21 Ways to Make and Save Money in Surgery Centers

1. Closely follow your market. Keep your ear to the ground. Know when competitors are attempting to get exclusive contracts with payors, says William G. Southwick, president and CEO of HealthMark Partners in Nashville. And know what physicians might be doing in terms of merger, sale or other practice transitions, he adds.

2. Use certified coders. A certified coder can help you capture the full reimbursement due your facility, says Sandy Berreth, administrator of Brainerd Lakes Surgery Center, a three-OR multispecialty center in Baxter, Minn., that logs 4,100 cases a year. The extra charges captured will be well worth the investment, she says. Her ASC employs a certified coder in addition to a biller/coder and a scheduler who does data-entry only.

3. Scrutinize payor contracts. Some new ASCs accept money-losing contracts just to get patient volume, then realize they cannot sustain these payment levels, says Naya Kehayes, CEO of Eveia Health Consulting & Management in Issaquah, Wash. It's important to know how much each service in each contract relates to your costs so that you'll know it needs to be renegotiated or, if need be, dropped. When estimating the cost, keep in mind that your costs are not just your day-to-day operating costs but also include such factors as future capital requirements and debt repayments.

4. Renegotiate money-losing contracts. When you have made accurate determinations of your costs, decide what sort of payment increases you'll need to request from insurers. Ms. Kehayes advises that it is more difficult to renegotiate contracts that require large percentage increases. Payors sometimes limit the amount of increase they will allow. Be prepared for some tough negotiating, Ms. Kehayes says. Help payors understand that even though your ASC needs a large rate increase, the requested amount will probably still be below what the hospital charges. Your overall message should be, "I can help you save money," she says.

5. Know when to terminate contracts. You may have to send the insurer a termination letter if negotiations stall, but don't do so at the start of the negotiating process, Ms. Kehayes says. "You need to give the payor a certain amount of time to resolve the problem," she says. If you do terminate a contract, be prepared to survive without it for one or two years, and maybe forever, Ms. Kehayes says. It can take years for an insurer to realize how much higher surgeries cost in the hospital and to come back to you.

6. Add new specialties. Recent medical and payment advances make it possible for the ASC to bring in more specialties, such as spine surgery, retina and bariatrics. But before signing up specialists and buying expensive equipment, Ms. Kehayes advises checking with payors to make sure they will cover the new procedures at the rates you need.

7. Pursue new opportunities with APCs. As private payors shift to Medicare's Ambulatory Payment Classification groups, ASCs have opportunities to add new kinds of surgery to their repertoire, Ms. Kehayes says. APC payments are often higher than the old "grouper" rates. Sling surgeries for stress urinary incontinence, for example, involve high-cost disposable kits that groupers did not fully cover but APCs do, she says. Ms. Berreth has had the same experience. With her major payor, Blue Cross Blue Shield of Minnesota, moving to APC payments as of July 1, 2009, "I find we're getting paid a bit better," she says.

8. Engage a management company. "In a down economy, smart business skills play an important role in the success of our ASC," says Joan Zarth, business manager of Kentucky Surgery Center, a seven-OR multispecialty facility with 100 credentialed surgeons and 800-1,000 cases per month. Ms. Zarth says her Lexington, Ky., ASC realizes a substantial return on investment by working with a management firm. "It ensures that our center continues to be a leader in the ASC industry," she says.

9. Use a management company with skin in the game. Jon Vick, president of ASCs Inc. in Valley Center, Calif., advises to partner with management companies that buy a share in the ASC. Mr. Vick, whose company finds such arrangements for ASCs, says the companies then have a vested interest in making your ASC successful. Typically, he says, the management company buys a 20-30 percent in the ASC.

10. Keep tight control over billing. An ASC needs to maintain as much control as possible over the billing process, Ms. Berreth says. At her ASC, "my office is very close to my business people. We have constant conversations about the process — what works and, more importantly, what isn't working." She would not want this important function to be undertaken off-site.

11. Recruit new physicians. There are many opportunities left to recruit physicians because many physicians still perform a large part of their surgery in higher-cost settings, Mr. Southwick says. These doctors need to learn about the benefits of your ASC, including comfort, convenience and especially lower out-of-pocket costs for their patients, he says. Southwick.

12. Carve out your schedule for newcomers. To assist in recruiting physicians, persuade your core physicians to make scheduling changes so that the new physicians can have some desirable time slots, Mr. Southwick says. Get other physicians to make the argument, pointing out that it's in the interest of adding operational revenue that everyone will split.

13. Create a physician outreach effort. To recruit physicians, "you need to build relationships with physicians," Mr. Southwick says. He advises engaging physicians in face-to-face meetings, often during after-work hours. At Kentucky Surgery Center, "our goal is to meet with surgeons, perhaps over dinner, and present the benefits of using our ASC and becoming a shareholder," Ms. Zarth says. She adds that "the best recruiting tool is a happy surgeon's recommendation to a colleague."

14. Periodically contact targeted physicians. Recruiting physicians is all about timing, Mr. Southwick says. Physicians who may not at first be interested in working in an ASC may change their minds over time, so it is important to check back with them periodically.

15. Manage supply costs. Since supplies are the second highest expense in an ASC, after staff salaries, they need to be tightly managed, Mr. Southwick says. This means working closely with physicians. Provide them with side-by-side comparisons between physicians on the costs of different devices and supplies. "This will generate discussion among the doctors and will bring out their competitive streak," he says.

16. Work closely with GPOs. Mr. Southwick calls for cultivating good working relationships with group purchasing organizations. He also suggests paying line-item attention to expenses, from larger items like property taxes down to telephone bills.

17. Renegotiate loans.
Mr. Southwick says renegotiating loans involves a lot of work but can be very rewarding. For example, HealthMark Partners is involved with an ASC that saved more than $15,000 in cash flow per month by renegotiating its loans.

18. Creatively manage work schedules.
Alter staff duties, depending on the demands of the surgery schedule, Mr. Southwick advises. For example, a nurse who is not busy in the OR can make pre-op ad post-op phone calls. Remember that state requirements may put limits on what each employee can do.

19. Don't burn out your staff. Even though Brainerd Lakes Surgery Center has been very busy, concerns about the recession have precluded hiring new staff, Ms. Berreth says. This means it's important to make sure that staff members don't get burned out. She uses benchmarks for reasonable work hours and, as a nurse with ASC skills, she can fill in when needed.

20. Deal fairly with high deductibles. Many employers are reverting to high-deductible insurance plans. ASCs need to have established policies on handling patients with this these plans — providing payment schedules for them, if necessary, says Ms. Zarth at Kentucky Surgery Center. "Prior to surgery we ask for a 50 percent downpayment on the estimated amount owed, with the balance to be paid over 90 days after surgery," she says. Her ASC also accepts credits cards and works through CareCredit, a healthcare loan company that offers reasonable interest rates for qualified applicants.

21. Remain flexible with patient payments.
When creating payment plans for patients, an ASC needs to weigh the financial risk and benefits of each case, Ms. Zarth says. For example, "you would not want to cancel a case worth $1,800 if the patient isn't able to come up with the full $360 co-pay on the day of surgery," she says. Similarly, while it is always important to work your accounts receivables, Ms. Zarth advises remaining somewhat flexible about late payments. For example, her collection agency has agreed to send out letters to delinquent accounts at no charge and credit ratings are not affected if patients pay promptly.

Contact Leigh Page at leigh@beckersasc.com.

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