1. Setting a bad contract for a small number of patients is not smart. In an increasing number of situations, surgery centers may sign a bad contract for a very small percentage of their patients. This contract might not be heavily negotiated and it may be at a low price. The surgery center reasons that this has little impact to them because these patients represent a small percentage of their patients. However, increasingly, one preferred provider organization or insurance company sells their contract rates and leases out the network to another party. Thus, when somebody thought they were contracting for 1-2 percent of the patients, they find over the course of time that they are actually contracting for a great number of their patients. Therefore, surgery centers have to be increasingly vigilant about walking away from contracts that are not at profitable rates.
2. ASCs are facing increased pressure to go in-network. Working out of network had been a profitable strategy for ASCs in the past, but recently, insurers in some states have made the use of out-of-network facilities less appealing to their customers. Some ways ASCs have responded to these measures is by offering discounted rates and collecting up-front payments.
In some cases, ASCs have approached the payor to renegotiate their rates to move in-network. Luke Lambert, CEO of the Ambulatory Surgical Centers of America, suggests that ASCs should go into these conversations prepared and armed with comparative information.
“Prepare for a dollars and cents discussion. It is important to know what you are willing to accept in terms of reimbursement,” Mr. Lambert says. As mentioned, entering into a bad contract for some patients could be far more detrimental than continuing out of network.
“The best bargaining chip to bring to the table is a possible change of surgical venue to bringing down cost,” Mr. Lambert adds. “If you or your center’s owners control where the cases are done, then providing them with a list of cases that can be moved to your center from some other high-cost venue can be a powerful lever in your negotiations.
“It is important to demonstrate the savings for the payor,” he says. “If you’ve historically accepted reimbursement that is too low but you’re doing the cases anyway at your facility, then you won’t have any leverage with the payor.”
3. Bariatrics can be profitable, but it does not constitute a majority of ASC business. As the obese population of the country continues to grow, many ASCs may consider adding bariatrics to their centers. This can be beneficial as the patient pool will continue to grow, and recent studies have demonstrated the safety of bariatric procedures performed in the outpatient setting.
Mr. Lambert sees this specialty continuing to grow in ASCs and notes that there is greater acceptance of LAP-banding procedures. “Hospitals have been successful, for the most part, at keeping bariatrics in their facilities,” he says. “As a result, I’ve seen few bariatrics-centered ASCs.
“Bariatrics can make money, but I have not typically seen it constitute a large percentage of service in ASCs,” Mr. Lambert adds.
4. GI/endoscopy can be profitable if volumes are high. GI, if volumes are high enough, remains profitable for ASCs. Gastroenterologists will increasingly have to minor in anesthesiology. It is becoming more common that payors will not pay physicians separately for anesthesia procedures provided in connection with gastroenterology procedures. Thus, there is a greater onus on gastroenterologists that they must be competent at offering all types of anesthesia procedures.
5. Spine continues to be of interest for ASCs. New technology and innovations have generated continued interest in outpatient spine surgery.
Larry Taylor, president and CEO of Practice Partners, says, “Spine and arthroscopic hip cases have continued opportunity in the ASC environment and more surgeons are utilizing the environment.”
Mr. Lambert agrees that a greater push has been towards adding spine in ASCs. However, he notes that there are some barriers to moving these procedures to the ambulatory surgery setting.
“We are fighting against traditional care,” he says. “Some surgeons are not excited to change, and there is some inertia from hospitals not to move some procedures to the outpatient department from hospitals.”
Marcus Williamson, president of the NeoSpine Division of Symbion, also notes the trend of spine cases leaving the hospital. However, he says that it is important for centers who are considering adding spine to consider the scope of the specialized training required for some of these procedures.
“Anesthesia and microinstruments are the drives of this move [of spine procedures to ASCs],” he says. “With these innovations, special training is needed, such as with X-LIF and spinal fusion.”
6. Spine procedures and orthopedic procedures can sometimes not mix well in a surgery center. Spine and orthopedics are specialties that continue to grow and to be integrated into centers. However, because a center performs orthopedics cases, spine may not be a logical addition.
