Can endoscopy centers remain successful in the current healthcare environment? Five gastroenterologists share their thoughts on the biggest challenges and opportunities for increasing GI-driven center profitability.
Question: What are a few of the biggest challenges standing in the way of endoscopy center profitability?
Brett Bernstein, MD, Director of Endoscopy Mount Sinai Beth Israel, Medical Director of Eastside Endoscopy (New York): Challenges include rising variable costs in the setting of an environment where consumerism has led to a reduction in volumes related to increasing deductibles and copayments for procedures. In addition, negotiations related to technical charges have resulted in minimal or no increases in fees.
R. Bruce Cameron, MD, FACG, American College of Gastroenterology Board of Trustees, Clinical Professor, Case Western Reserve School of Medicine, Endoscopy Director, Bainbridge Endoscopy Center (Chagrin Falls, Ohio): Controlling overhead and increasing reimbursement rates are obviously the keys to profitability. Employee costs with salary and wages, payroll taxes and employee benefits make up the single largest cost center in the ASC. Medical supplies, including disposables, is the next largest cost center.
Falling reimbursement rates led by Medicare's current rate of 56 percent of hospital outpatient departments continue to be the largest challenge on the income side of the ledger.
Maxwell Chait, MD, FACP, FACG, FASGE, AGAF, ColumbiaDoctors Medical Group (New York): Gastroenterology and single-specialty GI ASCs will be impacted by CMS's restructuring of the ASC payment system. Despite the anticipated cuts for GI procedures, it is possible to maintain or increase profitability. One needs to look at all payers, and not just Medicare, in determining what will be the real impact on the ASC. The center must take steps to compensate for the Medicare cuts and to help increase the profitability of the ASC. There are several important factors that help profitability
David Greenwald, MD, FACG, American College of Gastroenterology, Board of Trustees, Einstein/Montefiore Gastroenterology Fellowship Program, Director (New York): Probably the biggest challenge standing in the way of endoscopy center profitability is decreases in the reimbursement for endoscopic procedures. At a time when the value of endoscopic procedures continues to be validated, as was shown with a notable decrease in mortality related to use of colonoscopy and removal of colorectal polyps, reimbursement for endoscopic procedures continues to fall.
David A. Johnson, MD, MACG, FASGE, Gastrointestinal and Liver Specialists of Tidewater, Chief of Gastroenterology, Eastern Virginia Medical School (Norfolk, Va.): The Patient Protection and Affordable Care Act has provided us with a chaotic reality mandating changes in medical practice subject to technological, demographic, economic and political influences. Endoscopy centers and physician practices alike will be challenged to provide services with increased emphasis on quality and value.
Additionally there will be changes in payment models, likely away from the present "fee-for-service," moving towards bundled payments and shared savings contracts. In an era of declining reimbursements, a major challenge for endoscopy center profitability will be to fully understand and contain the costs for providing services. This will be essential when evaluating contracting alignments with accountable care organizations, integrated physician practices, hospitals and payers.
As GI practices and endoscopy centers are uniquely dependent on providing endoscopic services — in particular colonoscopy. Therefore, we are uniquely vulnerable to disruptive technologies, such as stool DNA testing, capsule colonoscopy or serum-based testing for CRC. Any shift in utilization of endoscopy therefore poses a major potential challenge to fiscal stability of the endoscopy center.
Finally, the ongoing threat of further reductions in Medicare fees is an ever present concern. Recognizably, the draconian cuts of more than 25 percent over the last several years has threatened the viability of endoscopy centers, most of which operate at or below cost for providing services.
Q: Do you think standalone endoscopy centers have sustainable future or will these centers need to consider joint venture partnerships?
DG: It is unclear how endoscopy centers will look in the near future. It would appear that more joint venture partnerships are in the offing, although some standalone endoscopy centers are likely also to be viable. Local conditions will dictate these circumstances, but the key thing is for physicians in endoscopy centers to be flexible and continue to review all available options on a regular basis.
BB: The rapid evolution of integrated healthcare systems and population management will make it difficult for standalone endoscopy centers to thrive. A hospital partner can offer many advantages including potential benefits, such as being clinically integrated.
