9 Supplies That Endanger Profitability for ASC Cases — and How To Reduce the Damage

Effectively managing a surgery center's supplies can cut costs and raise profits. But what about must-have supplies that are so expensive they single-handedly threaten the profitability of a case? Surgery center administrators and physicians share some high-cost supplies and how they have successfully managed to mitigate those costs.

1. Allografts.
Tona C. Savoie, RN, administrative director, Bayou Region Surgical Center in Thibodaux, La., says the center has trouble with the pricing on allografts — specifically for ACL and PCL procedures. The average cost of an allograft for ACL reconstruction was about $1,800, while the total cost of the procedure is more than $5,000. According to the ASC Association's 2011 Medicare payment calculator, the national average payment of an ACL knee repair is $3,371.

2. Balloons for ablation procedures. Brooke E. Smith, administrator, Maryland Surgery Center for Women in Rockville, Md., says the balloons used for ablation procedures can cost up to $1,000 a piece. The balloon is inserted, expanded and burns the lining of the uterus. She says some physicians at the center have returned to doing the procedure the "old school way" with a roller bar. As long as the physicians keep their skills up, the outcomes are the same. She says using a roller does take about five minutes longer per procedure, but the bars cost $12 each — saving the center more than $900 per case.

3. Balloon sinuplasty items. Another expensive item that the staff at the Bayou Region Surgical Center has trouble with are the supplies used for sinus procedures. The procedure uses a small, flexible balloon catheter to enlarge sinus passageways and relief sinusitis. The balloon is not reusable and costs $1,200-$1,500 per procedure. Adding another headache, if the surgeon combines the traditional endoscopic method with the balloon, a center can only use the CPT code for the endoscopic procedure and not the balloon procedure.

4. Hip arthroscopy equipment. In order to perform this procedure, a surgeon needs a special operating table, dedicated c-arm capability and hip specific arthroscopic equipment. This represents a large capital investment, says T.K. Miller, MD, an orthopedic surgeon with Carilion Clinic Orthopaedics and medical director of the Roanoke Ambulatory Surgery Center. However, with the right surgeon and the right center, the procedure can be done profitably, he says.

5. Multi-inflation balloon for esophageal dilation. Dana Folstrom, administrator of Mirage Endoscopy Center in Rancho Mirage, Calif., says the multi-inflation balloon used for esophageal dilation is so expensive that the center will not make any money on the procedure if it's done on a Medicare case.

6. Orthopedic implants. John Brock, administrator at NorthStar Surgical Center in Lubbock, Texas, says any type of orthopedic implant is going to mean high costs for a surgery center.

"With orthopedic implants, you're getting into high dollars and the issue that comes into play are the payors," he says.

Oftentimes, the payor will reimburse based on the procedure regardless of which implant was used.

These implants include supplies used for open reduction internal fixation, or inserting implants to aid bone healing, and Achilles tendon repairs, says Ms. Savoie.

7. Pump tubing for hysteroscopy procedures. Ms. Smith says pumps for hysteroscopy procedures cost $106 per procedure, but there is a less expensive alternative.

"If it's going to be a quick diagnostic procedure, you can truly just use cystoscopy tubing and a pressure bag," she says.

This brings the cost per procedure down to a mere $4. The Maryland Surgery Center for Women saved more than $50,000 a year by making this switch. If the surgeon starts the procedure and realizes the procedure is going to be more involved, the tubing can be switched in less than two minutes, Ms. Smith says.

8. Spinal cord stimulators. Implanting a spinal cord stimulator for the treatment of back pain is usually a two part process: a trial phase, where the patient essentially takes the stimulator for a test drive, and then a final implantation of the device if the trial was successful. Mr. Brock says it's this two-step process that makes the device itself and the procedure a potentially cost-prohibitive endeavor.

"You have to make sure the procedures that are scheduled are appropriate," he says. "This is done by working with the doctors — so much of this is about physician education anyway. Our way is to provide them with the cost information. We don't tell them what product to use or how to use it, but we make them aware of the cost. That is a critical part of all of this."

9. Tape for urological sling procedures. While sling procedures are generally well reimbursed — $5,000-$8,000 according to Regent Surgical Health — the tape used for the procedure can cost up to $4,000. Mesh implants are also needed for the procedure, so it's essential that the cost of supplies is negotiated to keep the procedure profitable, says Goran Dragolovic, senior vice president of operations for Surgical Care Affiliates.

Tips to bring down the costs
Jesseye Arrambide, RN, BSN, CNOR, executive director at Oregon Outpatient Surgery Center and vice present and program chair of the Oregon Ambulatory Surgery Center Association, recommends surgery centers consign expensive items such as implants.

"We have told them, 'We'll use your product, but you have to consign to us,'" she says. "Implants can be so expensive that you don't want to purchase them and then let them sit on the shelf."

Another way to mitigate the high cost of these items is by working with insurers to carve out, or reimburse the price of the implant separate from the procedure itself, the cost of the implant from the reimbursement itself, Ms. Savoie says.

"Many insurances do not cover implants or high dollar items separately," she says. "At times, we are able to negotiate carve outs, but that is getting increasingly more difficult. The southern region seems to have more difficulty getting implant reimbursement than the Northeast. Ultimately the best scenario is getting insurance contracts with carve outs. When that is not an option, we search for different vendors or attempt to negotiate pricing in order to perform the cases at the center."

Related Articles on Surgical Supplies:

10 Tips from ASC Administrators on Tough Vendor Negotiations
Amerinet Partners With Amblitel for Surgery Center Financial Management Services
Novarad Named Approved Supplier for Amerinet

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