10 Established Best Practices for Increasing Spine Surgery Center Profits

Here are 10 proven ways to increase and maintain profitability at spine surgery centers.

1. Carefully consider case volume and mix. Jeff Leland, CEO of Blue Chip Surgical Center Partners, says ASC success is predetermined long before the doors open. No surgery center should be launched until the right volume and mix of cases is assured, he says. While many ASCs start with the assumption that they'll grow into sufficient volume over time, Blue Chip Surgical Center Partners aims to be a fixed-cost business; hence, a baseline volume is required to support operations.

Business plans should be based on fully accurate, highly detailed and rigorously validated case volume projections. In spine, this often requires the addition of pain management cases to augment the lower number of major spine procedures (pain cases are also an effective way to orient patients to the notion of outpatient treatments and to the ASC itself). These projections should be viewed as a "go/no-go" decision in the planning process for new ASCs.

Once facilities are operational, case volume and mix should be monitored and analyzed carefully, by surgeon, with the results communicated to all stakeholders and compared each month to actual projections. That way, issues can be identified proactively and addressed quickly, long before the hole gets too deep.

2. Find the right surgeons. In identifying new surgeons to invite to East Portland Surgical Center, there was healthy dialogue among the ownership group, says surgery center partner Joseph Stapleton, MD. The center sought clinically distinguished physicians with excellent reputations but also wanted hard workers and team players. These qualities make for excellent partners in any type of surgery center. But the most important criterion was a high level of caution in patient selection. Not every spine case is appropriate for outpatient facilities. Surgeons must carefully examine patient weight and respiratory history, incision routes and other factors before choosing between an ASC and hospital for specific procedures.

"We first engaged with one neurosurgeon we knew and regarded highly and, several months later, invited a few more to bring cases to our surgery center," Dr. Stapleton says. "So far, it's been a very good fit. I think what these physicians like most about operating at EPSC is that their patients are more comfortable and that it's so easy to check on them after procedures are complete. Of course, these benefits apply to all specialties, not just spine."

3. Supplement spine surgery with other procedures. Orthopedic surgeon Kenneth A. Pettine, MD, co-owner of Loveland Surgery Center, a three-OR facility that is a joint venture with National Surgical Care, says technological advances are rapidly making it possible to perform most, if not all, kinds of spine surgery on an outpatient basis, but many factors — ranging from payor requirements to state regulations — stand in the way of that goal. Medicare still refuses to pay for most outpatient spine procedures. Many states do not allow 23-hour stay ASCs, which are often needed postoperatively for many spine procedures. And insurance coverage for outpatient spine procedures still lags behind what would be considered clinically appropriate and technologically possible.

Therefore, to have enough volume to make an appropriate profit, ASCs usually have to supplement spine with other types of procedures. Dr. Pettine says his three-OR ASC hosts ENT, orthopedics and pain management as well as spine.

Dr. Abraham says pain management is a good fit for a spine ASC because it involves the same kind of evaluation as a spine case. "Before you are a candidate for spine surgery, the full course of pain management, two to three injections, needs to have failed," he says. He adds that the pain management, which is administered by a physiatrist or an anesthesiologist specializing in pain management, is often performed in an ASC rather than a doctor's office.

4. Do not get locked into disadvantageous agreements with insurers. Neurosurgeon John Caruso, MD, co-owner of Parkway Surgery Center, a one-OR center in Hagerstown, Md., says his ASC initially stayed out of most payor networks. He says insurers aren't familiar with outpatient spine surgery, have no payment structure for it on their books and may be getting negative assessments from hospitals that are afraid of losing business.

"Payors always begin by saying, 'We'll pay 105 percent of Medicare,' but that doesn't work for us," Dr. Caruso says. "We waited them out and negotiated a much more favorable rate than if we'd signed their initial contract offers." When he finally negotiated with the payors, he could provide them with convincing data on costs and quality.

5. Consider which spine procedures are best suited for ASCs. Mr. Leland says generally speaking, discectomies, decompressions, laminotomies, laminectomies and single-level ACDFs are the spine procedures that are most appropriate for outpatient spine centers.

"In our collaborations with many leading spine specialists around the country (including both neurosurgeons and orthopedic surgeons), we see a growing number of physicians growing comfortable with performing more cases on an outpatient basis," Mr. Leland says. "Further, there is considerable innovation taking place in outpatient spine. The improvements cover everything from new surgical techniques and technologies, to post-op recovery and overall patient experience, to creative agreements with payers and hospitals/health systems. For these reasons, some surgeons are looking to take certain fusion procedures into outpatient centers."

6. Maintain staff efficiency. Top-to-bottom efficiency ensures timely healthcare delivery, which eventually translates to greater profits. The core of any organization is its employees. Spine procedures and techniques as well as patient care responsibilities may be unfamiliar to many ASC personnel. An investment in staff training and education is an essential part of improving efficiency and productivity.

"It is equally important to involve your staff in your plans to improve efficiency," says Nicola Hawkinson, MA, NP, CEO and founder of SpineSearch. "Invite feedback from your staff. They know the issues of daily practice better than anyone else and can help improve workflow."

7. Contracts with payors must address implant costs. Just as with orthopedic cases, considering implant costs are critical to profitable spine cases. In fact, they may even be more important for spine cases because implant costs typically run higher with spine — as much as $2,000-$5,000 per case — than in traditional orthopedic cases, says Jay Rom, president of Blue Chip Surgical Center Partners.

Mr. Rom says spine cases must be carved out or the case rate must be built to assume implant costs. Since implant costs can vary from physician to physician — sometimes by as much as $3,000 — rates must also cover the most expensive physician, he says.

"While we do a lot of work trying to minimize cost differences, there are practice differences that are going to exist. Some physicians are trained with different materials that just cost more," says Mr. Rom.

8. Pursue workers' compensation cases. Worker's compensation cases traditionally reimburse well for spine in the ASC setting, so physician-owners should consider performing these cases in the ASC, when appropriate.

Kamshad Raiszadeh, MD, director of the Advanced Spine Institute of Alvarado Hospital in San Diego and a physician-owner of the recently-opened Physicians Surgery Center in San Diego, says many of his workers' compensation cases, including most anterior cervical and lumbar discectomies and some fusions, can be performed in the outpatient setting. These cases bring additional revenue to an ASC, and building relationships with workers' compensation representatives can be beneficial.

9. Monitor and negotiate prices. Kathie Stewart, administrator at Cascade Spine Center in Tualatin, Ore., says pricing on items she orders regularly for the spine center can change suddenly and drastically, which can cost the spine center a significant amount of money over the long-run if she doesn't keep a close eye on those price changes. She also pushes for better price points at higher volumes when negotiating with supply vendors.

"We buy the same things, like drapes, all the time, so I'm always pushing supply representatives to look at the volume we need and give me better tier pricing," she says. "Also, prices on certain items, such as IV sets, anesthetic or steroid drugs, can change quite dramatically. Prices can increase as much as $5 per vial for anesthetic drugs. Drapes, which we need to have for every single patient, can jump $1 more per unit. I always go to my vendor to see why the price change has happened and see if anyone can give us the same supply for a cheaper price."

10. Regulate inventory. By establishing a par level, or an estimated case volume, every month, Cascade is better able to anticipate what supplies will be needed on a regulate basis.

"Let's say we do 250 cases per month," Ms. Stewart says. "We'll want to have supplies on hand on a weekly basis to handle 250 bases per month. To establish a par level, we'll see how many cases are scheduled and order a little below that par level in case our volume is down or if we have a physician who's out. We order supplies to maintain that par level but not overstock."

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