1. CMS’s new rates are viable. Last year we wrote that the new Medicare rate for surgery centers would generally be negative. After further study, and a better understanding of the political and economical impact, we tend to disagree with this earlier conclusion. The new rates from CMS are generally positive for higher-acuity procedures and negative for lower-acuity procedures. There are several winners and several losers under the new rates. Overall, the less your center is heavily focused on lower-acuity procedures like gastroenterology, pain management or ophthalmology, the overall impact of the changes is generally likely to be positive or of minor ultimate impact. Further, the changes should provide greater stability for several years to surgery centers. Finally, the changes’ hard-wired-in concept of surgery centers’ being reimbursed 65 percent of hospital outpatient departments provides a tremendous political card to be used constantly for surgery centers in Washington, D.C., and other places. In essence, each time a procedure is done in the surgery center, there is almost no question that the federal Medicare program is saving money.
“At Practice Partners facilities, we are, as anticipated, experiencing increased reimbursement in those cases with higher acuity — specifically orthopedics,” says Larry Taylor, president and CEO of Practice Partners in Healthcare. “Our pro forma materials for centers reflect the anticipated phased-in reimbursement for both the increases and decreases depending upon specialty. We believe that there is continued success in the specialty of pain intervention and will continue to experience excellent margins.”
Tom Mallon, CEO and founder of Regent Surgical Health, is also seeing strong gains in orthopedics.
“We analyzed the Medicare reimbursements for every one of our centers,” Mr. Mallon says. “All received a net gain — from $20,000 annually on the low side for a center
with high GI and cataracts, to $200,000 for a heavy ortho center.”
2. The loss of a few physicians is not fine. Surgery centers are increasingly becoming businesses that may profit when they hit a critical mass and perform more than a threshold number of cases. In the past, a few lost physicians could be easily replaced by other free physicians. However, there seem to be fewer and fewer independent and free surgeons available. Thus, each surgeon is starting to have more impact than each used to have.
“The loss of a surgeon is never acceptable due to the expense of establishing each provider, much less the loss of revenues and margin,” says Mr. Taylor. “This is an issue that has always plagued ASCs — as any business with top-line decreases, the point of less independent physicians not currently involved in a center has decreased, but there continues to be availability of physicians in the market place to support both new facilities and increase productivity in existing centers. The point to be emphasized is that customer service, efficiency and profitability are retention issues that the entire facility staff needs to clearly understand and be a part of. Instances where one center’s loss in another center’s gain depends upon what end of the equation you are on.”
Rick DeHart, CEO of Pinnacle III , agrees: “Many ASCs operate in mature markets where the majority of surgeons are committed to their operating facility. Therefore, losing a surgeon and easily replacing him is a difficult task. I believe that ASCs need to continue to work hard on customer relations to maintain their physician bases. There are too many choices in today’s environment.”
3. Information technology is critical. At one time, parties took pot shots at the use of new information technology in surgery centers. Now, as outstanding management becomes more critical to sustain surgery center success. In such surgery centers, the proper and intelligent use of information technology becomes that much more important. We expect centers to make more significant investments in information technology and as importantly, software systems that go with the technology to help them better handle case costing, benchmarking and other statistical analysis for their surgery center.
ASCs have been slow to invest in and adapt these new technologies, observes Arvind Subramanian, CEO of Wolters Kluwer Health Clinical Solutions and ProVation Medical.
“In March of this year, our company conducted a survey of 175 ASC administrators and found that while adoption of electronic health records (EHRs) is viewed as inevitable, only 18 percent of ASCs surveyed currently use an EHR,” Mr. Subramanian says. “Barriers to adoption cited included upfront capital investment, the fear of lost revenue during implementation, and worries about integration with other electronic systems.
“But relying on paper in an era of electronic documentation and communication is inefficient and expensive. The key to streamlining processes, increasing patient safety and cutting administrative costs through electronic documentation lies in choosing an EHR with a proven record of integration, from a company with a robust training and implementation plan that can minimize the initial workflow disruption and offer ongoing support.”
The good news is that while ASCs face many challenges, technology is available to assist with overcoming them.
“One pressing issue faced by centers today is the reduction in reimbursement money,” says Jeff Blankenship, president of Surgical Notes. “This reduction, many times, is a direct result of inaccurate data being transmitted to the payor. These inaccuracies are, many times, a direct result of having multiple data entry points of the same ADT (admission, discharge and transfer) information. This duplication of duties greatly increases the likelihood of errors and increases employee cost.
“Proper utilization of technology lets ASCs eliminate these multiple points of data entry into the system, thereby reducing possible transposition errors and greatly increasing reimbursement amounts by delivering accurate data to the payor,” he continues. “In the past, information technology solutions were expensive. That is not always the case now. Do your homework and you will find very affordable and functional technology. Companies have seen the need for these services to be affordable and there are great solutions available for reasonable amounts. You owe it to your facility to investigate these solutions. The right technology can greatly increase your facilities bottom line results and reduce errors.”
4. Good A/R, billing and collections are key to a successful ASC. Well-managed accounts receivable and billing and collections departments are critical to the success of an ASC. Cash collection is critical to an ASC, and any delays or defaults in billing or payment can damage a bottom line. Consider hiring billers and coders or a billing company with specific ASC billing experience.
“We all strive to provide the very best patient care possible, but we are still a business,” says Ann Geier, RN, MS, CNOR, CASC, vice president of operations for ASCOA. “The business office needs to function like a well-oiled machine, and good processes empower the employees to do this. Everyone should understand what is expected, the goals that they are trying to meet, and the benchmarks that they will be evaluated against."
“For example, if A/R days are to be at 35 days, how are they to achieve this?” asks Ms. Geier. “The processes would include timely follow up with all accounts, including Medicare. Persistent phone calls to the payors with detailed documentation of the calls. Any rise in A/R days should signal that something may be amiss. Are the collector’s behind in their follow-up calls? Is too much time elapsing between calls? The cost of hiring another collector more than pays for itself in the additional collections brought in.”
Hiring the right coders is also a crucial cog for successful collections efforts.
“Experienced, ethical, cautious coders are among your best assets in the ASC billing world,” says Nancy Burden, RN, MS, CPAN, CAPA, the director of BayCare Ambulatory Surgery in Largo, Fla. “Look for someone who will be aggressive in analyzing physician documentation and who is not afraid to ask for clarification in writing. It is, likewise, essential that the administrator stand behind the coding if controversy occurs. We want neither upcoding nor loss of revenue from missed procedures."
“Cash collections should be a team effort between both the front end and back end business teams,” Ms. Burden says. “Securing co-pays and deductibles prior to the surgery is not only good business practice, but an essential part of the center’s financial health. The demeanor of the front end team should be such that they are friendly but persuasive and not afraid to offer payments alternatives to patients. Another important aspect is to ensure that the preoperative nursing advice about leaving valuables at home does not conflict with the patient’s understanding to bring their required payment.”
