In both single-specialty urology and multi-specialty ASCs, longer, more complex procedures can be a good fit and good for
profitability. The key for either type of facility is having a dedicated fluoroscopy unit, with a cysto-fluoro table and a C-arm.
"The procedures that require more expensive equipment, that are more invasive and that require full anesthesia, were undervalued in the past," says Ira Klimberg, MD, of the Urology Center of Florida in Ocala, Fla. "These procedures are going to see their reimbursements go up by 60 to 100 percent over the next four years. I think that these more complex, more time-consuming cases are really going to be major drivers of new revenue."Here’s an overview of five such procedures — penile implants, slings for incontinence, kidney stone procedures, laser for benign prostatic hyperplasia and prostate cryotherapy — that your ASC might consider adding.
1. Penile implants
Historically, penile implant cases have been done in very limited numbers in freestanding surgical centers, by a limited number of surgeons, because the procedure code was not even part of the Medicare ASC payment list.
"The sugeons who did it specialized in it, and went out and contracted with payors in their areas to work out a reimbursement schedule," says Dr. Klimberg. "They showed that the procedures are amenable to the ASC, and while it’s great that Medicare has added these procedures to the ASC list, the problem is that CMS is bundling payments to the ASC for the procedure and implant cost. This is not sufficient so it is not feasible to do the procedure in the ASC for Medicare patients."
As a result, he says, penile implants will "remain limited to patients who are non-Medicare — either self-pay or who have insurance with which you can negotiate a carve-out."
Mike Shea, CEO Treasure Coast Management Group in Vero Beach, Fla., agrees.
"I suspect that Medicare and some of the private payors will refuse to pay except for a very limited diagnosis," he says. "Consequently, I think penile implants are going to go the way of breast implants and be considered non-covered, self-pay cosmetic procedures. Once that happens, the cosmetic surgeons will pick it up well; that group is very adept at marketing."
2. Slings for incontinence
"As we go forward, sling procedures are becoming less invasive, and the reimbursements have gone up in the ASCs," says Mr. Shea. "Because urologic procedures such as these have as many components as orthopedic procedures oftentimes do, these will consequently lend themselves well to the ASC."
The catch is that there are a lot of different types, sizes and materials of these implantable slings, and they can get quite pricey.
"The good news is that manufacturers are advancing rapidly with these, and the prices are dropping," says Mr. Shea. "But you still will want to get a carve-out with private pay to cover the cost — even with that reimbursement added on to that of the procedure, you can offer the insurer a package price that’s one-third of what it would cost them in the hospital."
3. Kidney stone procedures
"When you look at the numbers, I think the biggest increase is going to be in procedures for stones," says Dr. Klimberg.
Medicare did not previously compensate ASCs for lithotripsy, notes Jorgen Madsen, president and CEO of United Medical Systems in Westborough, Mass., so its addition to the ASC payment list — at a scheduled reimbursement of $1,782 — is an important step forward for this procedure.
"Medicare’s paying for lithotripsy in the surgery center is a big deal," says Mr. Shea.
For Dr. Klimberg’s practice, the addition represents a "nice line of business. We have access to the equipment where we either pay a flat fee for the day or a per-case rate, and we can negotiate a lower per-case rate for the Medicare patients, which gets us out of the hospital for those patients," he says. "If you have a couple of private payor patients [scheduled for lithotripsy] at the ASC, you can add a couple of Medicare patients, and both increase the reimbursement to the ASC that day and experience more efficiency as the physician, because you’re not splitting your time between the ASC and the hospital."
While extracorporeal shockwave lithotripsy’s addition makes the most waves, there are other kidney stone options that are also now more viable for ASCs.
"The ESWL is a half-million dollar machine that’s fairly heavy," says Mr. Shea. ‘The procedure pays very well, but it’s expensive to perform. Another way to do [stones] is with holmium laser. The reimbursement there is very good, though it depends on the size and placement of the stone and which modality the doctor uses: With the laser, you’re chipping away at smaller ones as opposed to smashing them with a sledgehammer."
Mr. Shea also notes that there are some physicians who are doing stone procedures very effectively with high-powered green-light laser. However, you might want to delay incorporating the laser procedures into the case mix, as the "government didn’t front-end load the laser reimbursement for ASCs," and the payment will become more viable as the new Medicare system is phased in over the next few years.
Further, says Dr. Klimberg, "reimbursement for ureteroscopic stone procedures have gone up appreciably — from $500 or $640 to $1,046. Facilities that have urologists on board should be thinking about adding fluoroscopic capabilities [necessary for such procedures] if they don’t already have that capability."
4. Laser for benign prostatic hyperplasia
Treatment for benign prostatic hyperplasia (BPH) aims to remove some of the tissue from an enlarged prostate. There are two types of lasers used for these hour-long procedures: holmium and green light.
"You can do either of these treatments in a fairly short amount of time, with no bleeding, quick recovery and minimal inconvenience to the patient," says Mr. Madsen. "Clinically, it makes a lot of sense — all aspects of the procedure really fit in the ASC environment very well."
