Orthopedics can be extremely profitable for surgery centers if certain best practices are used to ensure efficient operations and quality care in this service line. Becky Mann, director of Houston Orthopedic Surgery Center in Warner Robins, Ga., and Timothy Kremchek, MD, medical director at Beacon Orthopedics and Sports Medicine and a physician-owner of the clinic's surgery center, discuss eight best practices for a successful and profitable orthopedic service line in an ASC.
1. Know approximate reimbursement and case cost for all procedures before they take place. ASCs must consider reimbursements versus case costs, including staffing costs and supplies, for all procedures to ensure there will be an adequate profit margin, says Ms. Mann. Scheduling all possible surgeries is likely not a profitable as being more strategic in case selection and scheduling.
"There needs to be a balance between knowing what the insurance company is going to reimburse you and what it's going to cost you to do the procedure," says Ms. Mann. "It's great to say you have 15 cases to do in a day, but if for five of those cases you are paying staff overtime, it's not worth it."
2. Reduce supply costs by actively comparing vendors. One way that ASCs can reduce case costs fairly easily is to reduce supply costs. Administrators or purchasing managers must actively compare vendor pricing to ensure that the center is getting the best deal on its supplies. Ms. Mann recommends using a group purchasing organization to further reduce costs but recommends that purchasers continue to compare costs of the GPO with outside vendors rather than assume the GPO's contract brings the best price.
Administrators should also encourage physicians to use the same brand and type of supplies, such as plates, screws and anchors, for similar cases, which reduces supply costs by reducing the number of vendors that an ASC uses. Showing physician-owners the savings of such uniformity is a fairly easy and often successful way to convince them to agree to a single supply set.
Administrators must also be aware of and prepare for possible fluctuations in supply costs. For example, in 2010, ASCs can expect to see increases in the cost of face masks due to increasing demand for them brought on by the swine flu, says Ms. Mann.
3. Limit implant vendors. ASC administrators should try to limit the number of vendors used for implants as increased volume with one vendor should reduce implant costs, says Ms. Mann. ASCs may also want to consider using an implant device management company and should always attempt to carve-out device reimbursement in third-party contracts.
4. Educate staff about orthopedic procedures. A key to increasing efficiency in your orthopedic service line is ensuring that your staff is knowledgeable about each procedure that will be performed at the ASC.
"Spend the time early on to educate staff, including pre- post- and OR staff, about what you're doing and why you're doing it," says Dr. Kremchek. "The more they understand what you're doing, the more they understand and anticipate what needs to be done, which makes the surgeon more efficient."
5. Encourage frequent communication between the ASC and physician offices. Another key to improving the efficiency of orthopedic cases is opening and encouraging frequent communication between ASC front-office staff and physician offices. Frequent communication helps ensure that the ASC schedules cases properly, obtains accurate and complete patient information and understands physicians' preferences. For example, if a physician is performing a meniscus repair, his or her office staff should automatically communicate information about the instrumentation the ASC so that there is no missing instrumentation during the surgery, says Dr. Kremchek.
"Develop a relationship between the people in your office and those at the ASC so that information can easily go back and forth, and there are no lapses in communication," says Dr. Kremchek.
6. Benchmark. Benchmarking the performance of your ASC on key indicators, such as infection control, patient falls, patient burns, antibiotic protocol, case cost and OR turnover time, within the orthopedic service line is important for identifying areas where improvement is possible, says Ms. Mann. ASC leaders can use national ASC surveys and data to benchmark or join formal or informal groups of ASCs to share data.
7. Encourage surgeons and anesthesia staff to coordinate their efforts. Ensuring that blocks and other anesthetics are administered at times that make the surgeon most efficient is also very important to success for an orthopedic service line.
"Work with anesthesia to help them understand how [surgeons] want to coordinate their blocks," says Dr. Kremchek. "This is very important for ensuring that procedures can begin in a timely manner. Otherwise, you may be waiting in a room before a procedure can start."
8. Always be aware of industry issues and your own contracting issues that could affect the profitability of your ASC. It's critical that both ASC administrators and physicians remain informed of changes on the horizon that may affect the ASC.
