The business of cardiology in surgery centers

Cardiology is one of the fastest-growing ambulatory surgery center specialties as it is following in the footsteps of the hypergrowth specialties of orthopedics and spine. Strong reimbursement rates, an increase in covered procedures, and a high percentage of complex procedures all make cardiology an attractive specialty for both new and established ASCs.

According to Bain & Company, the percentage of cariology procedures performed in ASCs will grow from 4 percent in 2015 to a projected 33 percent in 2021, representing a 230 percent increase in just six years.

Adding cardiology as a specialty requires substantial investment in both equipment and people. However, ASCs that take time to evaluate the market, their contracts, and their finances can significantly increase the economic value of their surgery center. More importantly, offering cardiology provides another way to ensure that new and established patients receive high-quality care.

What is driving cardiology’s hypergrowth?

The benefits of the ASC setting for patients, surgeons, and payers has resulted in a gradual shift of complex procedures from the hospital to outpatient settings. It’s a triple-win move: patients benefit from improved outcomes at a lower cost. Surgeons benefit from uninterrupted block scheduling, an efficient surgical environment, and equity. (About 60 percent of existing ASCs are privately held by physician owners.) Payers benefit by covering procedures with the same or better quality at a lower cost.

As a result of these wins, Medicare, private health plans, and self-insured programs are increasingly structured to promote ASCs. “The current volume of cardiology procedures performed in the hospital is huge,” said Vijay Swarup, MD, a cardiac electrophysiologist at Arizona Heart Rhythm Center in a recent podcast. “Even if three to five percent of these procedures shift to ASCs, there will be millions of dollars saved for our healthcare system.”

CMS is also adding more cardiology procedures each year to its ASC Covered Procedures Lists. In 2019, CMS revised the definition of surgery and added several cardiology diagnostic procedures to its ASC Covered Procedures List. In 2020, CMS added three coronary intervention procedures. The 2021 ASC Covered Procedures List includes two lithotripsy procedures.

Add to that advances in technology, an aging population, and improvements for safety and outcomes and you have a recipe for impressive growth in a complex specialty.

The business value of cardiology

Most cardiology procedures are complex procedures with a significant reimbursement on an average cash-per-case basis. With these strong revenue numbers, an ASC can significantly increase its top line, bottom line, and equity value by adding cardiology services.

To double, or even more than double, an ASC’s equity value, the surgery center should undertake thoughtful planning, strict attention to revenue cycle management, and proper contract management and negotiation. Here are a few areas of focus.

Assess market opportunity. Evaluate the ASCs, cardiologists, and cardiology practices in your area. Evaluate not only the competition, but also research surgeons or groups that could potentially join your ASC.

Compile a pro forma financial statement. This statement breaks down the cost to build a cardiology center. An ASC planning to expand an existing facility may spend $1-2 million if adding additional procedures and operating rooms. A de novo cardiology focused ASC will likely require a more substantial investment.

During this stage, ASC owners should also conduct a return on investment analysis. That analysis includes the projected revenue, revenue growth, and profit margin based on varying assumptions as it relates to the numbers and types of cases per year, the estimated break-even point, as well as an exit strategy.

Evaluate the clinical benefit. Evaluate the cardiology procedures that both private payers and Medicare cover for the ASC setting. Does your state have any regulatory barriers for certain cardiology procedures? What are the clinical protocols and best practices for these procedures? New facilities will need to meet Medicare requirements and get accredited. You will also need to consider your referral base: do you have one? Develop a strong patient outreach plan to recruit qualified candidates.

Negotiate effective managed care contracts. “Effective” means procedures are covered at rates that make the best financial sense for your business. The first step is to make sure you have complete existing contracts, with all crosswalks, fee schedules and amendments. Review those contracts thoroughly to ensure you are billing correctly and getting paid correctly. Look at the full case as it will adjudicate. With a full case analysis, you have the data to prepare a strong argument when negotiating new contracts.

Managed care contract management not only affects revenue, but the entire revenue cycle process. Make sure every staff member along the revenue cycle understands the basics of the managed care contract: payer policies and procedures, timely filing details, days to pay claims, appeal rights, and all applicable details related to patient registration, among others.

Follow regulatory developments. CMS may cover certain cardiology procedures for ASCs, but your state may not allow them. Currently, California, Ohio, and New York impose restrictions on cardiology procedures performed in ASC settings.

Another regulatory change to watch: CMS plans to eliminate its Inpatient Only List by 2024. The agency is finalizing its proposal for transitioning codes off this list. For starters, expect to see about 300 services removed in 2021.

Developing an outpatient cardiology facility or adding cardiology to an existing practice requires extensive planning and number-crunching. Take time to focus on business development, contract management, and revenue cycle management to realize the maximum return on investment.

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