Some spine ASCs have stopped paying for implants by the screw. Frank Phillips, MD, a spine surgeon at Chicago-based Midwest Orthopaedics at Rush, said his group’s ASCs pay vendors one fixed price per procedure, no matter what hardware goes in.
“We’ll say to the vendor, ‘We’re going to do a one-level fusion with an interbody cage and a biologic, and we’re paying you $10,000,’” Dr. Phillips said during a panel at the Becker’s Spine, Orthopedic and Pain Management-Driven ASC + The Future of Spine Event in June. “It doesn’t matter if I use two screws or four screws or expensive biologics. That’s what they’re getting.”
For the ASC, the appeal is a fixed cost per case.
“Not one day a surgeon decides to use 50 packages of Infuse, and suddenly there’s a $30,000 bill,” Dr. Phillips said, referring to Medtronic’s bone graft product. “They know what they get in every case.”
Vendors get something too, Dr. Phillips said, because “they’re not disclosing implant pricing specifically, so it’s hidden in there.”
That matters because implant companies see the ASC as “the holy grail” but are “terrified to reduce prices” and set off a race to the bottom in their hospital business, he said.
Dr. Phillips does about three-quarters of his cases in ASCs and about 90% of his one-level fusions there. He estimated that fewer than 10% of spine fusions nationally happen in ASCs. Implant cost is one reason: “Implants are very expensive, and the hospital can eat them up.”
Jacob Rodman, CEO of Raleigh (N.C.) Neurosurgical Clinic, said the practice’s local hospital never shared implant cost data in his 15 years as CEO. The practice started tracking it when it opened its own ASC.
“We had one surgeon who was $30,000 to do a single-level lumbar fusion and another surgeon who was like $8,000,” Mr. Rodman said during a separate panel.
The surgeons compared what they used and agreed on a standard, and the ASC moved to a single vendor, dropped the “cost way down,: Mr. Rodman said.
Once implant costs were under control, Mr. Rodman said, the center could turn a profit on a $9,000 ACDF payment, a figure raised in an earlier panel. On the same panel, John Peloza, MD, a spine surgeon with concierge practice PelozaSpine who previously practiced in Dallas, recalled a Blue Cross Blue Shield representative offering a $9,000 global price for a one-level ACDF around 2010.
“I said, ‘The implant’s more than that,’” Dr. Peloza said. “He said, ‘Tough. Go somewhere else.’”
Bryce Basques, MD, an orthopedic spine surgeon at Providence, R.I.-based Brown University Health, said ASCs have leverage with smaller implant companies that are shut out of hospitals that have gone single- or dual-vendor.
“That’s one of the few places that these companies can play anymore,” he said. In exchange, he said, vendors should consign trays to the center so sets aren’t processed the day of surgery.
When surgeons disagree on vendors, Dr. Basques lets them settle it among themselves: “You guys figure this out and then tell us what you want to do.”
Andrew Lovewell, CEO of Columbia (Mo.) Orthopaedic Group, said the group shows every surgeon’s margin per minute to the full partnership.
“Behaviors change a little bit after that,” he said. He described a total joint surgeon who learned he had the lowest margin in the group because of a $200 dressing no one else used. “Oh God, I’ll get rid of that.”
Every approach starts with knowing what each case’s implants cost, data Mr. Rodman said his practice never got from the hospital.
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.
