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Opening a New ASC: Step-by-Step Design Guide
46 Plays2 days ago
Ryan Short, Principal and Founding Member of Cotton Architecture and Design, joins us to break down the step-by-step design process for opening a new surgery center. In this fast-paced, 20-minute conversation, we cover everything you need to know. Whether you plan to open a facility, expand an existing one, or just want insight into the process, you'll walk away with valuable takeaways.
Resources Mentioned:
- Surgery Centers Affected by LA Fires Share Their Stories
- Game-Changing Advances in Orthopedics
- How 5 ASC companies dominated in 2024
- How Beth Quatrara is Shaping the Future of Nursing
Brought to you by HST Pathways.
Recommended
Transcript
Introduction and Guest Welcome
00:00:01
Speaker
Welcome to This Week in Surgery Centers. If you're in the ASC industry, then you're in the right place. Every week, we'll start the episode off by sharing an interesting conversation we had with our featured guest.
00:00:12
Speaker
And then we'll close the episode by recapping the latest news impacting surgery centers. We're excited to share with you what we have. So let's get started and see what the industry's been up to.
00:00:27
Speaker
Hi everyone, here's what you can expect on today's episode. Ryan Short is a principal and founding member at Cotton Architecture and Design. He's here with us today to walk through the step-by-step design process for opening a new surgery center.
00:00:42
Speaker
Now, it's only a 20-minute conversation, so we talked as fast as we could to get through the whole process. But whether you're looking to open a new facility, expand your existing one, or really just gain some insight into what goes into the design process, you'll definitely walk away with some helpful information.
00:00:59
Speaker
And in our news recap, we'll cover surgery centers who were affected by the LA fires, game-changing advances in orthopedics, how five ASC management groups fared in 2024, and of course, end the new segment with a positive story about a nurse who is shaping the future of nursing one student and one puppy at a time.
00:01:19
Speaker
Hope everyone enjoys the episode, and here's what's going on this week in surgery centers.
Ryan Short's Role and Experience
00:01:27
Speaker
Hi, Ryan. Welcome to This Week in Surgery Centers. Hi, Erica. How are you? Good, thanks. Can you please share a little bit about your ASC experience with our listeners? Absolutely. So my name is Ryan Short. I'm one of the principals and the founders and architects of Cotton Architecture and Design here. We're based out of Phoenix.
00:01:45
Speaker
So we are a healthcare healthcare focus firm. We do a lot of surgery centers. We like to tell people we don't just focus on the outpatient stuff. We really focus on really the full continuum of care and continuum of acuity for patients and clients, everything from inpatient projects to outpatient surgery centers and imaging centers.
00:02:03
Speaker
So Cotton's been around for five years, but my business partner and I have been in the healthcare industry for about 10 years for myself and probably about 15 or more for my partner, Steve. Very cool. Thank you.
Design Process and Client Needs
00:02:14
Speaker
So today we're going to cover the step-by-step process of designing a new ASC, and we are going to attempt to do this in about 20 minutes. So let's dive right into it and start with how to determine the right site. What does that look like?
00:02:31
Speaker
Yeah. So yeah, like you said, we'll try to compress about a year's worth of work in 20 minutes. The first step, like you mentioned, really is that site analysis. And a lot of times what to what people are looking for, what we help clients look for are pad-ready sites. That just means that the sites ready to be built on utilities are are nearby.
00:02:48
Speaker
And then it's really about maximizing a building square footage for a specific site and and trying to help them plan out what that looks like. while also balancing the parking needs. ASCs are fairly high drivers of parking needs. So a lot of times we'll help put together a a preliminary site plan forum that shows parking layouts, the flows, the the covered drop-offs, generator locations, all that kind of site constraints is really the first step and making sure that if a client found a site first, making sure that it works for them before they really put a lot of money down onto the site.
00:03:20
Speaker
Great. All right. So let's say they find a site. Everyone's in agreement. What do we do next in terms of the design and space planning? Before we really put pen to paper on designing the building itself, we really need to understand the client's needs or or the operator's needs of that building.
