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8 Strategies for ASCs to Stay Profitable & Accept Medicare

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Bruce Kupper on surgery center administrationMedarva at Stony Point Surgery Center in Richmond, Va., has a policy of accepting every patient, regardless of their payor, and is able to maintain profitability despite treating a considerable number of Medicare and Medicaid cases. In some markets, surgery centers are considering dropping government payor cases, but CEO Bruce Kupper doesn't see that in the future for Medarva.


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"I think if we are going to be a full service ASC we have no choice but to take Medicare patients," he says. "The population is growing too fast and they have too many needs for us not to take Medicare anymore. In our particular situation, we believe strongly in providing charitable care and we take those patients on willingly."

Here, Mr. Kupper discusses how his surgery center is able to maintain profitability while also accepting government payors.

1. Don't turn cases away (even if they are Medicare).
Medarva's policy is to treat every patient, which means never turning a Medicare or Medicaid case away. Commercial payor cases can make up the difference between government payor rates and ASC expenses, and in some cases vice versa.

"We look at every patient as a reduction in overhead so we don't refuse anything," says Mr. Kupper. "We see it as pure volume and even if it's a Medicare or Medicaid patient, we see it as a way of reducing our overhead so we are happy to see that patient."

There are some Medicaid procedures Mr. Kupper has found to reimburse better than commercial payor rates, which is unusual for a government payor. These aren't necessarily typical ASC procedures, but they can be brought into the outpatient surgical setting if surgeons are willing to perform them.

"Medicaid pediatric dentistry in this market has done well," says Mr. Kupper. "Sometimes we seek out unusual types of cases other surgery centers tend to stay away from. We keep track of the different reimbursements to see where we can have success next."

2. Recruit new surgeons with non-Medicare payors.
Mr. Kupper is constantly trying to recruit new physicians who will be able to bring commercial payor cases to the center. While physicians are often excited about the opportunity to work in the outpatient environment, it can be challenging to change scheduling habits.

"The hardest thing we face is changing the surgeons' habits and their scheduler's habits," says Mr. Kupper. "Physicians are excited because they could have ownership in the center and will see faster turnaround times than at the hospital. It's harder to change the habits of the schedulers because they are familiar with the process for the hospitals already. Adding a new entity is challenging."

Mr. Kupper sends his scheduler out to meet the physician's office staff and invites the physician's scheduler to the ASC to tour the facility. They also invite the physician's scheduler to call any time, even if it's an urgent case, and ensure that the physician will have a slot in the OR.

"Our scheduler can't turn cases away, so that's helpful for last minute changes," says Mr. Kupper. "We tell them that we'll figure out a way to get them on the schedule at a time that's convenient for the physician, patient and for us."

3. Present cost comparisons to commercial payors.
In contract negotiations with commercial payors make sure they understand the cost differential between surgeries performed in the surgery center versus hospital setting, as well as the strong quality and patient satisfaction from your ASC. Negotiating strong contracts with commercial payors will offset the burden of government payor rates.

"The best thing we can do is make our case with commercial payors," says Mr. Kupper. "We are a great alternative to the hospital and we are willing to partner with insurance companies on cases that hospitals aren't. We don't want a fight with the payors; our approach is to make it work for everyone."

Medarva does a high volume of ophthalmology cases and they partner with insurance companies on corneal transplants, as an example. Mr. Kupper showed the insurance company the center’s costs and compared them to hospital costs for corneal transplants, and the insurance companies were supportive of reimbursing for the tissue and the procedure. The surgery center has also partnered with commercial payors on pediatric urology cases.

"Urinary reflux leads to bladder and kidney infections. To treat this problem the surgeons us a product called DeFlux which is injected into the patient to keep the urine from flowing back up," says Mr. Kupper. "One of our insurance companies didn't want to reimburse for Deflux, but we showed them that if the patient didn't receive the injection they would have to have a surgical procedure in the hospital. We showed them the costs for Deflux versus the costs for that procedure as well as the clinical data to support it. They quickly approved the addition of Deflux for our patients."

4. Pay attention to expense management.
Managing expenses at the surgery center can close the gaps of unnecessary and wasteful spending. Tightening in these areas allows the surgery center to perform more lower-reimbursing cases when necessary. One of the best ways to keep supply costs low is by managing vendor relationships within the ASC.

