The Profit Problem Hiding in Plain Sight

An interview with Allison Stock, COO, Surgical Management Professionals. Interview conducted by Michael Winkleman, CMO.

Two ASCs perform the exact same number of cases this year. One clears a 34 percent EBITDA margin. The other clears 23 percent. Same volume, eleven points of margin apart.

That’s not a hypothetical. It’s a real split VMG Health documented in its Intellimarker benchmarking study, the most widely cited financial dataset in the ASC industry. The higher-margin group in that comparison was actually running fewer cases per day, 10.7 versus 20.9, and spending a smaller share of revenue on salaries in the process. The busier centers were not the more profitable ones.

We sat down with Allison Stock, SMP’s COO, to find out why this keeps happening, and what she tells physician partners who assume more volume is always the answer.

“Why doesn’t more volume automatically mean more profit?”

Allison doesn’t dismiss volume. “Every surgery center has fixed costs, staff, equipment, technology, rent, and you have to have enough revenue to support those operations. For some centers, the challenge really is volume.”

But there’s a ceiling to what volume alone can fix. “Once the center reaches a sustainable level of activity, simply adding more cases doesn’t automatically improve financial performance. Rising labor costs, supply expenses, reimbursement pressures, and operational inefficiencies can quickly offset that additional revenue.”

Her fix for how centers think about this: “The conversation has to shift from how many cases are we doing, to how efficiently are we delivering care. That’s where long-term success is built.”

“What do you actually say when a physician tells you the answer is just more cases?”

Allison doesn’t say no outright. She asks a harder question first.

“What happens financially when we add those cases? Can we currently absorb them with our existing staff and operating room capacity? Do we require additional labor, supplies, equipment? If we’re not scheduling efficiently today, are we simply adding more work to an operation that already has inefficiencies?”

Her point: adding volume to a schedule that already leaks time and money doesn’t fix the leak. It makes the leak bigger.

She’s also blunt about where a lot of that leak comes from. “There are so many dollars lost from anesthesia costs and labor costs when we’re not optimizing the utilization of our ORs to maximum capacity.” That’s not unique to any one center. Becker’s has reported that anesthesia coverage shortages are driving longer turnover times and underutilized rooms across the industry as the national anesthesia workforce shrinks. Every ASC is fighting the same clock.

“What should physicians actually be watching instead of case count?”

Case count is the number every board sees first because it’s the easiest number to see. Allison thinks that’s exactly the problem.

“Case count does get a lot of attention by itself, but it doesn’t tell the whole story. Physician owners need to look at revenue per case, labor cost per case, supply cost per case, operating room utilization, block utilization, and even patient satisfaction and quality outcomes. When you look at these numbers together, that provides a much more complete picture of the health of the organization.”

The metrics she trusts most are the ones that compound quietly, day after day. “Reducing turnover time by even five or ten minutes can create additional capacity without opening up another operating room. Improving block utilization makes better use of expensive fixed resources. These operational improvements often compound over time.”

That same compounding effect is why staffing costs blindside owners as centers scale. “Staffing doesn’t increase in a perfectly straight line. There are points where additional resources become necessary, another circulator, scrub tech, SPD support, anesthesia coverage. Those step increases can surprise physician owners because they don’t happen gradually.” Her advice is to plan for those jumps ahead of time rather than react to them after the fact.

“Does patient experience actually save money, or does it just feel good on a survey?”

This is the one question that took Allison a moment to answer, and the answer turned out to be one of the more useful parts of the conversation.

“Patient satisfaction and cost savings are probably more connected than most people think. Good communication, shorter wait times, efficient patient flow, appropriate pain management, clear discharge instructions, these are all signs of an efficiently run operation.”

The financial logic runs both directions, in her view. “When patients are well prepared before surgery, we see fewer last-minute cancellations, delays, repeated phone calls. When patient flow is efficient, we reduce unnecessary staffing hours and overtime. And good discharge planning reduces unnecessary follow-up calls, potentially even transfers or complications.”

She’s careful not to overstate it. “I wouldn’t say a higher patient satisfaction score automatically equals a specific dollar amount in savings. But it’s a really valuable indicator of whether operational efficiencies or inefficiencies exist.”

“How should a center start fixing this if the foundation isn’t there yet?”

The instinct is to fix everything at once. Allison argues hard against that.

“Where centers fail is that they try to take on too much all at once. If you’re not focusing on a couple things and making them a priority, then nothing is a priority. Staff become overwhelmed, leadership feels like they can’t get through the day.”

Her prescription is narrow on purpose. “Pick one, whether it’s staffing, turnover times, or room utilization. Monitor it for a while, make some tweaks, see if it’s working. You’re not going to fix it all overnight, but you’ll be successful in the long term.”

She’s honest that the payoff doesn’t show up on the timeline anyone wants. “It’s really frustrating, especially for the ones digging in every day. They want to see that immediate win, and they get discouraged quickly. But you have to hold tight and keep trying, because it comes. It’s just not always as fast as we want it.”

“Is there one question every ASC should be asking regularly?”

Yes, and Allison has a specific one. “If we performed these exact same cases next month, what could we do differently to improve the experience for our patients, our staff, and the financial health of the organization?”

It’s a small question with a big function. It forces a center to stop measuring itself by how much it did and start measuring itself by how well it did it.

“What do you want physicians to do differently after reading this?”

“I hope physicians continue to think like both clinicians and owners,” Allison said. “Exceptional patient care will always be the foundation of an ASC, but long-term success comes from pairing that clinical excellence with disciplined operational management. Volume matters, operational excellence matters, but neither one alone is enough.”

Her closing line is the one worth holding onto. “Volume gets you in the game. Operational excellence determines how successful you’ll be. That’s the mindset that creates organizations that are financially healthy, operationally strong, and able to continue providing outstanding care to their communities.”

If This Sounds Like Your Center

Volume gets a center in the game. It doesn’t determine whether the center wins, and the data backs that up as clearly as Allison does. If your growth plan is built entirely around adding cases, get the schedule, the staffing, and the supply chain right first. Then decide whether volume is actually the lever left to pull.

Happy to walk through what that looks like for your center specifically. Reach out anytime.

Talk With SMP About Optimizing Your ASC’s Operations.

Allison Stock is COO of Surgical Management Professionals, where she oversees operational strategy across SMP’s portfolio of ambulatory surgery centers.