At the 18th Annual Ambulatory Surgery Centers Conference in Chicago on Oct. 27, Jeff Péo, vice president of acquisitions and development of Ambulatory Surgical Centers of America, gave five key points on the current state of the ophthalmology, ENT and podiatry specialties in the ASC market.
1. Volumes. Last year, volumes for each of the specialties varied. Mr. Péo said ophthalmology cases comprised 19 percent of volumes in ASCs, ENT cases comprised 8 percent and podiatry cases comprised 3 percent. While ENT and podiatry cases are not dominant in the ASC industry, he noted that they are growing. Over the past three years alone, ENT has experienced 4 percent growth.
2. Financial trends. The average Medicare reimbursement and profits have gone up dramatically for the ENT and podiatry specialties, Mr. Péo said. In 2007, Medicare reimbursed roughly $900 for the standard ENT case, and now that figure is closer to $1,500. Profits for ENT cases averaged around $100 in 2007 and are now just under $1,000 today.
Although podiatry Medicare reimbursements and profits have gone up over the past four years, many cases are still losing money. This is because Medicare does not reimburse implants. Mr. Péo said the average podiatry case is close to breaking even in terms of profit, but this is significantly higher than 2007, when podiatry ASCs were losing close to $800 per Medicare case.
Mr. Péo added that ophthalmology has remained steady in both its average Medicare reimbursements per case as well as its average profit per Medicare case. Ophthalmology cases average $100 to $200 in profit in ASCs, and he says if you want to make a profit in an ASC with ophthalmology, there must be a high volume — and cases must be done quickly. "If you're taking a long time in the [operating room], that profit very easily gets eaten up," Mr. Péo said.
3. Start-up costs. If an ASC wanted to add ophthalmology, constructing two operating rooms and adding the average equipment is expected to cost $275,000 to $325,000, Mr. Péo said. Adding two rooms and equipment for ENT would cost roughly $250,000. However, podiatry involves less start-up costs. "If you're running orthopedics already in your center, then podiatry is a very cheap initiative," Mr. Péo said. "You add a couple pieces of equipment, and the rest of what orthopedic [physicians] have is what podiatrists need." If an ASC is running orthopedics, he said the start-up costs could be as low as $10,000 to $20,000.
4. "Gotchas." Adding one of these three specialties does not come without caveats, Mr. Péo said. Ophthalmology, for example, relies heavily on the speed of the surgeon, as a high volume of cases is necessary to see a consistent cash flow. "You need to have a very fast surgeon, or else the profits just will not be there," he said. Fast ophthalmologists can also have a hidden caveat, as ASCs would have to add more trays to keep up with the volume, consequently increasing supply costs.
Mr. Péo said ENT is surging in ASCs, but ASCs must have multiple ENT physicians and a decent case load in order to keep the staff trained and happy. "It's hard to retain staff if you're only doing a couple [ENT] cases per month," he said.
Podiatry has several caveats, and most have to do with its heavy implant costs and lack of reimbursement from Medicare or Medicaid. For podiatry to work in ASCs, Mr. Péo said ASCs should negotiate closely with vendors and payors so they can get carve-outs to minimize costs.
5. Future opportunities. Volumes have been increasing for both ophthalmology and ENT. Mr. Péo said as the population ages, the need for cataract surgeries in particular is growing. Additionally, the ENT specialty is gaining more standards of care. Although podiatry has lower volumes, new procedures are being presented to boost its viability in an ASC. One of those procedures is a procedure involving plasma-rich platelets with radio frequency. These procedures can take 15 minutes, reduce patient heel pain and provide quick pain relief.
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1. Volumes. Last year, volumes for each of the specialties varied. Mr. Péo said ophthalmology cases comprised 19 percent of volumes in ASCs, ENT cases comprised 8 percent and podiatry cases comprised 3 percent. While ENT and podiatry cases are not dominant in the ASC industry, he noted that they are growing. Over the past three years alone, ENT has experienced 4 percent growth.
2. Financial trends. The average Medicare reimbursement and profits have gone up dramatically for the ENT and podiatry specialties, Mr. Péo said. In 2007, Medicare reimbursed roughly $900 for the standard ENT case, and now that figure is closer to $1,500. Profits for ENT cases averaged around $100 in 2007 and are now just under $1,000 today.
Although podiatry Medicare reimbursements and profits have gone up over the past four years, many cases are still losing money. This is because Medicare does not reimburse implants. Mr. Péo said the average podiatry case is close to breaking even in terms of profit, but this is significantly higher than 2007, when podiatry ASCs were losing close to $800 per Medicare case.
Mr. Péo added that ophthalmology has remained steady in both its average Medicare reimbursements per case as well as its average profit per Medicare case. Ophthalmology cases average $100 to $200 in profit in ASCs, and he says if you want to make a profit in an ASC with ophthalmology, there must be a high volume — and cases must be done quickly. "If you're taking a long time in the [operating room], that profit very easily gets eaten up," Mr. Péo said.
3. Start-up costs. If an ASC wanted to add ophthalmology, constructing two operating rooms and adding the average equipment is expected to cost $275,000 to $325,000, Mr. Péo said. Adding two rooms and equipment for ENT would cost roughly $250,000. However, podiatry involves less start-up costs. "If you're running orthopedics already in your center, then podiatry is a very cheap initiative," Mr. Péo said. "You add a couple pieces of equipment, and the rest of what orthopedic [physicians] have is what podiatrists need." If an ASC is running orthopedics, he said the start-up costs could be as low as $10,000 to $20,000.
4. "Gotchas." Adding one of these three specialties does not come without caveats, Mr. Péo said. Ophthalmology, for example, relies heavily on the speed of the surgeon, as a high volume of cases is necessary to see a consistent cash flow. "You need to have a very fast surgeon, or else the profits just will not be there," he said. Fast ophthalmologists can also have a hidden caveat, as ASCs would have to add more trays to keep up with the volume, consequently increasing supply costs.
Mr. Péo said ENT is surging in ASCs, but ASCs must have multiple ENT physicians and a decent case load in order to keep the staff trained and happy. "It's hard to retain staff if you're only doing a couple [ENT] cases per month," he said.
Podiatry has several caveats, and most have to do with its heavy implant costs and lack of reimbursement from Medicare or Medicaid. For podiatry to work in ASCs, Mr. Péo said ASCs should negotiate closely with vendors and payors so they can get carve-outs to minimize costs.
5. Future opportunities. Volumes have been increasing for both ophthalmology and ENT. Mr. Péo said as the population ages, the need for cataract surgeries in particular is growing. Additionally, the ENT specialty is gaining more standards of care. Although podiatry has lower volumes, new procedures are being presented to boost its viability in an ASC. One of those procedures is a procedure involving plasma-rich platelets with radio frequency. These procedures can take 15 minutes, reduce patient heel pain and provide quick pain relief.
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