conversation is before you ever do the first case. Because you’re offering a savings, you’re offering, you know, the ability, uh, and, and I say this all the time, grab some EOBs from those patients at those hospitals, um, that are your physicians, have your physicians talk to your patients, understand the costs they’re paying at the hospitals, uh, for a particular payer and share it

Michael McClain: back with that payer.

Michael McClain: It’s not a HIPAA concern. It’s the payer information about their own, you know, their own cases. And being able to say, listen, we, we have EOB evidence. We know it’s 47, 000 a case that you’re paying. We’re offering you the opportunity to save 20, 000 a case. By partnering with us and here’s our outcomes.

Michael McClain: Here’s our docs. Here’s the volume. Here’s the very specific Here’s the value we provide the worst time to do that is you’ve already done five and you’ve [00:31:00] accepted You know five bucks for each of those procedures Because in their mind they’re like hey, we saved our money by paying you five bucks and honestly By doing the case, you said that the payment was fine.

Michael McClain: So why should we make a change here? And so it’s, it’s timing. When you have those conversations, timing around terminations, timing around contract negotiations, uh, making sure that you give yourself the most leverage in a conversation. Mid contract, new procedure, I want to add one code, uh, at a new facility and I’ve already done it four times.

Michael McClain: That’s about the least leverage you can ever have in a conversation with a payer. Uh, it’s coming up on contract renewal. I’m gonna move 30 new cases. Here’s the data I have and I’m considering terminating this contract if I can’t get a reasonable rate to help move these. So, uh, Oh boy, you got way more [00:32:00] leverage now for that conversation.

Erik Sunset: So I, I don’t wanna say any of this sounds easy, but I also don’t think any of it sounds hard. If you’re one or two steps ahead and you’re not afraid to roll up your sleeves, get the data, and have, you know, to, to a professional like you, it’s not a hard conversation, but to some it might be a little daunting to negotiate and, you know, run up to some adversary, uh, adversity is the word I’m looking.

Erik Sunset: Is that, is that a fair way to look at it?

Michael McClain: I think it is and it’s time. Um, it takes a long time even as a professional negotiator, you know, premium contracts can take to get a premium rate might take six months of negotiating and three or four back and forths and data. And so, and it’s really hard when your physician’s like, I’m going to add this next week. And you’re like, but it might take me six months to get a reimbursement rate that’s adequate for this. And so this comes back to that sort of operations drivers is that, well, [00:33:00] you know what, we’ve looked at our contracts. We can do this for this payer. You can start bringing your Aetna cases right away or your United cases right away.

Michael McClain: It works. These cases don’t. And we have to find an appropriate reimbursement for these cases. Um, you know, so understanding and segregating their operational, uh, process in the office, it’s hard, it’s inconvenient. Um, but in the, in an ASC world, you know, convenience is the killer of profitability. If you’re willing to inconvenience yourself.

Michael McClain: Um, you can do great things. We talked about there being a cost to the cost of convenience. As you’re adding new services, there’s a huge cost of convenience. And so understanding there’s going to be time. So build that into your new services, understand where you are in your contract negotiation terms, who’s up, who’s [00:34:00] not and plan ahead.

Erik Sunset: Well, in that, in that vein of convenience, um, one of the very hottest topics, we talked about cardio and the ASC kind of dying off a little bit in terms of news coverage, a topic that hasn’t died off at all. And it’s only gaining momentum is AI and healthcare, artificial intelligence and healthcare can mean a lot of things to a lot of different people.

Erik Sunset: Uh, one thing is certain though, it’s, it’s appearing to be here to stay. What are your thoughts? What are you seeing on the front lines, Michael?

Michael McClain: Well, if you, if you swung by my LinkedIn profile over the weekend, I was talking about Skynet. So, you know, for those of you who aren’t, who aren’t as old as I am, you know, uh, the Terminator Skynet taking over everything. Um, yeah, that’s a little bit of fear mongering, little tongue in cheek there, but, uh, I a hundred percent agree.

Michael McClain: AI. Here to stay, uh, you know, uh, an artificial intelligence, whether it’s automating your existing practices, having decision making [00:35:00] happening, not going away. Um, I think though what’s really important for any new technology and one that has a decision making component, it matters. Um, it’s a tool. It’s gotta be a tool in the toolbox.

Michael McClain: It cannot become, it cannot become the contractor. It needs to be the tool. And so there are plenty of things, you know, I almost don’t take a position on whether it’s good or bad. Uh, I think that if automation. And, uh, and artificial intelligence decision making is surfacing the information quicker that helps you make good decisions.

Michael McClain: If it’s accurate, you know, I’m a trust, but verify guy, you know, double, triple check the data as it’s coming in. Does it make sense? Does it, you know, this doesn’t look right. Well, go dig in, make sure it’s real. Um, but if it’s helping you offset [00:36:00] difficult labor intensive processes to get you information to decide.

Michael McClain: 100 percent on board, ready to do it. Um, it’s also a buzzword as a shortcut to process improvement. Um, and in the end that improving your workflows, improving your processes. I mean, that’s something that we’re pretty adamant about is that figure out the ideal process first. then automate it. Don’t automate what you have.