BC: Efficient standalone centers are currently sustainable, but I fear that if Medicare reimbursement rates continue to fall sustainability may become an open question. Joint venture partnerships with hospitals can be of benefit if your center is able to adopt the hospital contracts with third party payers and accept the higher reimbursement rate. This higher contracted facility fee schedule is not dependant on being dubbed a remote HOPD (which is even more lucrative) but is inherent in hospital insurance contracts. Without that increased financial reward, partnership with a hospital is often merely cumbersome and without sufficient benefits.
DJ: Clearly in the next decade we will see continued disappearance of our medical practices as we know them. As integrated healthcare systems emerge, there clearly will be even more pressure for providing high quality endoscopy services at the lowest costs. This clearly means an increasing demand for out of hospital services. Joint ventures may be necessary in some circumstances and participation in integrated networks. Careful and comprehensive analysis of such ventures is essential. Additionally, exit strategies should be developed to best protect the practice against the "shifting sands" of the future.
Q: How can gastroenterologists improve profitability at their endoscopy centers?
DG: Gastroenterologists can improve profitability at endoscopy centers by focusing on high-quality practices. Such practices ensure that all procedures are done for indicated reasons, and are completed in a way that aligns with accepted quality metrics.
BB: Quality measurement and its codification through utilizing registries such as GIQuIC in conjunction with patient satisfaction surveys can successfully be utilized to negotiate with insurance carriers. Demonstrating high patient satisfaction and compliance with screening and surveillance intervals can translate into enhanced reimbursement when put in the proper context.
BC: Employee costs can be controlled by proper staffing models. One such model utilizes very few full-time employees that are supplemented by part-time and PRN staff. This model reduces employee benefit costs. Efficient staffing in the procedure room, either with a CRNA supplemented by a medical assistant or a single RN monitoring the patient's vital signs with a shared medical assistant between two rooms, decreases the overall number of employees and therefore the cost.
Disposable equipment costs can be mitigated by large yearly purchases whose sale price can be deeply discounted.
MC: Increase volume to offset any [reimbursement] reduction. Try to recruit new physicians or bring more volume into the center. In-service primary care physicians to make them aware of appropriate testing and community awareness programs, such as colon cancer screening. Awareness programs for primary care and GYN physicians should be considered. Communicate with office schedulers the importance of early notice of planned time off that might leave blocks open in the future. Patients should be asked if they wish to be placed on a priority list if availability in the physician's schedule arises. Patients on the priority list are contacted until one fills the gap.
Utilization rates must be evaluated. In the morning, utilization is greater than the afternoon. It is very important to examine whether one is running rooms at lower utilization. It may be wise to take the less-profitable cases to the hospital or another venue and have the option that fill that slot with more profitable cases. Sometimes slightly overbooking the schedule may be helpful since one can usually count on one or two patients either canceling or not showing. Customize physicians' blocks to enhance utilization. Some physicians are faster at the same level of quality than others. Of course the two most important objectives are patient safety and quality medicine. They must not be sacrificed for profitability.
DJ: Practices will have to fully understand their costs and carefully evaluate implications of involvement in any integrated care delivery system. It will be extremely important to analyze referral lines and the potential impact if the practice was to be involved or chose to not be involved. Emphasis on marketing high quality, low cost, safety and patient satisfaction will be extremely important as payment models are developed around value based purchasing. Developing systems to track these within the endoscopy centers will be key. Additionally, programmatic analysis to gain efficiency and eliminate waste will be essential for improvements in profitability.
Q: How can ASCs work with insurance companies for better reimbursement rates?
MC: Approach carriers for ways to enhance reimbursement. Examine the contracts with third party payers. Any rate increases that can be negotiated will help offset increases in expenses and decreases in governmental reimbursement.
BC: Reimbursement rates can actually go up if endoscopy centers negotiate from a position of strength documenting quality with a robust quality registry such as GIQuIC and using the current difference between ASC and HOPD rates to your advantage. Our center recently received an increase in its facility fee from a major national insurer by demonstrating an increase in the percentage of their insured patients who had procedures in the ASC, rather than the HOPD.
Q: How can gastroenterologists address market competition and give their endoscopy centers a competitive edge?.