00:03:39
Speaker
Simple questions just as to what type of sterilization flow do you want, whether it's one-room or two-room type approach can significantly drive building areas and what the program for a building is.
00:03:50
Speaker
It depends on the doctor too and and really what their patient capacity is. we work with a lot of doctors that are very boutique, they might do a small number of procedures a day and they only need a certain number of pre-op and POPE, pre-op and PACU bays in their facilities. We work with other doctors that that really can churn through patients, they're hyper-efficient and they need a lot of patient bays. So each one of those decisions and and many more really drive what that building is.
00:04:18
Speaker
And so early on we have a questionnaire in-house here at at Cotton Architecture. It's probably 80 questions or so that really help us understand from them what they're looking for. And it really challenges them to think about what they need. A lot of doctors think, I just need a surgery center. And then there's about 5 million other questions that they need to be asked to make sure that they get what they want.
00:04:36
Speaker
So once we get that questionnaire filled out, we will start looking at the what we call the program of the building, which is basically just a list of the rooms that are needed and really start dialing in the area of the building.
00:04:48
Speaker
And really from there, we can start taking those building area blocks and start moving them around on a piece of paper. We call it programming or or block plans. And we can start doing that, which will help start to show what that building is and and how those various rooms and program elements are are distributed.
00:05:06
Speaker
I would imagine as most doctors start going through the the questionnaire, probably sets off a lot of light bulbs of, oh my gosh, I didn't even think of that. And then they got to go back into planning mode themselves before they even continue work with you. Yeah. and that's really one of the challenges of of working with doctors. That's really our focus, I should say, is working with these doctors and helping educate them through the design process.
00:05:31
Speaker
Doctors are doctors first in most cases, and they're developers or builders second. So that's really our job to help them through that process. And so we like to guide them and point them to consultants that they might need. It could be could be a policies and procedures called consultant. It could be an equipment consultant, a shielding consultant, all these different things we ask questions about. And if they don't have those resources, we have connections and referrals and things like that will help them through. Really, the goal is to make it look easy for those doctors because there's a lot of decisions that but they're not aware of.
00:06:01
Speaker
Yeah, I'm sure. Okay. So they've answered the questionnaire. They're starting to see it come to life on paper. You're starting to lay it out. Then what do we do next?
Design Phases: Schematic to Construction
00:06:12
Speaker
Yeah. So much of what we've talked about so far, we would consider pre-design. So we get all that out of the way.
00:06:17
Speaker
And then we actually start the formal design process. And in the industry, there's really three main phases and that's schematic design development and construction documents are really the three and And it doesn't necessarily mean much to the clients, but basically all they need to know is that there's increasing levels of detail and complexity that we begin to overlay into our drawings.
00:06:37
Speaker
After schematic design, we might have floor plans to present and ceiling plans to present and maybe some interior concepts of different spaces and how the rooms work. And we will typically review that with the surgery center staff, the doctors and users and all the various people that might be involved in the process. We'll do a page turn.
00:06:56
Speaker
and we'll essentially get them to approve that package. And then we'll continue the next phase and and begin to develop a lot more detail. So really the way to to think about is schematic design is really reviewing and understanding the the flows and the overall big picture of the building. Design development is really about defining and coordinating the systems of the project. And that could be your mechanical, your plumbing, electrical, all those types of systems is really something that we hit hard in the design development phase, which is that middle phase.
00:07:24
Speaker
And then the construction document phase is really where everything's locked in. Hopefully there's no more plan changes or future requests from the doctor. And we really start defining what all of those details are. We get into the nitty gritty of how the building's built and how everything's laid out in that stage. So it's an increasing level of complexity and detail.
00:07:43
Speaker
Got it. And each step along the way, getting buy-in from the doctors. And how long up until this point in the design process, how many months in are we? I'm sure that's a loaded question. Looks different for everybody, but on average, how many months are we up to by now?
00:07:58
Speaker
Sure.
