3 Reasons Why ASCs Should Consider Implementing Spine Cases
At the 19th Annual Ambulatory Surgery Centers Conference in Chicago on Oct. 26, Chris Bishop, senior vice president of business development and acquisitions at Blue Chip Surgical Center Partners, discussed why ASCs should consider implementing spine and what steps should be taken if ASCs want to take that road.
1. There is a great need. Roughly 80 percent of adults — many of whom are baby boomers and/or overweight — will experience low back pain sometime during their life, and treating back pain costs roughly $25 billion every year. Although there are only 5,800 spine surgeons in the United States, ASCs can help combat the growing demand by adding orthopedic and neurosurgeons to their facilities, Mr. Bishop said.
2. Managed care payors want spine cases out of hospitals. Reimbursement rates are 40 to 60 percent higher in hospital outpatient departments, and both Medicare and managed care payors want to reduce costs by moving expensive spine cases into a lower-cost setting. "Insurers are eager to push lower acuity spine cases out of the more expensive hospital setting and into ASCs," Mr. Bishop said. "Progressive insurers have also been reimbursing specific ASC spine codes for three to five years."
3. It is profitable and attracts physician interest. The profit margins of spine procedures are one of the major benefits of adding it to an ASC. Mr. Bishop gave an example of an ASC with 5,000 annual cases. If that ASC went about its business as is, it could expect distributable income of $1.8 million. If that ASC added 450 spine cases per year, the distributable income would swell to $3.12 million.
Mr. Bishop added that this will attract physicians because they are looking for increased practice volume, attractive ROI, improved efficiency and being part of a spine center of excellence.
Before ASCs can move forward with this type of business decision, Mr. Bishop said the requisite amount of research and preparation must also be done. For example, ASCs must make sure everyone from anesthesia providers to all staff members understand why this shift could be beneficial for them. "When you're thinking about adding spine, it's very important to do business planning and projections on the front end," Mr. Bishop said.
For ASCs that are looking to integrate spine into their facilities, Mr. Bishop recommends they follow these five steps:
• Conduct a financial assessment and ROI model.
• Complete a thorough review of clinical practice (e.g., do surgeons have enough cases, and are relevant procedures being performed as outpatient in the local hospital?).
• Consider the payor mix.
• Determine what the capital start-up costs will be, particularly for equipment and instrumentation.
• Conduct case costing of physicians.
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