While many men are able to delay treatment by using drugs, "they will have to cross that bridge eventually," says Mr. Madsen. "It’s a high-volume procedure, half a million a year, and there are going to be increasingly more candidates. Almost twice as many men need treatment for BPH as there are people who need kidney stone treatment."
The lone problem, as mentioned, is that the reimbursement won’t be equal to the task of adding the service line in the ASC right away.
"The laser is roughly a $120,000 piece of equipment, and in order to keep disposable costs low, you have to purchase quite a large volume of laser fibers," says Mr. Shea. "The part that generates the beam itself has a finite life, so you’re going to have higher maintenance costs on the service contract. So the true cost does not equal the reimbursement."
Mr. Madsen agrees.
"The reimbursement schedule unfortunately favors the hospital setting at this point in time," he says. "We run an ASC (in addition to offering mobile urologic procedure services), and we don’t do them yet to any extent there, because purely from a financial standpoint, it’s hard to make it work." Mr. Shea works with some ASCs who are doing the treatments essentially at cost as a convenience for surgeons and to gain an early foothold in the marketplace. He estimates that BPH laser treatment will start to become profitable in year three of the new payment system’s implementation, and that "once it’s ramped up, it will be very profitable."
5. Cryoablation therapy
Various cryotherapy techniques have been available and in use since the early 1990s, and in 1999, a CPT code was approved by Medicare for prostate cryoablation. But now, that CPT code — for both primary and salvage prostate cryoablation — is open to ASCs, which could be a boon for your center beginning in 2008. According to data pending publication, results of the minimally invasive therapy are equivalent to or better than surgery at 10 years, says Marie Molnar Hammond of Galil Medical, which makes the Precise Cryoablation System.
"It’s a great procedure to add to the ASC," she says. "It’s been streamlined — just needle and grid — and can be done in skilled hands in less than an hour and in new hands in an hour-and-a-half. Further, it’s going to be the second-highest-paid procedure in the ASC. It’s not going to be an incredibly high-volume procedure, maybe one to two a week. But for ASCs already doing urology procedures, or for multi-specialties looking to increase OR utilization, this is a great procedure to add."
Mr. Shea says cryoablation is worth considering, as "if you have a patient in which the tumor is so aggressive, you didn’t get to kill 100 percent of the cancer cells in the gland, you can go in and re-freeze. You can’t do another surgery, can’t put the patient through another round of radiation."
As a result, he says, it is "becoming the gold standard for failed radiation of the prostate, especially economically. Intensity-modulated radiation therapy, which is the latest and greatest that the oncologists and urologists are doing, can go to $60,000 or $80,000; cryoablation is about $6,500 to $6,800. It’s very cost-effective as opposed to robotics."
Ms. Molnar Hammond estimates that costs run about $4,000 per procedure. An external company employed by Galil to determine 2007 ASC benchmarks found that the average income to the bottom line after all expenses is about $232 per procedure; for cryoablation, that figure ranges anywhere from $900 to $1,800.
"It took a big bump and now has a pretty hefty reimbursement. But right now, because of the disposable costs, we don’t feel the margins are going to be particularly strong," says Dr. Klimberg.
It’s another case of wait-for-full-implementation, says Mr. Shea: "It’s going to ramp up more. We have signed out with a number of centers, and with the efficient physicians doing two or three a day, the ASC makes a margin of $2,000 to $3,000 per case at an hour per case. It’s only going to get better."
Contact Stephanie Wasek at stephanie@beckersasc.com.
Options for Adding Complex Urology Procedures
There are two business models for adding the procedures requiring a laser or extracorporeal shockwave lithotripter: invest in buying the capital equipment and disposables, and hiring a tech — or contract with a mobile service provider that brings the equipment, disposables and tech to your facility.
Volume is key to being able to afford the former model; if your facility is going to have lower volumes of EWSL, laser kidney stone or laser BPH procedures, however, you might want to go the latter route.
"We service the average facility twice a month, typically doing five cases per visit, though we can do as many as 15 in a day," says Jorgen Madsen, president and CEO of United Medical Systems in Westborough, Mass. "If a center has three or four urologists, you’re doing pretty well, and that number will bring 120 EWSL cases a year. You probably need 500 cases a year for buying your own unit to make sense."
The machines themselves cost $150,000 to $500,000, and with disposables running into the several thousands per case, you might not be able to purchase enough to get the best
volume price, as a turnkey mobile service provider might. Further, the machines themselves are large, and in a multi-specialty center that doesn’t have a dedicated urology room, moving and storing the equipment might be a challenge for an ASC.
"A single surgery center may be hard-pressed to bring all those elements together," says Mike Shea, the president and CEO of Treasure Coast Management Group in Vero Beach, Fla. "Using a mobile service provider makes a $6,800 case rate profitable, because often the reimbursement would have to be twice that for a surgery center to break even."
Mr. Madsen also points out that investing in the equipment can be risky especially if urologists are utilizers but not owners of the center — at any time, theoretically, they could take their cases elsewhere, leaving you with several thousand dollars’ worth of equipment and nothing to do with it.
"There are no real out-of-pocket expenses," says Ira Klimberg, MD, of the Urology Center of Florida in Ocala, Fla. "When you lease a technology in this way, you are just leasing the expenses you would otherwise incur."
— Stephanie Wasek