Regulatory and Construction Timelines
00:07:59
Speaker
For a ground up AOC, it could be about three months, I would say. We'd be moving along at a pretty good pace, assuming we can get a buy-in from the owner and making sure that they're reviewing things in a timely manner and all the outside consultants that we don't control are are giving us information in a timely manner. But Three months maybe for a ground up. If it's a tenant improvement project, maybe two months. There's a little bit of time it just takes to work through these. There's a lot of coordination. So it takes time. And of course, the larger the building, the longer it is.
00:08:28
Speaker
Got it. That's actually a little faster than I would have anticipated. So that's great to hear. All right. So next, are we moving on to regulatory stuff? Yeah, regulations. I'm sure all the ASC providers and doctors love regulations. They've got their own world though that they've got to deal with.
00:08:46
Speaker
On our side, it's broken into two parts. A tenant improvement project is typically much, much easier to get through approval on the city side. And so that could take about a two-month process to get through, at least here in the Phoenix area, maybe three months, just depending on the city, frankly.
00:09:03
Speaker
And typically what we have to approve is the full set of drawings on an ASC project. There might be 80 100 drawings on a tenant improvement project. So we submit submit that into the city and the city reviews it. And there's a little bit of back and forth and communication between us and the city. Typically we answer questions they might have, or we can address comments or concerns they might have, which is all part of the standard permitting process.
00:09:24
Speaker
So two months, a ground up project is much more time intensive to get permitted. a lot of cities, especially in larger metro areas, have what's called site entitlements. They might have site planning or design guidelines or and invite um environmental surveys that have to be done.
00:09:42
Speaker
so a lot of that, it really takes time. And in many cities, it's a sequential process. So you might have to, like in the city of Phoenix here, we might have to submit for a pre-application package, which is basically just ah a notice to the city with a simple site plan that, hey, this is what we're thinking on the site.
00:09:57
Speaker
Let us know if the city's okay with it even, or if there's any concerns the city might have. And usually you have to get proved approved on that piece first, and then you can submit your site plan package, which is a whole different package.
00:10:08
Speaker
And like I said, it all just takes time. So um pre-application, there's a site plan, there's civil work, which is the site and and grading and things like that. So it can take longer. There's probably about eight months worth of just permitting processes that we have to go through on a ground up building.
00:10:26
Speaker
But there are some things that we can do to expedite that. There's some things we can do concurrently, which we try to advise our clients on. But there is also just a little bit of that reality that it just takes time and a lot of people aren't planning on that, especially if they have land carrying costs and development costs and things like that.
00:10:41
Speaker
And once you get permitted, construction takes off from there. Sure. Yeah. Let's switch gears. Permits are approved. We've got everything we need. Let's start with construction. Yeah.
00:10:53
Speaker
Yeah. So construction on the ground up could take a year and a TI could be six to eight months, something like that. The industry now, because of COVID and because of supply chain constraints and because of prevailing market conditions right now is challenged in a lot of basic items that are needed for a surgery center, especially on electrical gear size. So essentially the large electrical panels that are on the outsides of buildings that all of the main utilities come into.
00:11:18
Speaker
There's a real challenge in getting those. You have to wait in some cases, 10 to 12 months just to get a delivery of one of those. So we call those our critical path items. Those are usually the items that we track the closest and make sure are moving along.
00:11:30
Speaker
The schedule is really dictated by those elements. And once construction starts, whether it's a tenant improvement project or a ground up building, really what happens, or at least the way we like to see it, is is really close collaboration between ourselves, the contractors and the owners, and really anyone else, the city even during construction. And we're always going out to the site and we're walking it with the owner and the contractor and holding their hand through that process and helping to answer questions a contractor might have about what exactly we want or need in these different rooms.
00:12:00
Speaker
So it's a really collaborative process. And then in a lot of ways, we're the owner's agent out, out in the field, they're making sure things are being built how they want it, what they're paying for, and double checking contractor invoices and and things like that, just on their behalf and and really helping them through. We're really here to help and to protect our clients. That's really our main goal. So even throughout construction, even though a lot of people think cool, that's the contractor's world.
