A bigger reimbursement doesn’t always make a better case for an ASC. Once implant costs, operating room time and contract terms are factored in, a procedure with an eye-catching rate can barely break even or lose money.
That math is getting harder as CMS phases out the inpatient-only list and opens the door for ASCs to take on total shoulders, total ankles and other higher-acuity procedures. Before adding them, centers need to know whether their payer contracts even cover those codes and what the hardware will cost.
That puts the burden on administrators to know their case costs, preference cards and contracts well enough to vet a new procedure quickly. They also need to recognize that a full block and a profitable block aren’t the same thing.
Two ASC executives discussed how they separate profitable cases from ones that only look good on paper at Becker’s 32nd Annual: The Business and Operations of ASCs conference in Chicago.
Editor’s note: Responses have been lightly edited for clarity and length.
Question: What types of cases can look attractive on paper but aren’t as profitable once you factor in implants, OR time and other costs?
Nyleen Flores. Administrator and COO of Lake Oconee Orthopedics (Greensboro, Ga.): I just had a conversation with an orthopedic surgeon who said that we’re going to get $25,000 for this case. In my mind, we’re going to spend $19,000 on the hardware alone, and he’s going to spend four hours in the OR. So it looks like a big sticker, but it’s really not.
One of the big ones is total ankles and total shoulders. I don’t believe anybody is making a million dollars off of those unless you have super, super volume. I’d rather do quick cases that I can turn over and maximize. Make your money, and then you can look into growing. You’ve got to look at your contracts before you do any of those things with the high-dollar reimbursements. That should be a red flag first. Do a true cost analysis.
Raghu Reddy. Chief Administrative Officer of MiOrtho Surgery Center (Southfield, Mich.): If you take more than a minute to answer a question on a particular procedure, then you’re not doing your due diligence. You have to have absolute knowledge of everything that’s going through your books on a daily basis: case costing, staffing ratios, implant costs, preference cards. As leaders in the ASC, we get carried away or sidetracked putting out multiple fires, but this cost area can bleed you out if you’re not paying attention. This has to be a daily, weekly, by-the-hour conversation with your supply chain and materials team.
If there’s a case being put on the block, the surgeon can say, “Oh, I’m utilizing the block.” It looks good on block utilization, but where does it translate into the bottom line? If you put on a single six-hour case, lock up the OR and you look at the net profit and it’s like $400, why are we even here? That is not a case that should be done in an ASC. ASC cases should be reasonably efficient and well in line with your expectations in terms of profit, staffing, your payer contracts and your revenue.
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.
