3 ways to limit financial risk at ASCs

At ambulatory surgery centers, financial risks are ostensibly everywhere.

For example, consider neurostimulator generator implant cases at outpatient pain clinics. The procedure, which provides long-term pain relief without the need for opioid-based painkillers, typically follows a trial stimulation to determine the efficacy of permanently implanting a lead and generator in the patient.

While these procedures can greatly improve a patient’s quality of life, they can expose ambulatory surgery centers to considerable financial risks. ASCs typically accrue per-case expenses of $30,000 or more in device and labor costs for the procedures; and if the appropriate medical necessity requirements and other due diligence steps are not met beforehand, the ASC may end up writing off the debt.

Neurostimulator cases are not unique in this regard. According to a 2017 survey by the American College of Healthcare Executives, healthcare decision makers’ top concerns are all related to financial risk: supply and device costs, reimbursement challenges, operation costs and revenue cycle management. Complicating matters, cases involving implants and other expensive supplies often must be paid for by the center in advance — and with no guarantee of eventual reimbursement by the payer.

But these financial risks are preventable by performing your due diligence. Here are three ways to limit your exposure:

Inventory: Is your facility overbuying supplies or implants? Without the proper controls in place, it may be impossible to make a determination. Monitor the expiration dates of all supplies and use current inventory before ordering more to limit unnecessary financial risks. When in doubt, inventory the supplies and implants you have on hand.

Vendors: According to the 2017 VMG Health Intellimarker, 24 percent of a typical multi-specialty ASC’s expenses are for drugs and medical supplies, or about $2.2 million annually at an average facility. Work directly with the manufacturer’s vendor for all supplies to avoid the need to pay third parties out-of-pocket, because the preferred vendor is then reimbursed directly by the insurance company.

Payers: For high-cost cases, communicate with payers to determine all coding and billing requirements in advance of the scheduled procedure. Continuous education is also a prerequisite for success when dealing with payers, because their policies change frequently — and often with little or no notice. And remember: Most payers require a conservative approach to clinical care, so it’s important to ensure all preliminary treatments have been exhausted before taking a more aggressive — and often more expensive —approach.

ASCs should also conduct an analysis of their most common procedures, determine the recovery rate and case-specific revenue for each and establish which high-cost supplies and implants are used most frequently. According to VMG, the following are the median net revenue per case for the most common ASC specialties:

Otolaryngology: $2,591
Gastroenterology: $1,004
General Surgery: $2,156
Obstetrics & Gynecology: $2,344
Ophthalmology: $1,434
Oral Surgery: $1,217
Orthopedics: $3,133
Pain Management: $1,074
Plastic Surgery: $1,797
Podiatry: $2,506
Urology: $2,368

Once the case analysis is performed, determine the exact expenses that will be reimbursed to the facility by the payers. If necessary, institute a facility-wide policy of obtaining advance beneficiary notices from patients. This will allow your facility to recoup any unreimbursed expenses directly from patients.

In healthcare, ambulatory surgery centers are not alone in facing challenges. Even large health systems are exposed, particularly in managing their inventories and supply chains. Medical supply and pharmaceutical distributor Cardinal Health recently conducted a survey that identified some of the key reasons for these challenges, as well as quantifying the impact among providers.

"Nearly one-third of respondents haven’t implemented a new inventory management system in at least six years, and another 25 percent don’t know if it’s ever been done," the study found. "Seventy-eight percent are manually counting inventory in some parts of their supply chain and only 17 percent have implemented an automated technology system to track products and inventory in real time."

 

 

 

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