This is often the case when spine procedures cannot receive reasonable contracts from managed care payors. Then, the surgery center is faced with the situation where both the spine and orthopedic procedures have to be out-of-network or both have to be in-network. This can cause great problems because the spine reimbursement may be horribly inadequate, a forced scenario if the center wants to be in-network for its orthopedic reimbursable cases.
ASCs should take some elements into consideration before making the decision to add orthopedics or spine to the organization.
“The focus should be integrating the appropriate specialties into a center allowing for the flow of cases, equipment and scheduling to foster greater volume and diversity in centers without orthopedics,” Mr. Taylor says. “Of course, the managed care environment and contracting must be addressed and negotiations to cover implants or thresholds.”
7. High-quality management is vital to success. High-quality management is critical to an ASC’s success. Many management companies offer superior services. However, many are of little value. All management companies are not equal. For this reason, it is important to work with an experienced management company that has a proven track record of successes. Working with a low-quality, inexperienced company will do more harm than good.
8. Many ASCs still fail. Despite their growth throughout the country (nearly 6,000 total ASCs in 2008; more than 5,300 Medicare-certified ASCs currently), a number of ASCs still fail. The failures occur mostly due to bad management, overstaffing, low volume, poor reimbursement or overbuilding. Knowing the risks involved in developing an ASC can help to ensure that your ASC will prosper and not fail. Working with experienced managers in developing a center can also help prevent failures.
9. Surgery centers should not be run like convenience stores. The most profitable surgery centers are open those days and hours that they need to be open. In contrast, it makes little sense to operate a surgery center five or six days per week when case volume only supports operation on two days per week. Several surgery centers have failed due to this policy of trying to be open at all times rather than operating on days that are most profitable.
10. Single-specialty centers can be profitable if groups are aligned. Single-specialty ASCs can be viable options for larger groups if the mix is right.
Mr. Taylor says that his group has seen an increase in these kinds of development ventures. “These [large single-specialty] groups are usually aligned by similar practice goals, understand each other’s strengths and weaknesses, practice patterns, financial goals and have relationships that can become leverage in the marketplace. The group can be more easily focused and guided through the process, thus making decisions in a short time frame,” he says.
Another benefit of these arrangements is that determining a no-go situation usually occurs quickly, according to Mr. Taylor.
11. Single-specialty ASCs may also consider reaching out to other specialties. Single-specialty ASCs can struggle, especially if reimbursement rates for their specialty decline, such as the case with GI procedures and their Medicare rates. According to Mr. Lambert, many single-specialty ASCs are looking to add more service lines to help counteract these possible issues.
“We haven’t seen a lot of single-specialty startups,” he says. “When we do see de novo ventures, they are usually multi-specialty partnerships. This could or could not mean that the group was forced to reach out.”
Mr. Lambert notes that if single-specialty ASCs chose to reach out to other groups, they should make sure that the additions will improve the structure of the center and are compatible with what the center is trying to accomplish.
12. Some vendors are ready to enter the ASC market. Shopping around vendors to establish the best deals in medical/surgical equipment pricing is critical to managing costs at ASCs. Some vendors are interested in getting the “foot in the door” when it comes to ASCs, so it is important for surgery centers to explain the differences between ASCs and the hospitals.
“You want to get the best you can using the least amount of money, and often the vendor of choice is not necessary the best fit or the least expensive,” says Melodee Moncrief, administrator of Big Creek Surgery Center in Middleburg Heights, Ohio. She suggests bringing vendors into the ASC and explaining to them how the center works, including areas like reimbursements and types of patients, as they compare with hospitals. If you’re interested in a product, don’t hesitate to ask if vendors will let you trial their products in the center.
“You can use vendors to play against each other to get the best deal,” Ms. Moncrief says. “Most of the time vendors want to work together with you to discover what will be most profitable for both.”
