Sequestration hit April 1, reducing Medicare payments by 2 percent. This has a big impact on centers with Medicare patients, but also those who accept private insurances in areas where insurance companies base payment rates on Medicare reimbursement.
"It will be felt with varying degrees of severity by ASCs, but if they have a higher volume of Medicare it will make more of an impact," says Matt Searles, partner with Merritt Healthcare. "In the United States, we run trillion dollars deficits each year and so budget cuts are inevitable, but sequestration is troubling because the cuts are indiscriminant."
Mr. Searles discusses five ways ambulatory surgery centers can meet and overcome the challenges posted by payment reductions.
1. Focus on growth. Ambulatory surgery centers must renew or maintain efforts to maintain growth. This could mean working with partner surgeons to make sure all appropriate cases are coming to the ASC, or recruiting new surgeons.
"With new facilities in particular we are trying to be careful that we have a strong pro formas based on existing case volume and that our markets can provide for reasonable growth" says Mr. Searles. "ASCs need to have strong volume to do well. I hope the Medicare reimbursements aren't drastically reduced, but if we have strong, robust facilities, we can mitigate the downside of reimbursement reductions."
The higher volume, especially among non-Medicare patients, will maintain cash flow in the center despite the 2 percent Medicare reduction.
2. Focus on the advantages of being a low-cost provider. ASCs are the low cost provider in many markets and it could be beneficial to remain that way.
"We need to focus on the fact that we are the low cost provider and we can save Medicare money," says Mr. Searles. "We can show policy makers that it's possible to continue moving cases into the ASC setting, but if they aren't reimbursing enough, Medicare patients won't be viable in the ASCs and will have to move back to the higher-cost hospital settings."
3. Continue cost cutting and saving. ASCs have become very proficient with cost cutting strategies and realizing savings. However, lower reimbursements will require even more focus on cost containment opportunities.
"All around ASCs are continuing to cut costs and look for ways to save," says Mr. Searles. "If we are going to see reimbursement cuts, we are going to find ways to restructure the way we do business. I'm not sure if there is a great treasure trove of ways to cut costs in well-run ASCs, but the pending reductions make cost control efforts even more important."
Implants and supplies are often a huge expense per case, so ASCs are looking at more ways to standardize, eliminate waste and purchase implants wholesale to realize more savings. Other centers with high overhead due to staffing costs are relying on a leaner staffing model and compact case scheduling.
4. Expand scope of services. Consider new specialties if possible to bring in, especially if they are related to what the ASC already does. For example, an orthopedics ASC could bring on pain management.
5. Lobby for ASC interests. Leaders within the surgery center industry must remain politically active and lobby for the ASC industry locally and nationally. ASCA and state organizations play an important role in advocating for the industry's interests.
"Become active in advocacy and continue to remind policy makers and the public of the savings from using ASCs," says Mr. Searles. "Medicare saves many millions of dollars by using ASCs; the more we can make that clear, the better for us in general."
Start conversations with lawmakers about the pressures on surgery centers while understanding that everyone else in the healthcare industry is also trying to preserve their interest.
"I do worry about the state of things because we are heading toward a debt crisis," says Mr. Searles. "They are looking to cut and squeeze, and we have to live with that reality and navigate it the best we can."
More Articles on Surgery Centers:
12 Recent ASC Openings and Announcements
5 Tips for ASC Success With Physician Preference Items
8 Steps for Smooth ASC Patient Flow
"It will be felt with varying degrees of severity by ASCs, but if they have a higher volume of Medicare it will make more of an impact," says Matt Searles, partner with Merritt Healthcare. "In the United States, we run trillion dollars deficits each year and so budget cuts are inevitable, but sequestration is troubling because the cuts are indiscriminant."
Mr. Searles discusses five ways ambulatory surgery centers can meet and overcome the challenges posted by payment reductions.
1. Focus on growth. Ambulatory surgery centers must renew or maintain efforts to maintain growth. This could mean working with partner surgeons to make sure all appropriate cases are coming to the ASC, or recruiting new surgeons.
"With new facilities in particular we are trying to be careful that we have a strong pro formas based on existing case volume and that our markets can provide for reasonable growth" says Mr. Searles. "ASCs need to have strong volume to do well. I hope the Medicare reimbursements aren't drastically reduced, but if we have strong, robust facilities, we can mitigate the downside of reimbursement reductions."
The higher volume, especially among non-Medicare patients, will maintain cash flow in the center despite the 2 percent Medicare reduction.
2. Focus on the advantages of being a low-cost provider. ASCs are the low cost provider in many markets and it could be beneficial to remain that way.
"We need to focus on the fact that we are the low cost provider and we can save Medicare money," says Mr. Searles. "We can show policy makers that it's possible to continue moving cases into the ASC setting, but if they aren't reimbursing enough, Medicare patients won't be viable in the ASCs and will have to move back to the higher-cost hospital settings."
3. Continue cost cutting and saving. ASCs have become very proficient with cost cutting strategies and realizing savings. However, lower reimbursements will require even more focus on cost containment opportunities.
"All around ASCs are continuing to cut costs and look for ways to save," says Mr. Searles. "If we are going to see reimbursement cuts, we are going to find ways to restructure the way we do business. I'm not sure if there is a great treasure trove of ways to cut costs in well-run ASCs, but the pending reductions make cost control efforts even more important."
Implants and supplies are often a huge expense per case, so ASCs are looking at more ways to standardize, eliminate waste and purchase implants wholesale to realize more savings. Other centers with high overhead due to staffing costs are relying on a leaner staffing model and compact case scheduling.
4. Expand scope of services. Consider new specialties if possible to bring in, especially if they are related to what the ASC already does. For example, an orthopedics ASC could bring on pain management.
5. Lobby for ASC interests. Leaders within the surgery center industry must remain politically active and lobby for the ASC industry locally and nationally. ASCA and state organizations play an important role in advocating for the industry's interests.
"Become active in advocacy and continue to remind policy makers and the public of the savings from using ASCs," says Mr. Searles. "Medicare saves many millions of dollars by using ASCs; the more we can make that clear, the better for us in general."
Start conversations with lawmakers about the pressures on surgery centers while understanding that everyone else in the healthcare industry is also trying to preserve their interest.
"I do worry about the state of things because we are heading toward a debt crisis," says Mr. Searles. "They are looking to cut and squeeze, and we have to live with that reality and navigate it the best we can."
More Articles on Surgery Centers:
12 Recent ASC Openings and Announcements
5 Tips for ASC Success With Physician Preference Items
8 Steps for Smooth ASC Patient Flow