From: Becker Scott <>
Subject: ASC Reverses Recurring Losses and Sheds Debt: A Case Study and Benchmarks from Brent Lambert, MD; 20 Days Left for Early Registration for Orthopedics-Driven Webinar; Rick Pence Provides Guidance to Help Manage Your GPO Relationships Closely


October 30, 2007
In This Issue
Florida ASC Reverses Losses, Sheds $2.5 Million Debt: An ASC Case Study
News and Notes
Key Thoughts on the Future of Orthopedics: 20 Days Left to Register Early for Dec. 5 Webinar
Companies to Watch
Ortho Webinar
Florida ASC Reverses Losses, Sheds $2.5 Million Debt: An ASC Case Study

A small southwest Florida multi-specialty ASC could not dig its way out its debt of $2.5 million. When Ambulatory Surgical Centers of America was engaged to evaluate the ASC, it found a multitude of problems including an administrative staff with limited billing experience, poor scheduling, inadequate surgery fees, old equipment, bad debt and a negative reputation in the healthcare community. For example, the ASC was open for five days sitting vacant for much of the time and the ASC signed every single payor contract presented to it regardless of the terms, recounts Brent Lambert, MD, FACS, the founder of Ambulatory Surgery Centers of America (781-258-1533).

ASCOA benchmarks chart

To remedy the situation, ASCOA took many steps including compressing the surgery schedule to two days and having staff leave when they were not needed, expanding the types of cases to include spine, orthopedic and ENT, canceling inadequate payor contracts and renegotiating others, revising the fee schedule, streamlining supplies and training staff in billing and collecting, especially in regards to the accounts receivables.

"The accounts receivables in this instance were only nine days out -- they were too good!" says Dr. Lambert. "We discovered that, in order to balance the A/R, administrative staff was writing off any bill that was not paid within nine days. Thousands and thousands of dollars were virtually being left on the table."

As a result of its work, the center was able to accomplish the following:

  • Staffing costs went from 39 percent to 20 percent of revenue.

  • Supply costs went from 27 percent to 14 percent of revenue.

  • Rent went from 8.5 percent to 3 percent of revenue (the rent did not actually decrease but ended up representing a smaller portion of the increased revenue).

  • A/R went from nine to 39 days outstanding - but almost no unpaid bills were being written off.

  • A/P went from $640,000 to being current (less than one month outstanding).

  • Average revenue per case increased over 300 percent: from $807 to $2,600.

After one year, the severely in-debt ASC was profiting significantly every month, says Dr. Lambert.

Specific expertise can help ASCs successfully turn around financially struggling facilities. The Nov./Dec. issue of Becker's ASC Review will be released soon; it contains an outstanding article by Dana Kulvin that speaks to different approaches that several different ASCs have used to find turnaround success. Don't miss it -- subscribe to Becker's ASC Review.

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News and Notes

Steps for follow-up when submitting the CMS-855. Want to save yourself a considerable amount of money during the development process? Follow up with fiscal intermediaries to ensure they have your Medicare enrollment application after submission.

"This happened to us twice, and we were told to simply resubmit," says Fred W. Ortmann III, the CEO and president of Ortmann Healthcare Solutions. "While this sounds like a good answer, it actually means you may re-submit and go to the back of the processing line. Since it is likely that you submitted your 855 at least two months previously, this could mean that you have delayed your approval date for the 855 by one to four months."

To avoid this problem, says Mr. Ortmann, ASCs should send the CMS-855 to the fiscal intermediary via registered or certified mail with the return receipt required. Then, approximately two weeks after sending, call the fiscal intermediary and ask for the application status. The fiscal intermediary should then give you a tracking number for your application.

"If they say they lost your application, then give them the tracking information and tell them you will send them a copy, but their tracking dates should start on the day they first received your initial package," says Mr. Ortmann. "If they don't agree to do this, then write a letter to the president of the fiscal intermediary, present the information discussed above, and ask that your approval be expedited and started on the date they received your initial application. If they decline, we suggest you write another letter to CMS."

