Essentials of Developing a Spine-Focused ASC: Q&A With Kenny Hancock and Cathy Kowalski of Meridian Surgical Partners
Spine-driven or spine-focused surgery centers are gaining traction in the ASC industry, as minimally invasive surgical techniques make the procedures more accessible in an outpatient setting. Despite progress in the last several years, however, Medicare has yet to approve most spinal procedures for the ASC, creating roadblocks for payor contracting and physician recruitment. Here Kenny Hancock, president and chief development officer, and Cathy Kowalski, executive vice president and chief operating officer for Meridian Surgical Partners, discuss essential steps to developing a spine-driven ASC.
Q: Spine has been an increasingly popular specialty for ASCs in the last few years. How do you determine whether a spine-driven ASC is appropriate for a given area?
KH and CK: The opportunity is always driven by the surgical case volume and the ability to get paid for the procedures performed. We see increased interest from neurosurgeons and orthopedic surgeons wanting to develop surgical facilities focused in spine. This is driven because technology, surgical techniques, anesthesia, pain control and patient expectations with minimally invasive surgery allow patients to move from an inpatient to an outpatient environment safely.
This evolution creates an opportunity for higher acuity cases historically performed in hospitals to move to a surgery center creating the opportunity for spine surgeons to participate in surgery center partnerships. Spine surgeons desire to control their surgical environment, increase their productivity, simplify their lives and increase their income just as the other surgical subspecialties have for years.
Q: Which procedures do you build the center on, when developing an ASC?
KH and CK: The top spine procedures performed in spine-focused surgery centers are pain injections, microdiscectomy, laminectomy, laminotomy and fusions, including ACDFs -- anterior cervical discectomy & fusion (1 and 2 level) and PLIFs – posterior lumbar interbody fusion.
Q: How does spine surgeon recruitment differ from recruiting other ASC specialty surgeons? Are there any particular challenges?
KH and CK: You must select surgeons who are comfortable practicing in the outpatient arena – or who are willing to do so -- to build a spine-focused ASC. Neurosurgeons and orthopedic spine surgeons must be motivated and understand the enhanced patient outcomes and satisfaction rates represented by an ASC-based program. Physicians need to be comfortable with minimally invasive techniques, a shorter period of post-op care and modified discharge criteria.
Q: What are the major challenges of developing a spine-driven ASC?
KH and CK: Spine-driven ASCs are similar to developing any surgical facility. The keys to understanding any project is knowing that surgical case volume drives project scope (number of operating and procedure rooms), which drives costs, including construction, equipment and working capital, which determines the capital needed to develop and operate the business. There are few considerations unique to spine; we currently see less surgical case volume by physician because only a subset of the surgeon’s spine volume will move to the ASC. This is likely due to an evolving migration of spine from the hospital to an outpatient setting.
As physicians gain confidence in the outpatient process, combined with excellent patient outcomes, the volume will increase with time. Other unique considerations include reimbursement and implant costs and making sure you can get paid and reimbursed for implants. Working capital demands will be greater in a spine center, typically $1.5M for a 9 to 12-month ramp phase.
Critical areas of consideration are divided into two categories: development and operations. Development considerations include financial analysis, surgical case volume, reimbursement analysis, construction cost, financing (equity, debt and working capital). Operational considerations include reimbursement analysis, implant cost, equipment cost, staffing, patient education, physician mindset, patient selection, pre-op process, pain control and anesthesia program.
Q: How can ASCs negotiate profitable payor contracts for a new spine center? Is reimbursement still relatively high compared to other specialties?
KH and CK: Reimbursement -- getting paid -- is a critical step in your planning process. Most spine procedures are not currently approved by Medicare and thus insurance companies don’t provide payment methodology for spine in an ambulatory setting. We’re beginning to see some exceptions to this; for example, Blue Cross of Texas recently implemented a fee schedule for spine in an ASC setting.
For the most part, it’s a negotiation between the ASC and insurance companies to ensure the cases performed get paid. A managed care expert who has knowledge of the local market condition is critical to an accurate revenue build. Keep in mind critical steps when negotiating with payors:
• Know your case costs for each physician provider and procedure type – make sure the reimbursement rate you negotiate covers your costs and make sure you have adequately covered the cost of surgical implants.
• Be prepared to defend and argue the benefits of spine reimbursed in an ASC setting versus the hospital. Reimbursement for the same spine procedures in the hospital is significantly higher than the ASC.
Q: Are there any considerations when it comes to staff and anesthesia providers?
KH and CK:
1. Staffing. Optimally, you hire staff that has spine experience or has worked with your surgeons previously. Having adequate resources who understand the needs of spine patients pre-operatively and post-operatively will make a significant difference in your ability to have a successful program.
2. Anesthesia. Anesthesiologists are using shorter-acting anesthetics and patients can go home with improved pain control, including programmable pain pumps. You must have good protocols and pathways for dealing with complications, recovery and pain control after discharge. Patients should be fully educated on what's normal and what's not, what to look for if they're having an issue and someone to call if they believe they're having a problem. Managing these factors is critical to success.
3. Patient education. Patient preparation is the key. Managing the patient’s expectations should start in the physician's office. The physician needs to manage expectations from the beginning and convey the message that, "It's minimally invasive surgery; you'll be home the same day." Helping them understand that they can go home with good pain control will ease anxiety and allow for successful discharge and transition home.
Learn more about Meridian Surgical Partners.
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