"You need to constantly be looking at your contracts and Medicare payment rates to determine if you expect an increase or decrease in revenue," says Ms. Mann. Knowing what the future holds for your ASC will allow you to plan accordingly for regulations and other issues that could affect profitability.
1. Know approximate reimbursement and case cost for all procedures before they take place. ASCs must consider reimbursements versus case costs, including staffing costs and supplies, for all procedures to ensure there will be an adequate profit margin, says Ms. Mann. Scheduling all possible surgeries is likely not a profitable as being more strategic in case selection and scheduling.
"There needs to be a balance between knowing what the insurance company is going to reimburse you and what it's going to cost you to do the procedure," says Ms. Mann. "It's great to say you have 15 cases to do in a day, but if for five of those cases you are paying staff overtime, it's not worth it."
2. Reduce supply costs by actively comparing vendors. One way that ASCs can reduce case costs fairly easily is to reduce supply costs. Administrators or purchasing managers must actively compare vendor pricing to ensure that the center is getting the best deal on its supplies. Ms. Mann recommends using a group purchasing organization to further reduce costs but recommends that purchasers continue to compare costs of the GPO with outside vendors rather than assume the GPO's contract brings the best price.
Administrators should also encourage physicians to use the same brand and type of supplies, such as plates, screws and anchors, for similar cases, which reduces supply costs by reducing the number of vendors that an ASC uses. Showing physician-owners the savings of such uniformity is a fairly easy and often successful way to convince them to agree to a single supply set.
Administrators must also be aware of and prepare for possible fluctuations in supply costs. For example, in 2010, ASCs can expect to see increases in the cost of face masks due to increasing demand for them brought on by the swine flu, says Ms. Mann.
3. Limit implant vendors. ASC administrators should try to limit the number of vendors used for implants as increased volume with one vendor should reduce implant costs, says Ms. Mann. ASCs may also want to consider using an implant device management company and should always attempt to carve-out device reimbursement in third-party contracts.
4. Educate staff about orthopedic procedures. A key to increasing efficiency in your orthopedic service line is ensuring that your staff is knowledgeable about each procedure that will be performed at the ASC.
"Spend the time early on to educate staff, including pre- post- and OR staff, about what you're doing and why you're doing it," says Dr. Kremchek. "The more they understand what you're doing, the more they understand and anticipate what needs to be done, which makes the surgeon more efficient."
5. Encourage frequent communication between the ASC and physician offices. Another key to improving the efficiency of orthopedic cases is opening and encouraging frequent communication between ASC front-office staff and physician offices. Frequent communication helps ensure that the ASC schedules cases properly, obtains accurate and complete patient information and understands physicians' preferences. For example, if a physician is performing a meniscus repair, his or her office staff should automatically communicate information about the instrumentation the ASC so that there is no missing instrumentation during the surgery, says Dr. Kremchek.
"Develop a relationship between the people in your office and those at the ASC so that information can easily go back and forth, and there are no lapses in communication," says Dr. Kremchek.
6. Benchmark. Benchmarking the performance of your ASC on key indicators, such as infection control, patient falls, patient burns, antibiotic protocol, case cost and OR turnover time, within the orthopedic service line is important for identifying areas where improvement is possible, says Ms. Mann. ASC leaders can use national ASC surveys and data to benchmark or join formal or informal groups of ASCs to share data.
7. Encourage surgeons and anesthesia staff to coordinate their efforts. Ensuring that blocks and other anesthetics are administered at times that make the surgeon most efficient is also very important to success for an orthopedic service line.
"Work with anesthesia to help them understand how [surgeons] want to coordinate their blocks," says Dr. Kremchek. "This is very important for ensuring that procedures can begin in a timely manner. Otherwise, you may be waiting in a room before a procedure can start."
8. Always be aware of industry issues and your own contracting issues that could affect the profitability of your ASC. It's critical that both ASC administrators and physicians remain informed of changes on the horizon that may affect the ASC.
"You need to constantly be looking at your contracts and Medicare payment rates to determine if you expect an increase or decrease in revenue," says Ms. Mann. Knowing what the future holds for your ASC will allow you to plan accordingly for regulations and other issues that could affect profitability.
To receive the latest ASC news and feature stories from Becker's ASC Review, sign-up for the free Becker's ASC Review E-weekly by clicking here.