2013 should prove a challenging year for surgery centers, as reimbursements face a hit and quality reporting requirements go into full effect. Here are five ways to save and make more money next year, according to Daren Smith, director of clinical services for Surgical Management Professionals, Kim Woodruff, vice president of corporate finance and compliance for Pinnacle III, Rob Murphy, CEO of Murphy Healthcare, John Bartos, CEO of Collect Rx, and Todd Mello, MBA, partner with HealthCare Appraisers.
1. Think about what you spend on distribution. Mr. Smith said surgery centers can save money next year by considering their budget for supply distribution. A significant portion of an ASC's materials management money goes toward distribution, and distributors mark-up costs and add on shipping charges for GPO-negotiated products. ASCs should be aware that the price they negotiate for a supply with their GPO may not be the final price they pay when all is said and done.
"Hold business reviews quarterly," Mr. Smith added. "If you're not doing this, get a hold of your distributor right away. Sit down with the distributor, and have them give you information on products that you're ordering." He added that ASCs should conduct a shipping charge analysis to determine how much they spend on shipping. He recommended that ASCs provide their own UPS and FedEx numbers for direct manufacturer and GPO purchases, which could yield a 40 to 50 percent savings on shipping costs.
2. Take advantage of social media. According to Ms. Woodruff, surgery centers that don't embrace social media — including Twitter, Facebook, Google+ and LinkedIn — may fall behind in the next few years. "Well-run ASCs would be well-served to harness the energy that occurs in this medium," she said.
She said ASCs can benefit in numerous ways by creating a social media presence. First, they can establish relationships with new physicians and patients and start meaningful conversations about surgical options, the cost benefits of outpatient surgery and the future of healthcare. Second, they can build trust and loyalty in the community by conveying that their center is reputable. Patients are more likely to trust a surgery center with an attractive, well-functioning website and social media presence.
"Differentiate yourself," she said. "You don't want to be everything to everybody, but you do want to invite people in. Be inclusive."
3. Consider more high-paying cases. It seems like a no-brainer, but if your surgery center is mostly dependent on low-paying cases — such as GI, ophthalmology and pain cases — you may suffer if volume drops or a physician leaves. Mr. Murphy says failure to bring in more complex, higher-paying cases can leave a surgery center behind the curve. "This would be the equivalent of running a restaurant with the same limited menu year after year," he said.
He said ASC administrators should consider profitable procedures such as spine, total joint replacement, and orthopedic procedures in the next year. ENT-navigation guided procedures, brachytherapy and lithotripsy can also be profitable for a surgery center.
4. Re-evaluate your out of network strategy. Mr. Bartos said providers frequently fail to maximize the reimbursement they receive via their out-of-network strategy. "We see providers accept reimbursement levels that are perhaps only slightly above their in-network or Medicare or Medicaid rates," he said. "The payors, knowing that providers won't push for more, will often under-pay those claims." The whole point of out-of-network is to receive higher reimbursement than you would be able to negotiate with a commercial contract, so make sure your strategy is as lucrative as possible.
He says this strategy requires staff members who are dedicated to negotiating out-of-network settlements on individual bills and effectively appealing claims. If your surgery center does not have staff members experienced with out-of-network bills, you might consider hiring a third party to handle this side of your reimbursement. "The provider [also] needs to have supporting data to be effective in negotiating individual bills," Mr. Bartos says. "For example, the provider must have the ability to identify the inconsistencies between the EOB and the remittance advice and be able to decipher the actual language."
5. Get to the "sweet spot" in terms of physicians. If you want to maximize your surgery center's value, make sure you have a healthy number of physicians participating in your center. Mr. Mello said 10 to 15 physicians is the ideal number of practicing providers at the center.
A surgery center should be confident that if one physician leaves, volume will still remain relatively stable; a surgery center with two few providers can find itself in dire straits if a high-volume physician leaves. On the other hand, too many physicians can mean that individual investors become disengaged with the center's operations.
