An update on net working capital

The average net working capital for CHWs is $1.3 million per year, a benchmark of a surgical center’s financial health, according to VMG Health’s “Intellimarker 2022” report.

Surgical centers aim to have sufficient working capital to cover costs and prepare for growth. The median number of cash days is 39.8 days, varying slightly between different regions of the United States. CHWs in the Montagnes region have the fewest cash days, about 33, and surgery centers in the South have the most cash days, 49.6.

Net working capital, the difference between a surgery center’s assets and liabilities, also varies.

Distribution of median net working capital of CHWs by region:

Atlantic: $1.2 million
Midwest: $1.3 million
Mountain: $1.5 million
Northeast: $1.2 million
Pacific: $1.2 million
South: $1.4 million

Net working capital represents approximately 12% of the surgical centers’ overall net operating income. The typical CSA balance sheet shows that most are able to cover costs, but margins remain tight as expenses increase without a similar rate increase from insurers.

Many ASCs plan to invest in new capital equipment in the coming months, including surgical robots and other clinical technologies. Other surgery centers plan to expand as the number of insured patients requiring elective surgery in certain communities increases. Surgical centers are also making room in their budgets for new computer systems and data analysis software to increase operational efficiency and prepare for more value-oriented contracts.