Young Surgery Center Management Company Experiences Fast Growth in First Six Months

Most people avoid problems.

Mike Lipomi, MSHA, president of RMC MedStone Capital, looks for them, at least in part of his business. He and his colleagues take on troubled centers that have potential, then they turn them around. The team also acquires well-performing centers, transforms surgery centers into hospitals, and launches de novo operations.

RMC Medstone Capital is only running four centers now — one of which is the well known Stanislaus Surgical Hospital of Modesto, Calif. — but the company has a whopping 23 projects in acquisition, conversion and development phases.

Having all those projects on deck is a lot to handle, but it’s working fine, Lipomi says. “It’s not like all of these facilities’ transactions are going to be completed in the next 30 days,” he says. “It’s demanding but manageable.”

He expects that some of the deals won’t ever close. Others, however, are moving swiftly. Lipomi predicts that in the next year somewhere between seven and 10 facilities will open.

The parent company of RMC MedStone Capital is RM Crowe, a real estate developer and property manager based in Dallas, Texas. RM Crowe bought out TruMedical Partners and renamed the company RMC MedStone Capital.

The buy-out occurred about six months ago and Lipomi has been president since. Lipomi has been managing and operating ambulatory surgery centers (ASCs) for about 30 years. He has served on the boards of several organizations.

Lipomi describes himself as an “operations person at heart” and says that people value the breadth of his day-to-day ASC experiences. Lipomi suspects that part of why Med- Stone has been able to lure so many projects is because the parent company has more than 6 million square feet of real estate space, and the real estate finance knowledge to go with it. This savvy gives physician owners more opportunities, he says.

The MedStone model is to acquire a percentage of a facility and then use its affiliate, RMC MedStone Management, to manage operations, growth and profitability. In addition to the traditional management services, the staff offers marketing, physician recruitment and referral services.

RMC MedStone Capital’s facilities are in California and Indiana and the company leaders want to spread nationwide. Representatives say the benefits of a national company include efficiencies in operations, increased revenues, debt restructuring and benchmarking. It is also valuable to draw on the expertise of doctors from different parts of the market and country.

“We do have an ongoing partnership opportunity so that doctors and anybody who gets involved with us financially can participate with all our deals, so we are truly partners with our physicians,” Lipomi says. “(In most other companies) the doctors invest in the surgery center they work at, but not in (ASCs) in other communities.”

When doctors invest outside their ASC it provides the company with strong clinical insight, Lipomi says. “We’ll have doctors from all over the country participating with us and we’ll be able to benchmark best practices,” Lipomi says. “If a doctor in Phoenix is doing something unique or innovative, we can share it with other facilities that we own or manage. That’s a huge advantage to us.”

Input from doctors and other staff members during the 90-day due diligence period is a crucial factor in whether RMC MedStone will get involved with a center. A team of two to four people research clinical and financial information and spend about a week on site learning about the community, making observations and interviewing the staff. They look at quality assurance programs, records, meeting minutes, credentialing, licensing and infection control.

“They ask the staff and the physicians about what works and what doesn’t, and what services, equipment, supplies and staff resources are needed,” Lipomi says. “They ask about other underserved areas of medicine in the community. What are the hospitals doing or not doing? What would benefit the community?”

The due diligence team also meets with vendors and community leaders.

“It’s a critical part of the process to make sure you understand as much about the facilities and the needs of the community before you get involved,” Lipomi says. “It’s a longterm relationship, so you want to be sure that you have a good understanding of what you’re getting into.”

Despite all the scrutiny, staff members are usually receptive to the team, Lipomi says.

“When you come in with that attitude of exceptional service, everyone is happy,” he adds. “At the end of the day the facility is going to be profitable. Profits shouldn’t be your primary motivation, but if you’re not profitable, you’re not going to be able to stay in business.”

Converting surgery centers into hospitals can be profitable, but takes a great deal of resources and can’t be done halfway.

“If you’re going to move from an ASC to a hospital you need to add all of those services and meet all of the building codes of an acute care hospital,” Lipomi says. “It is a very large undertaking.”

The process takes between two-and-a-half to four years to complete. The biggest part of RMC’s projected business is the acquisition and management of ASCs, followed by acquisition and management of hospitals, then de novo projects.

Lipomi says he can’t discuss the specifics of any projects that are in development. He did say, however, that one in particular has him excited because patients are currently having to travel far to another county to get quality medical care, but will have a great center much closer to home if the deal goes through.

“There’s (another) project we’re working on where the community and the doctors have lost faith in the local hospital and they’ve come to us to convert their surgery center to a hospital and that’s a very exciting one for us to get involved with because it’s a real community service,” Lipomi says. “Patients are being underserved.”

Problems that can be mitigated are not deal breakers to Lipomi, but there are certain red flags that do cause him to walk away.

“If someone is not committed to quality patient care, then I wouldn’t go anywhere near that facility,” Lipomi says. “If they’re not screening their patients, charting, credentialing, or if any of the quality control processes are not in place (it’s a red flag).”

The culture of the facility must also be one that is open to change. If that flexibility and other signs of potential are present, as far as Lipomi and his colleagues are concerned, the sky’s the limit. 

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