Four surgery center leaders — Luke Lambert of ASCOA, Rob Murphy of Murphy Healthcare Group, Joe Zasa of ASD Management and Brian Brown of Meridian Surgical Partners — discuss strategies to increase ASC profitability.
1. Consider going in-network. Many surgery center experts believe out-of-network reimbursement — a once profitable strategy for ASCs — is disappearing. Luke Lambert, CEO of ASCOA, says payor issues are one of the biggest concerns for surgery centers at the moment, as "out-of-network [is] being eliminated and deductibles and co-pays [are] increasing, causing patients to defer care."
Rob Murphy, president of Murphy Healthcare Group, says surgery centers should go in-network when reduced cast volume and total revenue outweigh the benefits of higher per-case revenue of out-of-network cases. In other words, going in-network can be profitable if it generates a sufficient increase in volume to cancel out the lower revenue per case. Because insurers generally want to send patients to in-network providers, an out-of-network surgery center loses out on cases that could boost profitability.
However, if going in-network would not increase volume substantially, the surgery center may want to consider staying out-of-network. Mr. Murphy says payor negotiations are crucial when going in-network. He recommends surgery centers only sign contracts that increase their overall profit margin.
2. Track budget-related statistics. Brian Brown, regional vice president of operations for Meridian Surgical Partners, says surgery centers should track several budget-related statistics to maintain profitability. He says surgery centers should track:
• Same-store sales. Surgery centers must track physicians' growth or non-growth from a year-over-year standpoint, Mr. Brown says. This will help determine if the physician's practice is growing, if they are bringing in new partners or if they are adding new procedures.
• Supplies per case. Mr. Brown says you should attempt to keep the total increase of supplies per case at the very minimum. ASC administrators should focus on the current run-rate, or trailing 12 months, to identify current supplies per case.
• Wages per case. Mr. Brown says surgery centers should review available benchmarks specific to their region as well as wage indexes to determine what to pay employees. ASC leaders should then benchmark by reviewing the last 12 months to identify salaries per case, taking into account current ASC volume.
3. Stop losing money on implants. Joe Zasa, co-founder and managing partner of ASD Management, says surgery centers must benchmark the cost of implantable devices against other ASCs to make sure they're getting the best prices. It's also important to watch for price increases on implants, he says. "Some of these companies will do several percent increases twice per year," he says. "This goes on all of the time, and it ends up being a 10-12 percent increase." He says surgery centers must monitor their costs or they will end up paying more for implants without realizing it.
4. Bring in more high-paying cases. Mr. Murphy says surgery centers fail when they don't bring in complex, high-paying cases. "Failure to constantly bring in more complex, higher-paying ASC cases puts the facility behind the curve," he says. "This would be the equivalent of running a restaurant with the same limited menu year after year."
He says surgery center administrators should continually look for profitable procedures and specialties that could be added to the surgery center's line of services. For example, major spine cases, joints (i.e. total hips), ENT-navigation guided procedures, brachytherapy and lithotripsy can be profitable for a surgery center, he says.
Related Articles on Surgery Center Turnarounds:
8 Points on Physician Engagement in an ASC
10 Evolving Issues for Hospitals, Health Systems, Physicians & ACOs
7 Steps to Double ASC Volume by Integrating Cases From a Closed Surgery Center
1. Consider going in-network. Many surgery center experts believe out-of-network reimbursement — a once profitable strategy for ASCs — is disappearing. Luke Lambert, CEO of ASCOA, says payor issues are one of the biggest concerns for surgery centers at the moment, as "out-of-network [is] being eliminated and deductibles and co-pays [are] increasing, causing patients to defer care."
Rob Murphy, president of Murphy Healthcare Group, says surgery centers should go in-network when reduced cast volume and total revenue outweigh the benefits of higher per-case revenue of out-of-network cases. In other words, going in-network can be profitable if it generates a sufficient increase in volume to cancel out the lower revenue per case. Because insurers generally want to send patients to in-network providers, an out-of-network surgery center loses out on cases that could boost profitability.
However, if going in-network would not increase volume substantially, the surgery center may want to consider staying out-of-network. Mr. Murphy says payor negotiations are crucial when going in-network. He recommends surgery centers only sign contracts that increase their overall profit margin.
2. Track budget-related statistics. Brian Brown, regional vice president of operations for Meridian Surgical Partners, says surgery centers should track several budget-related statistics to maintain profitability. He says surgery centers should track:
• Same-store sales. Surgery centers must track physicians' growth or non-growth from a year-over-year standpoint, Mr. Brown says. This will help determine if the physician's practice is growing, if they are bringing in new partners or if they are adding new procedures.
• Supplies per case. Mr. Brown says you should attempt to keep the total increase of supplies per case at the very minimum. ASC administrators should focus on the current run-rate, or trailing 12 months, to identify current supplies per case.
• Wages per case. Mr. Brown says surgery centers should review available benchmarks specific to their region as well as wage indexes to determine what to pay employees. ASC leaders should then benchmark by reviewing the last 12 months to identify salaries per case, taking into account current ASC volume.
3. Stop losing money on implants. Joe Zasa, co-founder and managing partner of ASD Management, says surgery centers must benchmark the cost of implantable devices against other ASCs to make sure they're getting the best prices. It's also important to watch for price increases on implants, he says. "Some of these companies will do several percent increases twice per year," he says. "This goes on all of the time, and it ends up being a 10-12 percent increase." He says surgery centers must monitor their costs or they will end up paying more for implants without realizing it.
4. Bring in more high-paying cases. Mr. Murphy says surgery centers fail when they don't bring in complex, high-paying cases. "Failure to constantly bring in more complex, higher-paying ASC cases puts the facility behind the curve," he says. "This would be the equivalent of running a restaurant with the same limited menu year after year."
He says surgery center administrators should continually look for profitable procedures and specialties that could be added to the surgery center's line of services. For example, major spine cases, joints (i.e. total hips), ENT-navigation guided procedures, brachytherapy and lithotripsy can be profitable for a surgery center, he says.
Related Articles on Surgery Center Turnarounds:
8 Points on Physician Engagement in an ASC
10 Evolving Issues for Hospitals, Health Systems, Physicians & ACOs
7 Steps to Double ASC Volume by Integrating Cases From a Closed Surgery Center