ASCs provide safer environments for patients because they undergo more licensing requirements and oversight and may provide financial benefits to the physician depending upon his or her equity in the ASC. When physicians perform in-office procedures, they generally receive a professional fee plus a site of service differential, often an additional 10 percent. In the ASC setting, physicians receive a professional fee and then divide the facility fee among the owners, he explains. If a physician has a considerable investment in an ASC, he or she could make more money in the long run by moving cases to that ASC.
Dr. Frank discusses the following five challenges pain management physicians may face when transitioning office-based procedures to an ASC and strategies to overcome them.
1. Increased overhead for ASC procedures. ASC procedures cost more in overhead expenses than office-based procedures due to additional staffing and administrative costs associated with the ASC. Physician investors in an ASC need to ensure that higher overhead costs will be covered with reimbursements that are high enough to result in increased profits for the physicians.
Dr. Frank recommends that physicians considering investing in an ASC perform a feasibility study, which should examine payor mix and volume, to determine if they will actually see increased profits in the ASC setting. If projected volume and payor mix does not provide a large enough profit margin, then physicians may need to reconsider moving the cases.
2. Managed care contracting difficulties. Managed care contracting for procedures performed at an ASC can create headaches for physicians. Contracting needs to be done wisely, and agreed-upon rates need to consider a variety of factors affecting the ASC’s overall financial health.
“This is not as easy as some physicians think it will be. We are seeing a lot of ASCs struggle with an out-of-network model while not having the option of going in-network because it is not feasible,” says Dr. Frank. He recommends that physician-investors contact a managed care contracting expert to identify any problematic payor issues in their market and advise negotiations as soon as possible.
3. Increased patient out-of-pocket costs. Because patient out-of-pocket costs are often based upon co-insurance, patients will likely see their out-of-pocket costs increase when a physician moves cases to the ASC setting. Additionally, patients will also receive two invoices in the ASC setting as a result of the facility fee.
In order to retain old patients and continue to draw in new ones, despite these increases, Dr. Frank recommends that physicians tell patients before their first procedure at the ASC that there will be an increased cost and provide a rationale for the move. He also suggests physicians post this information on the practice Web site and in patient brochures.
“We have seen the best outcomes when the physician tells them why the fee is higher. Let the patient know they are paying for better services and the improved outcomes an ASC can provide,” says Dr. Frank.
4. Entity separation. The physician-owners of an ASC may sometimes find it difficult to separate their medical practice from the ASC. However, Dr. Frank recommends that each holding be a separate entity.
“The ASC should be separate from the [physician’s practice],” says Dr. Frank. “Don’t share staff or equipment without advice from a healthcare attorney on how to set up documents to allow staff and equipment leasing. You should hire an attorney to help you create the separate entities.”
Dr. Frank also suggests, in these situations, that the ASC and practice are visually separated as well. He recommends that each entity have its own scrubs, logo and marketing materials to help them look different, even if they share the same physicians.
5. Loss in physician practice revenue. As physicians move office-based procedures to the ASC, their practices will lose revenue from the loss of those procedures. Physicians must prepare for this loss of revenue from in-office procedures before the procedures are moved.
“Moving these procedures causes practices to lose a significant amount of revenue, and we have seen practices go into the negative,” says Dr. Frank. “Practices must analyze and anticipate this ahead of time and put strategies in place to deal with this anticipated loss, such as downsizing or reorganizing staff.”
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