Monitor GPO arrangements closely to ensure entire savings. Many ASCs join group purchasing organizations as a way to better manage supply costs. However to maximize the benefits, ASCs must continually monitor these arrangements.

"While GPOs are an incredibly effective way to save money at your ASC, you should never rely on the GPO and the vendors to get the pricing correct the first time. There are many steps that must be completed between your signing up with a GPO and the vendor loading the contracted price," says Rick Pence, the chief operating officer of National Surgical Care. "We have worked with many ASCs that have lost a lot of money by not closely evaluating the contracts, invoices and correspondence from the GPOs and the vendors."

Mr. Pence suggests the following three tips to ensure your ASC obtains its GPO savings:

  1. Assign a person at your ASC to scrutinize the vendor invoices and compare to the GPO contracts. "Often there will be a discrepancy in cost, that usually does not favor the ASC," explains Mr. Pence. If a discrepancy is found, that person should contact the GPO and the vendor immediately to correct the mistake.

  2. Always open and read all mail from the GPO and the vendors. A GPO or vendor may periodically make brand or price changes on certain supplies for which an ASC is contracted. Often an ASC will only be notified of these changes by written correspondence through the mail.

    "I have seen ASCs lose up to twenty-five percent of its anticipated savings on supplies by failing to read mail from their GPO or vendor," says Mr. Pence.

  3. When changing GPOs, always carefully track through all changes from your old contract to the proposed new one. "Don't simply assume all the contracts will be loaded in a timely fashion, as some will not be," warns Mr. Pence. In addition, do not assume that it is an inferior contract just because some supply costs have increased. "By carefully tracking the proposed new contract, you may find that while some supply costs have risen, others have dropped significantly enough to put you in an overall better position," he adds.

In partnership with physicians and hospitals, National Surgical Care develops, operates and invests in ASCs nationwide. In 2007, centers managed by National Surgical Care will perform more than 110,000 cases, support 325 physician partners and include five hospital partners.

Free McGuireWoods Webinar: "Sales and Marketing of Drugs and Medical Devices." On Wednesday, Nov. 7 from 11:30 a.m. to 12:45 p.m. Central time, McGuireWoods will host a free Webinar, "Current Developments Affecting Pharmaceutical & Medical Device Sales & Marketing Practices." The Webinar will focus on recent enforcement actions as well as practical ways to comply with the rapidly evolving laws and regulations that impact marketing practices by pharmaceutical and medical device companies. Topics to be covered include recent settlements related to off-label promotion and anti-kickback claims; state limitations on the use of prescriber data; and a discussion focused on the state false claims laws under the Federal Deficit Reduction Act. CLE credit is pending. To register, please e-mail Andrea Green. For more information about McGuireWoods' life sciences practice, please e-mail Candace Eastman.

Ask Scott Becker. If you have an ASC-related legal or business question, e-mail Scott, and we'll publish the answer in a future E-Weekly. Please indicate when asking whether you prefer to remain anonymous.

Call for proposals. We are seeking speaking proposals for the Orthopedics-, Spine-, and Pain Management-Driven ASC Conference, to be held in Chicago June 19 to 21. Should you have suggestions, please e-mail Scott Becker by early November.

Subscribe to ASC Review
Key Thoughts on the Future of Orthopedics: 20 Days Left to Register Early for Dec. 5 Webinar
At a Glance: "Key Thoughts on The Orthopedics Industry"

What you will learn: There are two key issues that will be the focus of the Webinar:

  1. A forecast for the next 10 years in orthopedics; and

  2. how ASCs, hospitals and medical device companies should work with orthopedic surgeons.

Who should attend: C-level hospital leadership, vice presidents and other leaders who who work in a orthopedic-physician-relations capacity, orthopedic physician leaders, ASC administrators, ASC owners, and ASC and medical device companies.

