4 Ways to Ensure Profitability When Adding Procedures
In a tenuous economy with declining reimbursements, many ASCs are simply hunkering down to see how the healthcare reform landscape will shape up before making any bold moves. Still, says Joyce Deno, chief operations officer for the Eastern Region of Regent Surgical Health, there are ways ASCs can begin testing out some newer procedures that hold promise for their clinical and financial futures. She shares some of her thoughts here on procedures some of Regent's 16 ASCs have recently added that have been panning out well during the past year or two.
1. Best additions may not require big investments. Ms. Deno says many clinically or technologically advanced procedures are not worthwhile for ASCs simply because reimbursement rates won't support the investment necessary to add them. Take robotic surgery, for example. "It is wonderful, but we just don't get those kinds of margins to allow us to invest in that kind of technology," she says.
Therefore, some of the procedures Deno highlights as potential winners for ASCs may not appear all that glamorous. Here are a few:
- Fracture fixation
- Pacemaker generator and leads replacement
- Unicompartmental knee replacement (partial knee replacement)
- Anterior cervical discectomy and fusion
- Prostate cryoablation for treatment of prostate cancer
- Bladder stimulator implant
- Stress incontinence procedures
Ms. Deno says some of these procedures, while not necessarily representing brand new technologies or advances, have been successful contributors to Regent ASCs' margins thanks to favorable reimbursement rates. For some of them, Medicare began reimbursing in the ASC environment only within the past couple of years.
2. Know the market. While ASCs should always be on the hunt for new advances and developments in the procedures they offer, Ms. Deno cautions that administrators need to have a good handle on their current offerings and costs of doing business first.
"It's going to be really hard to reach out for new procedures now because margins are shrinking," she says. Take another example: gastric sleeve resection surgery, a bariatric surgery procedure. While this relatively new procedure can be a winner for ASCs, the fact that it is often an out-of-pocket expense for patients who might now be losing their jobs or insurance coverage makes it a more financially uncertain procedure to launch than might have been the case when the economy was stronger.
3. Determine ROI. Given these constraints, ASC managers need to thoroughly examine the potential return on investment of a new procedure before they leap. Their analysis should involve calls to insurance representatives to determine ahead of time what they would reimburse for the procedure (or if they would reimburse for it at all).
"If you're going to lose money, don't even buy the equipment," says Ms. Deno. "Don't go any further." Administrators also need to talk to their physician partners to find out their perspective on any new procedures. For example, in the case of vertebroplasties, in which bone cement is inserted into cracks in the vertebra to reduce the pain of spinal fractures, the procedure may be profitable if a surgeon uses a less expensive cement but unprofitable if the surgeon prefers a more expensive product.
4. Conduct due diligence before acting. The bottom line, according to Ms. Deno, is that ASCs need to use their information systems to thoroughly examine their fixed and variable costs before heading into unknown territory. Their homework should also include estimating how much it might cost to ramp up a new procedure.
"As a good administrator," she says, "before you look outside the box, you'd better know what's inside your box."
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