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The key financial concepts and payer trends for ASCs today

Thomas K. Miller, MD, is the sports medicine chief at Carilion Clinic Institute for Orthopaedic and Neurosciences in Roanoke, Va.

He has experience with outpatient surgery and spent time as a team physician for the USA Triathlon National Team. Here, he discusses the big challenges and opportunities for orthopedic centers today.

Dr. Miller will share his expertise as a speaker at the Becker's ASC 26th Annual Meeting: The Business and Operations of ASCs, Oct. 24-26, 2019 in Chicago. To learn more and register, click here. For more information about exhibitor and sponsor opportunities, contact Maura Jodoin at mjodoin@beckershealthcare.com. 

Question: What is the biggest challenge for your orthopedic center today?

Dr. Thomas K. Miller: The biggest challenge is recognition that accurate case costing and determination of a positive fiscal margin is a much more fluid target than in the past. We have experienced a number of implants suppliers move to implant cost mark ups, often unannounced or unanticipated. Increases in the 4 to 4.5 percent range for implants and technology that we have used for years are not uncommon. At the same time, we find ourselves in contract discussions with commercial insurers that are far more restrictive in their consideration of facility reimbursement increases than prior negotiations. We cannot assume that a given case is profitable simply because 'it always has been.'

Q: Where do you hope to grow for the next nine months?

TM: As CMS continues to direct cases from the hospital-based environment, including hospital associated ambulatory sites, we need to make sure we continually assess OR utilization and offer new, and current, providers access for these cases either through reliable open time access or reassignment of block times. As healthcare expenses continue to rise, ASCs need to make sure they actively court and are prepared to absorb the migration of cases from hospitals to freestanding sites of service.

Q: How do you approach budgeting for and selecting new technology for your center?

TM: There are three core questions:

1) Is the new technology bottom line fiscally positive? Case-costing can be a challenge especially if commercial insurers are skeptical of a procedure and inclined to deny payment. New technology may often be associated with ancillary case costs not typically considered. While some short-term loss may be acceptable during phase in, ultimately even the most intriguing or innovative surgical offering still needs to generate a positive income stream.

2) Does the new technology fit into or expand our existing service line and case mix or will it require a significant change in case scheduling, block times/OR access for current providers, staff training, facility work flows and patient throughput? We do not want to compromise our current positive case mix but we also want to retain facility users as they embrace new techniques and recruit new users if they bring the right case profile, including new technology and techniques.

3) Will the new technology realistically bring new cases, and are the anticipated volumes sufficient to justify the expense in new equipment and support services?

Q: What are your biggest payer challenges today?

TM: As CMS has encouraged case migration to free standing ASC sites via fiscal incentives, we have not seen commercial insurers follow this ASC centric shifting of payment increases during current contract negotiations. In addition, while CMS seems to be embracing techniques or technology that improves patient care via line item medication or implant reimbursement to cover costs in freestanding ASCs, we find the commercials unwilling to follow their lead ultimately either requiring wholesale renegotiation of contracts to bring one or two implants, procedures or medications on board. This either forces the center to consider stepping away from otherwise suitable contracts in place, choosing to not offer a service or intervention or absorb not insignificant costs to provide state-of-the-art care that even governmental agencies want out of the more expensive hospital-based care setting.

More articles on surgery centers:
The right and wrong partners for joint venture ASCs
4 new joint venture ASCs
Why more hospitals are shifting outpatient care to ASCs

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