"We make sure our vendors know what our reimbursement structure is like and where it's going," says Mr. Kupper. "If we don't see rate increases from our carriers, we make it clear that we aren't going to be the only ones feeling pain in this process."

Surgeons are also informed of supply costs and they partner with the ASC to make sure vendors receive a consistent message about what the center can afford and what it can't.

"If surgeons come to us with a new item — an inserter or a widget — we show them our reimbursement and what it's costing us," says Mr. Kupper. "We work with the physician and vendor to see what can be eliminated or modified to reduce our costs so we can afford that item. In working with the physicians, they have been incredibly responsive and supportive."

5. Partner with vendors on materials management.
Surgery centers can partner with their vendors on lowering cost and improving quality at the ASC. When vendors show they are willing to work with you on your terms, remain loyal to them.

"We try to build long term relationships with the sales folks," says Mr. Kupper. "They know where we are and where we stand so they don't try to sneak something in or play a game. In exchange for that, we become fiercely loyal to them."

Make sure surgeons are aware of your vendor relationship policy as well. When vendors approach surgeons about a new item, the surgeon should redirect the vendors to ASC administration. "When the sales reps try to go to the physicians first, our physicians send them back to us or give them the same cost information we would," says Mr. Kupper. "They hear the same tune from the physicians and the center."

6. Accommodate all surgeons.
Whether the surgeons are investing partners or just bringing cases into the ASC, administrators and staff must accommodate for them to keep their volume. This might mean putting in extra time to work with a scheduler, shifting around OR blocks or going the extra step to coordinate patient services.

"Our goal is to make it as easy as possible for our surgeons and their schedulers," says Mr. Kupper. "We don't get into whether there is a private or government payor; we will schedule everything and deal with the financial consequences as they happen. We want it to be as easy as possible for everyone who practices here."

One of the general surgeons bringing cases to Medarva requests a home health nurse visit the patient one day after surgery and remove the drain. The office staff members at Medarva have a process where they schedule the home health nurse at the same time the surgery is scheduled to make it easy for this surgeon and his scheduler.

"We focus on quality, interaction with patients, surgeons and schedulers," says Mr. Kupper. "My staff does a great job of making surgeons feel comfortable and welcome here."

7. Keep an open mind.
There are plenty of non-traditional opportunities to partner with other healthcare entities and providers in the community to strengthen the ASC's reputation and success for the future. Mr. Kupper is always open to these opportunities and has found a mutually beneficial partnership with an academic medical center training program to include residents at their center.

"We take on some things that the average ASC wouldn't take on, such as allowing residents to operate and medical students to observe here," says Mr. Kupper. "We have affiliations with five different residencies at the medical school and it has a couple of benefits: it's a whole different population of surgeons we can recruit from."

The program allows residents to perform their cases at the ASC, and even though the training surgeon is a little bit slower, the case volume and recruitment potential is strong. If the case drags too long, the attending surgeon and circulating nurse can help move it along.

"A lot of the residents stay in Richmond, so they are familiar with us and our staff," says Mr. Kupper. "Familiarity breeds relationships and a high comfort level. We've seen a lot of residents say this is where they want to operate and we have a chance to recruit them."

8. Support advocacy initiatives.
Surgery centers are currently reimbursed at lower rates than hospitals and hospital outpatient departments. Government payors reimburse a fraction of private payors, and even less when they reimburse to ASCs. National organizations such as ASCA are advocating for better rates in the future and surgery centers can support these efforts.

"Obviously the payment structure that Medicare comes up with is an issue because we keep falling farther behind the hospitals," says Mr. Kupper. "ASCA has done a good job of keeping Congress and CMS aware of the issue. A more telling story would be actually showing comparisons of what hospitals and ASCs receive for the same procedure."

Surgery centers sometimes use these comparisons as leverage during commercial payor contract negotiations to drive patient volume or increase rates. These same tactics could apply to government payors. "We should ask them why they are sending patients to the hospital when it costs more and see if they can increase our rates so the ASC is a viable option," says Mr. Kupper.

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