Are Surgery Centers Recession Proof?

One of the reasons for a decline in sales during a recession is a change in the supply and demand curve as a result of price elasticity. This means that you may be willing to pay more or less for a product or service depending on your desire and ability to pay the price. When times are good, buying a $40,000 car may be comfortable, but as job security goes away and gas prices go up, you may only be willing to pay $35,000 or decide to wait a year to buy a new car. Healthcare operates in a false economy due to health insurance. A $2,000 hernia only costs you a hospital copay of $250. You are receiving a perceived $2,000 value for $250. At this price you will continue to buy much further into recessionary times.

This doesn’t mean that there will be no effect of a recession on our industry. There will still be the family that cannot afford the copay under the best of circumstances and when times are tough decide that a truss is cheaper than surgery. It will also be the patient who decides to postpone surgery for a few months or until the problem get worse.

For the most part, there will be a lot of hard times in the business world before the effects of a recession reach the healthcare industry. Taking a hard look at all expenses and developing additional service lines to hedge against the possibility of a recession will only make your organization stronger. Being aware of the economic climate and planning well in advance will help you maximize profitability, reduce risk and survive whatever difficult time we have in the future.

Michael J. Lipomi, MSHA, is president of RMC MedStone Capital. He can be reached at ssurgery@aol.com.