Some vendors, however, are not interested in the ASC market, and occasionally, vendors hands are tied as far what they can negotiate, Ms. Moncrief notes. She also suggests limiting the amount of trials use do in the center. Once you find a vendor that works well for physicians, you should work to settle on a deal rather than constantly trialing new products.
13. Size matters, so don’t overbuild. ASCs should only build to the size they need to meet expected volume and specialty needs. Overbuilding can result in a center’s demise. A center with substantial fixed building and equipment costs will likely face long-term cost problems. There are not many things that can predict the long-term death of a center more than over expenditure on fixed building costs and fixed equipment costs. These are costs that almost never go away. Where appropriate and fiscally viable, an ASC may consider building to accommodate future growth but this should be done with caution.
“The best way to make sure you do not overbuild is to let data drive the process of determining the scale of the facility,” says Kenneth Hancock, president and chief development officer of Meridian Surgical Partners. “Determine the net transfer of cases from the physicians to the new center by analyzing billing reports and conducting in-depth interviews with the physicians to validate the information and gain additional intelligence.”
14. Reimbursement depends on more than just billing and collections. Keeping a watch over reimbursements is crucial to ASC profitability, and receiving the correct reimbursements in a timely manner is becoming more and more difficult. However, the responsibility for getting these payments should not fall solely on the shoulders of billing and collections.
“In order to generate cash collection, all other business office staff should be involved as well,” says Caryl Serbin, RN, president and founder of Serbin Surgery Center Billing. Ms. Serbin suggests the following responsibilities for members of an ASC’s business office:
- Schedulers — need to request accurate and up-to-date patient demographics and insurance information.
- Management — plan ahead and provide advance notification to patient about your financial practices (brochure, Web site, flyer, etc.), perhaps through the physician’s office handouts.
- Insurance verification specialist — request in- and out-of-network coverage, if applicable. Use a form so nothing is forgotten. “Full verification of insurance coverage is a must (not just computer-generated eligibility information),” Ms. Serbin says.
- Patient financial counselors — call the patient and explain the patient’s financial responsibility. Try to do this at least three days prior to procedure. Describe different payment options and get commitment from patient. Advise admitting desk of patient’s financial responsibility.
- Receptionist — collect agreed-upon payment amount from patient at time of registration. Verify insurance for accuracy. Copy/scan both sides of insurance card.
- Medical records specialist — provide coder with copy of operative note in timely manner. Also provide coder with pathology and other related reports for accurate and optimal coding.
15. RAC audits and Red Flags Rule. ASCs will be required to meet increasing compliance requirements from government agencies such as the RAC audits from the OIG and the FTC’s Red Flags Rule, which ensures further HIPAA protection for breaches of electronic information.
In order to meet these demands and to respond to decreasing caseloads or streams of revenue, Ms. Serbin says an internal audit of an ASC’s billing processes is necessary. She suggests performing audits at least on a monthly basis can help determine negative trends preventing an efficient collection process for ASCs.
“First, be sure you have clear and concise billing process guidelines (policies/procedures) and make sure employees have copies and are following these. Address each area of the process with separate audits. Randomly choose at least 5 percent of your caseload (minimum of 10 cases) each month,” Ms. Serbin says.
Ms. Serbin notes the following areas which should also be addressed in internal audits:
- Check for accuracy and need for additional CPTs, diagnosis codes and/or modifiers in coding. This auditing process may have to be outsourced to certified coding experts.
- Audit your biller for accuracy of posting CPTs, diagnosis codes and modifiers and determine how long after receiving from coder was it submitted. Audit to make sure up-front adjustments are done correctly.
- Audits to determine the accuracy of payment and adjustment posting, transferring of balance and sending secondary insurance claims and/or patient statements. Timeliness of refund requests and request to payers for correction of under or overpayments should also be audited.
- Check to see how long the first follow-up from collections takes. Check on accuracy and timeliness of appeals. Check on appropriate pre-collection efforts.
16. Include the entire staff in ASC processes. A good staff is essential to running a successful ASC. Therefore, once you build a good team at your ASCs, it is important to keep turnaround low and staff members engaged in the ASC.