When: Wednesday, Dec. 5 at 2 p.m. CST (running time: 60 to 90 minutes)

About the speakers: John Cherf, MD, MBA, MPH, is an orthopedic surgeon at the Chicago Institute of Orthopedics, a clinical advisor for Sg2 and a thought-leader in orthopedics. Dr. Cherf founded the Midwest Orthopedic Institute, an orthopedic physicians group with full integration of diagnostic imaging, rehabilitation, ambulatory surgery and occupational medicine under one roof. He presently practices in Chicago and is once of the founding members of the Chicago Institute of Orthopedics. With more than 15 years' experience and fellowship training in sports medicine, he has served as team physician for several collegiate and professional sports teams in addition to U.S. Soccer. Dr. Cherf has published in numerous peer review journals, speaks internationally, and serves on several advisory boards for healthcare-related businesses.

Scott Becker, JD, CPA, is a partner in and co-chair of the health depatment at the national law firm of McGuireWoods in Chicago. For more information, visit his McGuireWoods profile or

Cost: $199 if registering before Nov. 19 (save $50!).

How to register: There are five easy ways.

  1. Fill out and submit the online registration form.

  2. E-mail Jessica Cole.

  3. Call us toll-free at (800) 417-2035.

  4. Download the printable registration, fill out and fax to (866) 678-5755.

  5. Download the printable registration, fill out and mail to 315 Vernon Ave., Glencoe, IL 60022.
Companies to Watch

We are delighted to highlight the following companies in this week's E-Weekly.

Irmscher Construction. Irmscher is a 115-year old national healthcare project development firm specializing in the design and construction of healthcare facilities. Irmscher's first project in the medical field was St. Joseph's Hospital in Fort Wayne, Ind., in 1926. Since then, the company has kept its focus on the healthcare industry, and today it is one of the leaders in design/build healthcare construction. Irmscher offers clients the essential combination of cutting-edge design and construction knowledge, as well as technical expertise. In addition to design/build services, Irmscher assists clients with other phases of project development including feasibility studies, pro forma development, site selection, and alternative financing options. Irmscher has completed more than 30 surgery centers and millions of square feet of medical and hospital buildings. For more information, visit Irmscher online.

MedBridge Financial Services. The team at MedBridge has one goal in mind, and that is to obtain the highest reimbursements their clients are entitled to in a timely manner. Through many years of experience in ASC billing and collections, MedBridge Financial Services (MFS) achieves proven results, at an affordable cost. If your surgery center is not pleased with its current case reimbursement averages, there is likely a problem with your billing, coding and collections protocols. MedBridge can fix this. By outsourcing all billing needs to MFS, the burden is lifted so that your surgery center can focus on what it does best -- provide quality patient care. Partnering with MFS greatly reduces overhead, opens crucial office space, and redirects patient billing questions away from surgical staff. Take the burden off your center and start collecting what you deserve. To contact MFS, call toll free (888) 282-7472.

Transworld Systems. John Morgan is a national account manager with Transworld Systems, focusing on helping the ASC industry and their physician partner practices recover money on past due patient accounts and insurance claims for a flat fee of around $10 per account rather than charging a percentage. Some of John's clients include Surgical Care Affiliates, Nueterra Healthcare Single Specialty Division and Practice Partners in Healthcare. The Transworld Systems profit recovery system is designed to reduce costly internal processes regarding past-due accounts and improving cash flow by getting accounts paid quicker. The company's 24/7, Web-based system is user-friendly and allows for a simple reporting mechanism for both ASC corporate partners and independent facilities. E-mail John or call him today at (800) 873-8005 to begin spending less and recovering more. You can also visit him online.

*           *           *

If you have any questions on any of the items listed in this letter, please contact me at (312) 750-6016 or by email at

Very truly yours,
Scott Becker

Scott Becker, JD, CPA
(312) 750-6016

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