00:12:23
Speaker
We are still pretty heavily involved throughout. And do you work with your clients to choose who the construction company is that you're going to work with? Our initial preference is always to engage with a contractor early on in the process.
00:12:39
Speaker
In some of those early design phases, even like a schematic design or design development phase, we like to get contractors involved or at least advise the owner they so should start talking to them. And what that does is it helps us really hone in and answer questions ahead of time before those drawings are even finished.
00:12:57
Speaker
We like to joke that changing drawings is is free. Once it's out in the field, it's very expensive to change things. It's not free on the architect's side. we We spend time and money to fix things, but it's much easier for everyone to to change some lines on a paper early on before things become real.
00:13:12
Speaker
So we like to get a contractor involved early if possible. Not all owners are willing to, but we really advise them it it really is better for the project. Sometimes contractors will charge for it because they are spending time and they do put in a lot of effort that we really value. So some owners are are reluctant to do that, but at some point they're going to have to get a contractor involved. and And like I said, the the earlier, the better.
00:13:35
Speaker
If they don't get them involved in that design process, the older school way of doing projects is what's called design bid build. So essentially we would go through our process, finish that package of drawings, and then us or the owner would put it out into the market to to several different GCs and they would bid on it.
00:13:53
Speaker
and And that's a little bit older school. We don't see that too much anymore, but it does come up. There's some benefits and drawbacks either way, of course. Sure. Yeah, that's really interesting.
00:14:04
Speaker
Okay. So construction is done. Equipment is installed. What's our next step?
Safety, Compliance, and Equipment Challenges
00:14:10
Speaker
So every state has their own licensure process. I'll take Arizona because it's the state we practice in the most. In Arizona, there's a architectural review that needs to happen by the architect prior to the owner submitting for their license. There's just backup, I guess.
00:14:28
Speaker
There's an architectural application piece. And then there's the actual owner's license piece, which is their medical license. We used to in Arizona have to submit a package of drawings and things like that to the state. The state would review that, approve the architectural drawings, and then the owner can submit their licensure process.
00:14:45
Speaker
It's simplified now. Right now, what we have to do is basically collect a package of information from our general contractors, everything from how flammable materials are in a building and making sure that those are safe.
00:14:58
Speaker
what your testing and balance and air flows are in your ASC and making sure that the engineer has reviewed and approved those. Making sure your med gas system is safe. So there's ah quite a bit of documentation that we collect. And again, it's to protect our owner.
00:15:11
Speaker
And once we get through all of that information and we review it, we basically send an approval letter to the state and then the owner is actually able to apply for their license.
00:15:22
Speaker
Many states are are like that. They have similar steps. We do work in New Mexico. It's similar in some ways, but it's a really state-by-state process. So finding an architect that knows what to look for in these application processes or knowing having a local architect that has been through it really saves a lot of headaches.
00:15:41
Speaker
We see a lot of out-of-state architects coming into Arizona and trying to do what we do, and they really have a hard time and really can mess things up if they don't know what they're doing. And then, of course, once the state gets you the facility license, then it's really on the owner's side to go through whatever kind of accreditation program they might want, AAAHC and all the others, joint commission, whatever it might be.
00:16:01
Speaker
That's really on their side to to start working through, but it's something um that we have our eyes on and can make sure we're moving towards that date. I would imagine then it becomes real, very exciting. Everyone just waiting for all the final approvals needed.
00:16:16
Speaker
ye Yeah. The other thing that that is important for for surgery centers to know, or people running surgery centers is even though the contractor's done, there usually is a little bit of a time lag between when they can actually start seeing patients. We can't submit our application until the building's done. So, you know, of course the state takes their time and it could be a month or two.
00:16:36
Speaker
Project might just be sitting there. So again, there's carrying costs and and all kinds of costs that owners need to be aware of and, or at least they're planning for. Sure. And at a high level, are there just some common challenges you've seen ASCs run into during the design process as a whole? Yeah, the big things are just not having equipment information that we need that really holds us up.