Related Articles on ASC Turnarounds:
30 Statistics on Staff Hours Per Case in Surgery Centers
8 Big Concerns Facing ASCs Next Year -- and What to Do About Them
Identifying Your ASC as 'High Performance' to Generate Results
1. Think about what you spend on distribution. Mr. Smith said surgery centers can save money next year by considering their budget for supply distribution. A significant portion of an ASC's materials management money goes toward distribution, and distributors mark-up costs and add on shipping charges for GPO-negotiated products. ASCs should be aware that the price they negotiate for a supply with their GPO may not be the final price they pay when all is said and done.
"Hold business reviews quarterly," Mr. Smith added. "If you're not doing this, get a hold of your distributor right away. Sit down with the distributor, and have them give you information on products that you're ordering." He added that ASCs should conduct a shipping charge analysis to determine how much they spend on shipping. He recommended that ASCs provide their own UPS and FedEx numbers for direct manufacturer and GPO purchases, which could yield a 40 to 50 percent savings on shipping costs.
2. Take advantage of social media. According to Ms. Woodruff, surgery centers that don't embrace social media — including Twitter, Facebook, Google+ and LinkedIn — may fall behind in the next few years. "Well-run ASCs would be well-served to harness the energy that occurs in this medium," she said.
She said ASCs can benefit in numerous ways by creating a social media presence. First, they can establish relationships with new physicians and patients and start meaningful conversations about surgical options, the cost benefits of outpatient surgery and the future of healthcare. Second, they can build trust and loyalty in the community by conveying that their center is reputable. Patients are more likely to trust a surgery center with an attractive, well-functioning website and social media presence.
"Differentiate yourself," she said. "You don't want to be everything to everybody, but you do want to invite people in. Be inclusive."
3. Consider more high-paying cases. It seems like a no-brainer, but if your surgery center is mostly dependent on low-paying cases — such as GI, ophthalmology and pain cases — you may suffer if volume drops or a physician leaves. Mr. Murphy says failure to bring in more complex, higher-paying cases can leave a surgery center behind the curve. "This would be the equivalent of running a restaurant with the same limited menu year after year," he said.
He said ASC administrators should consider profitable procedures such as spine, total joint replacement, and orthopedic procedures in the next year. ENT-navigation guided procedures, brachytherapy and lithotripsy can also be profitable for a surgery center.
4. Re-evaluate your out of network strategy. Mr. Bartos said providers frequently fail to maximize the reimbursement they receive via their out-of-network strategy. "We see providers accept reimbursement levels that are perhaps only slightly above their in-network or Medicare or Medicaid rates," he said. "The payors, knowing that providers won't push for more, will often under-pay those claims." The whole point of out-of-network is to receive higher reimbursement than you would be able to negotiate with a commercial contract, so make sure your strategy is as lucrative as possible.
He says this strategy requires staff members who are dedicated to negotiating out-of-network settlements on individual bills and effectively appealing claims. If your surgery center does not have staff members experienced with out-of-network bills, you might consider hiring a third party to handle this side of your reimbursement. "The provider [also] needs to have supporting data to be effective in negotiating individual bills," Mr. Bartos says. "For example, the provider must have the ability to identify the inconsistencies between the EOB and the remittance advice and be able to decipher the actual language."
5. Get to the "sweet spot" in terms of physicians. If you want to maximize your surgery center's value, make sure you have a healthy number of physicians participating in your center. Mr. Mello said 10 to 15 physicians is the ideal number of practicing providers at the center.
A surgery center should be confident that if one physician leaves, volume will still remain relatively stable; a surgery center with two few providers can find itself in dire straits if a high-volume physician leaves. On the other hand, too many physicians can mean that individual investors become disengaged with the center's operations.
Related Articles on ASC Turnarounds:
30 Statistics on Staff Hours Per Case in Surgery Centers
8 Big Concerns Facing ASCs Next Year -- and What to Do About Them
Identifying Your ASC as 'High Performance' to Generate Results