Michael McClain: There’s this old term. I, you know, I, I grew up in Michigan and my uncle was a dairy farmer. Um, and he used to talk about paving the cow path is that, you know, the worst thing that you can do is just pave the cow path, which is the cows know where they want to go. They just go and then you just pave it.

Michael McClain: And then you end up with this farmland with. You know, all these strange concrete paths around. I think it is the same way when we start thinking about adding technology is that you want to blaze a trail. You want to find the right way to do it, get your workflow [00:37:00] dialed in, find the path that makes sense, then hardwire it with automation and technology.

Michael McClain: Don’t just pave the process you have today. Um, because someone can, and I

Michael McClain: think, you know, this is something where there is literally. a vendor a week that’s reaching out to us and I’m not even buying, you know, so I can’t imagine what ASCs and hospital leaders are getting bombarded with where I got a solution for you.

Michael McClain: It’s great. It’s going to solve all of your problems. It’s only nine 95. It comes with a free clear code. I mean, it’s, and then it’s not to pick on the vendors themselves. But a lot of times it’s automation of processes that were never applicable in the ASC space in the first place. So you really need to, first of all, find somebody else that’s bit on that to see if it’s working for them, but do the homework to figure out what you really need, [00:38:00] then apply automation and AI.

Michael McClain: And you know, once the Terminator’s it’s all over anyway. So we can’t really stop the progression. It’ll never stop. It won’t stop. It won’t ever stop. And sorry, I’m ASCi fi fan, but

Michael McClain: it’s here.

Erik Sunset: Well, that’s, those are wise words there. And just to your point about the bombardment of AI across all facets, I’m at least my inbox is still in the phase of the thought running through my mind, this vendor has people paying for this, like, what does it even do? Uh, they’re paying in cow pads all over the world.

Erik Sunset: Um, there’s still some very good stuff, um, that’s out there, but there’s also a lot of AI and I’ll use air quotes there. Where you just think who asked for that? Why did you build it? And I think the health community needs to be able to, you know, separate the wheat from the chaff to use our farming analogy here, a [00:39:00] lot more chaff than wheat today.

Michael McClain: And there’s a lot of organizations, a lot of companies, you know, uh, shameless plug for DocBuddy and others that have been around for a lot longer than I think people recognize. And I think starting with those vendors you’ve worked with that, you know, That have been in the industry for a long time. Most of them aren’t afraid to have conversations.

Michael McClain: They’re not afraid to give you way more information, uh, that you need. They’re not afraid to help, uh, supply lots of examples of other people using it. Um, there’s a lot of transparency. There’s a lot of pride. There’s a lot of sales, but there’s a lot of transparency in about what is being offered. If it’s, you know, what, if you sign today, we can get it built and get it in and get it quick.

Michael McClain: My opinion is run

Erik Sunset: Totally.

Michael McClain: this ASCs, you know, if you asked me five years ago, [00:40:00] this is a metric we used to run when I was still working for provenance over all of our ASCs, you know, what was the average EBITDA, the average profit per OR per ASC. And if, you know, five, seven years ago. That EBITDA might’ve been, you know, a half million per OR per year on average.

Michael McClain: Um, the cost of bill was half of what it is now. You know, now you’re talking, um, you know, 800, a thousand dollars a square foot build cost a million in medical equipment. If you’re doing heavy ortho, is a 10, 15, 20 million investment. You’re making a lot of times in your new businesses and you’re running 30, 40 million of revenue up front.

Michael McClain: Um, And we’re still have a chief cook and bottle washer who is a professional firefighter who’s trying to make the best decisions possible based on what’s in front of them. Um, we need to support those people and having the opportunity to get [00:41:00] good information. Um, and sometimes that means, you know, more information like this at conferences, more industry connections, but giving them the opportunity to, Take a breath, slow down and really get information because these are huge multimillion dollar businesses that we’re running and you can’t just make a decision based on what you saw on YouTube.

Erik Sunset: Michael, where can people get more information about you and your work? Where can they find you online?

Michael McClain: So, um, we would encourage, I would encourage people to stop by our website. Uh, uh, left coast healthcare advisors. It’s a L C H advisors. com. Um, just Google left coast healthcare advisors. We’re the only one that comes up. Um, drop by and see our LinkedIn, uh, page. You can always see me on LinkedIn. Um, if you’re going to be at Casa, we’ll be at [00:42:00] Casa.

Michael McClain: We’ll be at MGMA. We’ll be at Boston and Waltham. We’ll be, we’re going to be all over the place in October and November as well. So good online presence and, uh, hopefully get a chance to see some folks in person in the next few months.

Erik Sunset: I can’t encourage you strongly enough to attend CASA if you are a West Coast or a Left Coast ASC facility. And we’ll of course have links to all of those places in the show notes. And on behalf of the entire DocBuddy team, I want to thank you for listening. Michael, thank you for joining us. Be sure you’re subscribed on Apple Podcasts, Spotify, YouTube, so you can always get the newest episodes of the show.

Erik Sunset: And until next time, I’m your host, Erik, we’ll talk soon.

Michael McClain: Thank you so much, Erik.