00:16:58
Speaker
If a doctor's got a specific C-arm he wants to use or if it's ah a fixed piece of equipment, we need product data and all the information on the electrical connections, as an example, for that piece of equipment before we can finish our design. And and a lot of times we just don't get that in a timely manner. So that that hurts us sometimes.
00:17:16
Speaker
Perfect. All right, Ryan, we do this every week with our guests. What is one thing our listeners can do this week to improve their surgery centers? I think to really challenge the status quo of what you've seen in surgery centers, there's not one-size-fits-all approach. And I think if you're designing a surgery center, it can be a once-in-a-lifetime chance to really put your mark on your practice and do things the way that you want.
00:17:41
Speaker
Of course, within the stipulations of the building code and all those different things, but There's so much innovation and creativity that goes on in ASCs these days. Challenge yourself, challenge your design team, and hopefully you have a design team that that is up to that challenge. And we can really work hard and and develop that new model of practice that that you're excited about and make your dream a reality.
00:18:03
Speaker
You have been a wealth of knowledge. I know our listeners will get a lot out of this conversation. So thank you so much for coming on. We really appreciate it. Absolutely. Thank you.
Impact of Wildfires on ASCs
00:18:17
Speaker
As always, it has been a busy week in healthcare, so let's jump right in. In early January, wildfires tore through the l LA area, forcing several ASCs to close their doors.
00:18:28
Speaker
Among them was Risser Surgery Center in Pasadena, which narrowly escaped destruction thanks to an external sprinkler system. When their admin noticed an orange glow in the sky, she quickly learned the fire had reached Risser.
00:18:41
Speaker
The next day, though, the team was already in crisis mode, assessing damage, cleaning up and activating their emergency management plan. While Risser is working towards reopening, Huntington Ambulatory Surgery Center faced its own challenges.
00:18:55
Speaker
Not only did they lose power, but about 10 of their physicians lost their homes and local schools were destroyed, leaving staff scrambling for childcare. The poor air quality delayed their reopening, but in the meantime, staff stepped up by helping their affiliated hospital, which was overwhelmed with displaced nursing home patients.
00:19:14
Speaker
And as you can imagine, Financial losses were significant. Risser estimated around $160,000 in canceled cases, while Huntington ASC saw a higher payroll payroll costs from longer shifts.
00:19:28
Speaker
But in the face of disaster, both centers prioritize patient care, even waiving fees for those who lost everything in the fire. And, you know, in hindsight, the disaster underscores the critical need for ASC emergency preparedness.
00:19:43
Speaker
Wildfires, floods, and other crises can strike at any time. Regularly updating response plans, conducting scenario drills, and building partnerships with hospitals can help ASCs pivot when disaster hits.
00:19:56
Speaker
But perhaps most importantly, this event highlights the resilience of the ASC community. When disaster struck, these teams did what they could to protect their business, but also made sure to protect their patients and staff and support their local community along the way.
00:20:11
Speaker
So we wish you the best and for all the ASCs and everybody else who was affected by the fires and reopening and rebuilding and getting back to some sort of normal.
Technological Advances in Orthopedics
00:20:21
Speaker
All right. The orthopedic industry is continuing to evolve thanks to groundbreaking advancements in surgical technology.
00:20:29
Speaker
From robotic-assisted procedures to AI-powered imaging and smart implants, the field is seeing rapid innovation that's improving precision, reducing recovery times, and making surgery even safer.
00:20:42
Speaker
Dr. Human Melamed, an orthopedic spine surgeon in Beverly Hills, highlights how new technology is enabling ultra minimally invasive procedures.
00:20:53
Speaker
These innovations allow for more outpatient surgeries and result in reduced blood loss, quicker recoveries, and improved outcomes. AI is playing a growing role as well with augmented reality tools that overlay critical surgery information onto a surgeon's view.
00:21:10
Speaker
And AI-driven analytics are helping predict outcomes and refine surgical planning, while 3D imaging is making pre-op assessments even more accurate. Smart implants are now capable of tracking a patient's recovery in real time, allowing for personalized adjustments as recovery progresses.