“If [your staff members] don’t feel like partners, you won’t be successful,” Mr. Williamson says. “Support for your staff should come not from the bottom up, but from the top down. Administrators and managers should remove obstacles and distractions that get in the way of their staff members from doing a good job.”
By having staff members feel like they are part of a team, they can focus on patient care, which leads to a successful ASC experience.
17. Physician buy-in is crucial. In order for an ASC to be successful, physicians need to be on board with the organization’s mission and goals so that operations run smoothly.
“Physicians have to buy-in, and administrators need to keep them informed,” says Ms. Moncrief. Provide them with updates on things they may not want to hear, but need to know to stay in the loop.”
Communication is critical to an ASC’s success, and Ms. Moncrief advises ASCs to make sure physicians understand the actual operations of the ASC compared with what may be a different view of them. “You need show them where you are, but also understand where they are coming from,” she says.
Mr. Williamson agrees that a good physician-ASC relationship is crucial. “Physician-client respect is part of the five point circle of excellence I stress at all of our centers,” he says. “We try to have a daily focus on the physician as a customer and to address their needs.”
One way to keep physician relationships strong is by maintaining a good, consistent staff. “Don’t let a physician get familiar with just one team,” Ms. Moncrief suggests. “Let them use all the teams so that they are comfortable no matter who is in the OR.” She notes that by keeping turnover low, physicians will stay happy because they will cut down on the time needed to train new staff members.
18. Turnarounds continue to be big. Over the last few years, as more surgery centers have been built and fewer independent physicians are available, there has been greater growth and attention paid to turning around surgery centers rather than building new facilities.
Joseph Zasa, co-founder and managing partner of Woodrum/ASD, notes that this trend has remained popular. “Most of our business is turnaround oriented since we are focused as a management/operations firm,” he says. “Turnarounds require deft management expertise and a team effort between the surgeons, management, the staff and anesthesia.”
Mr. Lambert says, “Three years ago, 80 percent or more of our business was startups. Now, 80 percent or more are turnarounds.”
19. Market your services and expertise, not just the ASC. As with any corporation, marketing to the community is essential for an ASC’s success. However, simply informing the public that your ASC is available is an ineffective way of spending marketing dollars.
“It’s much more effective to market services your ASC offers rather than the ASC itself,” says Mr. Williamson. He also suggests placing more focus on the expertise of the physicians who handle cases at the ASCs. “If people are aware of the physicians, they will see more patients in their offices, which could mean more cases coming to the ASC,” he says.
One key to this strategy is maintaining a solid Web presence for the ASC, which can provide testimonials, outcome information and benchmarking information on specific procedures and the ASC’s overall performance.
“Patients and their families will have questions, and the Web site can help to educate them on their procedure and what to expect prior to and after surgery,” Mr. Williamson says. Other information to include can be anatomy, the difference in procedures and definition for different medical conditions.
“A Web site provides 24/7 information that is easy to access for patients,” Mr. Williamson adds.
20. ASCs can be pillars in their communities. Because ASCs are for-profit, their local communities may hold misconceptions on what the centers do and how they benefit the area. For this reason, it is important for ASCs to reach out to their communities to share the “ASC story.”
“ASCs should take the time to aggregate their relationship with the community,” says Mr. Williamson. “Nurses and worker’s compensation case managers should be in touch. Staff members should work with referring physicians and reach out to the local media to offer expertise.”
As with the ASC’s Web site, education should be the focus of community outreach. These can include open houses, health fairs and seminars on preventative medicine or commonly treated conditions.
Also, by providing quality care to patients who come into the center, ASCs can do their best marketing. “Patient loyalty is part of our five-part circle of excellence,” Mr. Williamson says. “We encourage our ASCs to stay in touch with patients, to remember birthdays and anniversaries and to send cards, so they will return or recommend the ASC to friends. They say if a patient has a bad experience, they will tell up to 11 of their friends, but if they have a good one, they’ll only tell three or four. It’s important to get those three or four.”
