5 Ways Spine Cases Can Improve Profitability in Poorly Performing Surgery Centers

At the 11th Annual Orthopedic, Spine & Pain Management-Driven ASC Conference in Chicago on June 13, Senior Vice President of Acquisitions and Business Development at Blue Chip Surgery Center Partners Chris Bishop gave a presentation titled "Utilizing Spine Cases to Improve the Profitability of Underutilized, Poorly Performing ASCs."


"There is a large population of people who could benefit from spinal procedures, and minimally invasive techniques have advanced over the past few years," said Mr. Bishop. "When you work at the ASC, the techniques are the same as at hospitals. What it comes down to is whether the surgeon trusts the anesthesiologist and the center's postoperative pain protocols."

Surgeons must be comfortable with patient selection for the outpatient setting before bringing cases, but more high-acuity cases are finding their way into the ASC, where there is lower infection rates and higher patient satisfaction. Surgical costs are also 30 to 60 percent less in the ASC than in the hospital, according to Mr. Bishop.

Because spine cases are profitable for the center, they could make a big difference for a struggling center's bottom line. Here are five steps for ASCs to add spine cases.

1. Conduct a financial assessment and ROI analysis.
There aren't many surgeons currently looking to construct a new surgery center, but opportunities to join existing centers are abundant. The average spine surgeon performs around 60 to 75 cases per year in the surgery center setting that are non-Medicare cases. Currently, Medicare doesn't reimburse for spine surgery in ASCs.

"Go through the planning analysis, and if you already perform orthopedics cases in your ASC you'll have much of the equipment and other tools you need for spine," said Mr. Bishop. "The spine business model is to perform at a high margin and not take up too much extra capacity. This could increase your profitability significantly."

2. Thoroughly review clinical practices.
Identify surgeons who perform cases that are clinically appropriate for the ASC. Surgeons who already do outpatient cases at the hospital are a good start.

"You'll be surprised at how many of those spine surgeons want to learn more about minimally invasive procedures in the ASC setting," said Mr. Bishop. "We tell new spine surgeons to get comfortable sending patients home the same day after a hospital procedure. We start with low acuity cases and talk to our colleagues and partners about developing advanced and progressive protocols."

Figure out which home health agency follows up best with patients and which anesthesia groups are progressive about outpatient spine procedures to develop the best care team around the surgeon. Start out the surgeons conservatively and after the first 100 days they should be comfortable with the staff and procedures at the center.

3. Negotiate good contracts for spine procedures.
It can be difficult to set appropriate pricing for spine procedures in ASCs because Medicare currently doesn't reimburse for these cases, so payers can't base reimbursement on a percentage of Medicare. Instead, entice payers into paying a good rate by proving quality outcomes and lower costs than in hospital settings.

"We collect EOBs from surgeons at the hospital," said Mr. Bishop. "If I'm negotiating a reimbursement in that market, I'm bringing value to the payer. We won't accept something lower when we know what they are paying at the hospital."

If your center is already completely in-network, check to see whether you've already negotiated spine rates too low. If that's the case, renegotiate rates for those codes.

"Once you negotiate a fair rate with payers, spinal cord stimulators can be profitable in the center," said Mr. Bishop. "One of the things payers don't like is cost-plus invoices, so we've taken it in a different direction. We ask for a reasonable rate and then make the physicians responsible for choosing implants and delivering the cases."

4. Update capital requirements.
ASCs with orthopedics already should have the main equipment, but if your center doesn't have a C-arm and basic orthopedic instrumentation, it could cost $300,000 to $400,000 in capital expenses to bring in spine. Otherwise, it typically costs $250,000 to $300,000.

"Spine surgeons often want the latest and greatest technology, but when it's their money, there is a lot more attention paid for what type of microscope they need," said Mr. Bishop. "A refurbished microscope is a feasible solution and can provide the same outcome."

5. Perform case costing.
As you begin to bring spine cases in, do case costing to really maximize cost-savings and distributions. Bring all spine surgeons together and show who has the lowest costs and highest patient satisfaction ratings. Surgeons will share best practices amongst themselves.

"We've had meetings where the administrator grabs preference cards and we engineer costs out of the supply usage," said Mr. Bishop. "That improves margins. We also monitor how much time costs in the operating room, so if the surgeon shows up late or spends 10 to 15 minutes telling jokes before beginning surgery, that gets expensive."

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