BC: In the current landscape, endoscopy has increasingly become a commodity. In order to distinguish yourself and your endoscopy center from others, you will need to demonstrate the highest quality as measured by an independent entity (for instance the GIQuIC registry) while at the same time improving patient satisfaction and outcomes. Personal attention, ease of scheduling, and pre-and post-op experience go a long way in distinguishing your center.
Meeting quality measures and making them available publicly to both your patients and your referring physicians can also distinguish your endoscopy center from its competition. It is important to find opportunities to optimize and publicize the benefits that your center offers patients, referring physicians and third party payers.
MC: High quality improves endoscopy through better performance and patient satisfaction. Performance data can be used as a bargaining chip with insurers to get reimbursement increases for meeting specific targets. Quality tracking to detect inefficiencies and devise methods for improvement will produce savings. Quality indicators such as arrival to patient in room, patient in room to time-out, time-out to scope-in, scope-in to scope-out, scope-out to recovery start, recovery start to discharge, and polypectomy detection rate can be evaluated and addressed to improve both quality and efficiency.
DJ: With full understanding of the costs for providing services and maximizing endoscopy center efficiency, physicians are in a position to better address where they can participate in various healthcare markets. Developing a high quality reputation with emphasis on low cost, as well as high level patient satisfaction will be key. There will be an increased demand for transparency in all aspects of the care delivery. This will ultimately mean sharing specific outcome data with payers and the public alike. Participation in national registries (e.g. GIQuIC) will be key for comparative benchmarking in value and outcomes.
Q: Are there any under-utilized services that endoscopy centers can add to boost case volume and improve profitability?
BB: Some procedures that centers may not realize are profitable include endoscopic ultrasound. While slightly more labor intensive when combined with interventions such as FNA, these procedures demonstrate your center has enhanced capabilities and can be highly profitable if enough demand exists.
BC: Our center has added hemorrhoid banding as a new service line.
DG: Some endoscopy centers have used additional procedures besides upper endoscopy and colonoscopy in order to boost profitability. One example of this is hemorrhoidal banding, which can be done in a relatively short period of time and can dramatically increase endoscopy center volume.
DJ: Clearly there are services which can help profitability. Internal programs which drive endoscopy include quality improvements for adenoma detection, hence more polyp surveillance patients.
We have used our post-colonoscopy discussion with patients who have hemorrhoids to open a brief dialogue by asking "Do they bother you?" Amazingly when asked a striking percentage of patients will reply affirmatively and this leads us to bring them back for sequential hemorrhoid banding (typically three sessions). These ancillary procedures are extremely safe, effective and add increased profitability.
Practice profitability has also been enhanced by adding ancillary service lines such as pathology, anesthesia and infusion services. How long these will remain as ancillary options however is quite uncertain.
Q: How can marketing help improve endoscopy center financial performance?
DJ: External marketing of the practice is typically underutilized. This should be profiling the practice around quality metrics, specifically comparing data on effectiveness (e.g. adenoma detection rates) with national benchmarking registry participation (e.g. GIQuIC). This type of information needs to be highlighted to emphasize the quality of the practice, ever more important as patients become more involved in the selection of where they will have these services provided, as well as payments redirected to high quality delivery centers.
Additionally, physicians typically underestimate the power of the websites for their practices and need for marketing their quality to patients via this platform. Most all businesses with annual revenue of $10 million or more have a full time person devoted to media relations and marketing. Physicians are woefully naïve however, and clearly need to take note of the potential impact of enhancing web presence as well as monitoring their on line reputations.
Q: What advice you have for endoscopy center physicians trying to attract new physician partners this year?
BB: The decision to take in a new partner has become more complex in this environment. Downward pressures on technical and physician fees require continuous effort to maintain and extend referral bases. Selling points for recruitment of new physicians might include adequate availability of morning block time, maintaining state-of-the-art equipment and accessories, ensuring that while fair market value calculations are always utilized in calculating buy-ins and that the ROI is reasonable.
BC: Potential new physician partners are interested in knowing how much support they will receive until they can build a practice, and how soon they can become an equal partner. Maximizing the former while minimizing the latter will attract many qualified applicants.
DJ: Practices which understand local politics and evolving market forces will be in the best position to attract new physician partners. Furthermore, those with evidence of high quality, efficient, low cost provision of care will be in the best position to sustain and or thrive in the new environment.
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