00:21:27
Speaker
And lastly, advances in pain management are also making a difference with new opioid-free treatments and long-acting anesthetics, helping patients recover faster with less reliance on medication.
00:21:40
Speaker
In HST State of the Industry of report, we shared how ortho by far has the highest net revenue per case out of all the specialties, coming in with an average of $6,419 per case.
00:21:52
Speaker
So as robotics, AI, regenerative med continue to advance, combined with the potential revenue and growing patient preference to have surgery in an ASC versus a hospital, ortho just continues to be in a strong place to continue expanding.
00:22:08
Speaker
All right, our third story.
Growth and Acquisitions in the ASC Industry
00:22:10
Speaker
The ASC industry saw significant expansion in 2024 with major players aggressively growing through acquisitions, joint ventures, and de novo developments.
00:22:20
Speaker
In this Becker's ASC article, they did a quick recap of how five of the largest ASC management groups solidified their market positions, setting the stage for continued consolidation and competition in 2025.
00:22:33
Speaker
So let's take a look at each of them. USPI maintained its position as the largest ASC operator with an 8.1% market share, adding nearly 70 centers in 2024.
00:22:46
Speaker
It played a key role in parent company Tenant Healthcare's financial success, contributing nearly half of Tenant's $3.99 billion dollars in And USPI's own EBITDA jumped 20% $1.8 billion dollars with further growth planned through million annual investment and ambulatory acquisition SCA Health, a division of Optum, expanded its ortho footprint with the acquisition of Ortho Alliance, a private equity-backed firm with over 200 physicians.
00:23:19
Speaker
With a 5% market share and 320 SCA Health benefited from Optum's massive $253 billion in revenue, which saw an 11.7% increase year over year.
00:23:29
Speaker
which saw an eleven point seven percent increase year over year AmSearch closed the year with about 250 ASCs 2,000 affiliated physicians pursuing joint ventures and acquisitions across the country.
00:23:42
Speaker
Major deals included partnerships in San Diego, Las Vegas, and Maryland, reinforcing 3.9% market share. HCA Healthcare, managing 124 ASCs under its Surgery Ventures division, focused on greenfield developments and new construction.
00:24:00
Speaker
It partnered with NexCorp Group to open a new ASC and medical office in Katy, Texas, continuing its expansion strategy. And lastly, Surgery Partners has a 2% market share, managing over 160 centers and deploying nearly $400 million dollars in acquisitions.
00:24:18
Speaker
It also received a $3.2 billion dollars acquisition proposal from Bain Capital, signaling strong investor interest in the ASC sector. The dominance of these five ASC companies underscores the ongoing trend of consolidation and investment in outpatient surgery.
00:24:36
Speaker
Expect to see further PE interest, technological advancements, and expansion into high-growth specialties like ortho and cardiology as the industry evolves in 2025.
00:24:48
Speaker
And to end our new segment on a positive note...
Dr. Beth Quattrara's Contributions to Nursing
00:24:51
Speaker
For decades, Dr. Beth Quattrara has been a guiding force at the University of Virginia School of Nursing, blending clinical experience with a deep commitment to her students.
00:25:02
Speaker
As the Nurse of the Week, she is being recognized for her profound impact on the next generation of nurses. Dr. Quattrara is known for her advocacy for military students, celebrating military promotions, organizing Veterans Day events, and making sure they feel her encouragement.
00:25:20
Speaker
She also raises service dogs in training. So she is also known for always having a Labrador Retriever puppy in her office, which, as you can imagine, helps to bring a comforting presence to a very stressful academic setting.
00:25:34
Speaker
So congrats to Dr. Kuchara for making such a lasting impact on her students and for being recognized as nurse of the week by the daily nurse. And that officially wraps up this week's podcast.
00:25:46
Speaker
Thank you as always for spending a few minutes of your week with us. Make sure to subscribe or leave a review on whichever platform you're listening from. ah hope you have a great day and we will see you again next week.