Improving Surgery Center Cash Flow and Revenue: Q&A With Ed Gallo of GENASCIS

Ed Gallo, CEO of GENASCIS, a provider of revenue cycle management and business intelligence to ASCs, discusses areas in which ASCs can improve their cash flow and collections.

Q: What data should surgery centers review on a regular basis to keep on top of their cash flow?

Ed Gallo: Very frequently we see surgery centers not focused on areas they can control, such as the time spent on a case. This includes not only surgical time, but also, how long does it takes to complete a transcription, are operation reports appropriate and how much time does it take to complete paperwork. The faster a physician completes his transcription, the faster it can go to coding and billing allowing the surgery center to receive a prompt payment.

Another area we continually find to be suboptimal at surgery centers is bills being submitted to the payor on a prompt basis. It's not uncommon for a center to take 20 days before they can get the bill out the door.

The single biggest factor is the terms in the center's managed care contracts. Contract negotiations drive revenue. After contracts are signed, it really is an effort to ensure that the expected payment is what is actually received.  Too many centers are satisfied with a payment even though it isn't necessarily the correct payment.

Q: How can surgery centers improve their collections in this economy?

EG: First and foremost, is the center doing the best job it possibly can in identifying the appropriate financial responsibility for the patient? I think centers should be proactive in obtaining insurance information and working with patients before surgery rather than waiting until after surgery. It becomes more difficult to collect after the surgery has been performed. Payment plans should also be determined prior to the procedure. More centers should be aggressive about collecting payments upfront.

We deal with over 700 centers, and, by and large, I've been surprised that patient bad debt isn't escalating as much as expected. This doesn't mean that the trend will continue and centers won't be exposed to increased risk-related to patient payments.

We have been advising centers to reconsider their processes. Many may seem to be tried and true, but they may not work in this changing, challenging environment. If they change their techniques to better adapt to the new challenges, they will see a significant difference.

Q: What are some coding errors surgery centers commonly make that can affect their cash flow?

EG: It is surprising how few certified coders are out there and how many coders who work in surgery centers are not certified. Surgery centers should ask themselves, "Are [we] really invested in [our] coder(s), and are they are up to par?" With all the changes in codes and modifiers, it is important to work with coders who understand coding to eliminate errors. With ICD-10 around the corner, this can have an incredible [negative] impact on centers. Investing in coders that are qualified is critical.

Our research shows up to 10-15 percent of cases at a surgery center have potential errors. This is probably the second biggest area that affects revenue and cash flow. Even if 10 percent of cases have errors, there can be a huge adverse impact because of coding. Potentially millions of dollars are at risk, which can be the difference between profit and loss. There is also the risk of audit. The hospital industry is undergoing coding audits sponsored by CMS. We have no doubt that the ASC market will be engaged in the near future.

It can be important for centers to perform a coding audit. We are in the process of developing a system where customers can supply us with information, and it will point out codes and areas that are low performing or commonly have errors.

Q: What are some trends you've seen in surgery centers regarding collections?

EG: Centers should look out for short pays by their commercial payors. This trend might not be seen over a single center or even 10 centers, but across our 700 centers, we've noticed this. Major payors have reduced payments by 20-30 percent. For example, a payor may agree to give you $1,000 under contract, but only pay you $700, and you will have to be very persistent to collect the remaining $300. Cash flow may only be down a little as a result, but it creeps up and adds up.

We prefer to use information-driven revenue management rather than relying on just the people at the center so that it is easier to track trends like this. [Proper use of] IT will provide a huge advantage for centers.

Q: What should a surgery center consider when looking into outsourcing part or all of its billing and collections?

EG: Surgery centers should ask themselves, "What business am I in?" What are your core competencies? What do you really want to invest in? Centers that should outsource are the ones that want to invest in patient care and growth without investing a significant amount their time in collections.

Also, it is important to find a company whose goals align with those of the center, which should be to receive accurate information that represents what happened across the complete revenue cycle. Look out for conflict. I wouldn't recommend outsourcing parts of the cycle to different companies.

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