Mr. Murphy said ASCs should go in-network when reduced case volume and total revenue outweigh the benefits of higher per-case revenue of out-of-network cases. Going in-network can be profitable if it generates a sufficient increase in volume to cancel out the lower revenue per case. However, ASC administrators will need to determine if the center and physicians can handle an increase in volume, Mr. Murphy said.
Mr. Murphy said when an ASC is out-of-network, the insurance carrier will send patients to a hospital or other provider that is in-network. If the ASC goes in-network it could capture the cases that would otherwise go to the hospital. If the volume increases to the point that the total profit exceeds that for the out-of-network cases, the center should go in-network. Conversely, if the volume does not increase substantially, the ASC may want to stay out-of-network.
When going in-network, it is important to be persistent in negotiations with payors, Mr. Murphy said. “Don’t sign contracts that don’t increase the overall profit margin.” ASCs have an advantage in negotiations because their cases typically cost less than those in hospitals, which benefits payors. ASC administrators can thus afford to wait until the payor increases its payment to make the cases profitable for the ASC.
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