Leadership: Grow or Add a Service Line With Confidence

What administrators should know about expansion and its revenue-boosting effect.

Looking for ways to increase revenue in the new year? Consider expanding or adding a new service line.

Addition vs. expansion

ASC leaders face many challenges in 2025 and increasing revenues will certainly be one of them. One approach to boost revenues is to expand an existing service line or add a new one. Expansion can be accomplished by increasing the number of your providers, creating additional OR availability or investing in new staff, equipment or supplies. Although the expansion of an existing service line requires research and planning, it is easier to accomplish than adding a new service line altogether.

When I worked at a new single-owner surgery center, it took time to secure commercial payor contracts, recruit a physician partner and build the volume necessary to cover expenses. We continually sought to add physicians and service lines to increase volumes and maximize utilization of the ORs. Physician recruitment was a priority, and we dabbled in different service lines over several years.

Areas of focus

If I had known then what I know now, I would have done things differently. Here are a few lessons I learned along the way.

• Reimbursement is only half of the equation; hidden expenses are the other. For example, although orthopedics is one of the highest-reimbursed specialties, it also requires the use of implants, durable medical equipment (DME) and assistive devices that can chip away at your profit. DME can be consigned through a third party, but that adds a process and storage needs, which should be included in the plan.

• Not all procedures are reimbursed when performed in an ASC. Consult Medicare’s ASC Covered Procedures List when considering adding new procedures. When implementing a new service line, start by performing approved procedures and add more complex procedures over time as those are approved.

• Leasing medical equipment versus purchasing offers different benefits. Evaluate both options when adding a new service line. Key benefits of leasing include lower upfront costs, access to the latest technology, covered maintenance and repairs, and a contract tailored to meet your center’s financial needs. Purchasing, on the other hand, offers the advantage of full ownership, potential tax benefits through depreciation and long-term cost savings once the equipment is paid off. The choice between leasing and purchasing ultimately depends on the specific needs and financial situation of your center. I found leasing GI lab equipment preferable, while purchasing patient monitoring and anesthesia machines was the better choice. When purchasing equipment, make sure it is compatible with future updates to extend its useful life, and consider a service agreement as the equipment ages.

• Some service lines are easier to implement than others. Pain management is a great option to add on a short- or long-term basis. This service line can usually be implemented without a permanent investment, requires minimal training and does not add to your sterile processing burden. I have turned to pain management on a few occasions to increase revenue when our ORs weren’t maximized because surgeon availability was lower than normal, staff was on maternity or paternity leave and other factors. The key is to maximize the number of procedures you perform during the scheduled time. This may involve using multiple ORs and procedure rooms without doubling the number of staff. Support roles can complete many tasks while keeping staffing costs lower than using an all-RN team. Expanding the surgical tech role to assist with patient transport and room and patient prep can decrease expenses while providing the staff productive hours.

• If you build it, they don’t always come. Adding a service line requires a balance between planning and implementation, particularly with capital purchases. Verbal agreements, especially with established providers, do not equate to revenue. We’ve all worked with providers to approve privileges and establish OR usage time, and spent many hours preparing, and then “plans” change at the last minute.

Physicians seeking to join an ASC are likely being recruited by several organizations and may be swayed to accept a better offer, even at the last minute. Would you believe I purchased a C-arm for a provider who committed to joining the ASC, but never actually practiced there? Privileges were granted and instruments purchased, but the provider never brought any patients and never used them. We found a way to use the equipment and instruments, but that was a tough lesson to learn. If you are counting on someone else, proceed with caution and protect your financial interests.

Establish a framework

Expanding or adding service lines can be profitable, but do your homework. There are many things to consider and steps to take prior to jumping in with both feet. Adding a new service line should be included in your overall strategic plan. Clearly define the goals and objectives that serve as the key performance indicators you will use to determine and track success. See “Action Items” below for a general framework you can use.

ACTION ITEMS

An Eight-Step Checklist for Adding or Expanding an ASC Service Line

Whether you’re adding a new specialty or expanding an existing service line, a proven framework for the process includes some version of these eight key steps.

• Perform a market analysis. It’s a good starting point and useful to assess demand for the new service, evaluate competition and market share, and identify target patient demographics.

• A financial feasibility study is useful to estimate startup and operational costs and project revenue, as well as to conduct a break-even analysis.

• Regulatory compliance involves reviewing state and federal regulations, ensuring accreditation and licensing requirements can be met and developing policies and procedures to promote compliance.

• The clinical capabilities of staff, equipment and technology should be evaluated. Ensure adequate staffing and training, determine the need for additional certifications and update clinical privileges.

• Operational planning should include a detailed implementation timeline, a plan for space and facility modifications and the establishment of supply chain and vendor relationships.

• Quality and safety specific to the new service line should be included in the overall quality assurance and performance improvement plan. Patient safety protocols should be implemented and monitored to address any potential risks from the new service line.

• Marketing and outreach strategies should be developed to promote the new service. This can be accomplished by engaging with referring physicians and community partners.

• Technology integration is often overlooked, sometimes resulting in significant unintended consequences. Evaluate for compatibility with existing electronic health record systems, and plan for data management and cybersecurity measures. Ensure providers and staff are adequately trained to use new technology and software.

— Jeanine Watson, MSN, RN, CNOR(E), CASC

Worthwhile effort

Introducing a new service line can be challenging, and even minor mistakes can lead to significant financial consequences. Following the steps outlined here will require time and resources, but it’s a worthwhile investment that is crucial to determine if the new service line will actually boost your revenue before you begin, rather than discovering later that there is little to no return on investment.

You can find a wealth of useful resources for ASC leaders at aorn.org/asc. Coming in early 2025 is the ASC Academy: Expanding Service Lines online course. OSM