Adding a new service line can increase ASC revenue. However, ASC owners and operators have several considerations before implementing a new service line.
"When adding a service line, develop a business case, confirming your assumptions regarding volume, rate and costs, thus ensuring your expected outcome can be achieved and is compelling enough to gain buy in from your partnership and participating physicians," says Winborne Macphail, senior vice president of sales and market development for Surgical Care Affiliates.
Here are five considerations for ASCs when adding a new service line.
1. Conduct an economic analysis. The most successful ASC leaders talk with payers to ensure they will cover the service line. "ASCs need to do an economic analysis of what reimbursement will be," says Joe Zasa, managing partner of ASD Management. "They need to discuss with third party payers carve-outs for those procedures to obtain higher reimbursement."
2. Talk to your physicians. When adding a service line it's essential to confirm the assumptions you are making regarding expected case volume and costs are sound. "The foundation has to start with the commitment from the physicians to participate in supporting the new service," says Ms. Macphail. "If you don't have a firm commitment from your physicians, you may want to reconsider any investments until you do. You should also prospect the total market and evaluate other available physicians to optimize the service line and the investment opportunity."
Talk to the physicians about the total number of cases they can bring to the new service line, and then calculate the actual number of cases each physician will bring; physicians often over-estimate the actual cases they'll bring to the center. "When an ASC knows the reimbursement rate, its cost to perform the case and has commitment so that is can estimate the number of cases, it can assess if they want to add the line," Mr. Zasa adds.
3. Understand the outpatient landscape by specialty. Look at the outpatient landscape when choosing a service line to determine if it makes sense for the long term. If a center is considering adding pain management, for example, consider if pain is expanding in the outpatient setting, or if it perhaps is going back into the office setting.
Consider adding a line that compliments an existing specialty such as total joints for an orthopedics-focused center. Service lines that go hand-in-hand may serve as a practical and often highly profitable expansion opportunity.
4. Develop a business plan. Adding a service line entails various expenses/costs to evaluate that will ensure a good investment. Evaluate all capital investments as well as equipment costs. Because an additional service line is a major investment, a center may want to consider making facility improvements, such as updating the waiting room with coffee and comfortable seating to put patients at ease.
5. Have a formal implementation plan. Train and/or hire clinical staff to ensure competency in the new procedures, and develop protocols to ensure a smooth implementation process for the physicians and patients. The addition of a new service line should not disrupt patient care. Ms. Macphail recommends leveraging vendor relationships and negotiate leasing options or other arrangements to pace your investment costs for capital equipment.
"If you start in advance and have a plan, you will accelerate the start and ultimate success of a new service line," says Ms. Macphail. "Make sure everyone is on board and knows why the service line is beneficial for the growth of the center."
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