Over the past several years, ambulatory surgery centers have experienced and championed the growth of cardiology procedures in the outpatient setting.
Strong reimbursement rates, an increase in covered procedures and improved patient experiences all make cardiology an attractive specialty for both new and established ASCs. Experts with Bain & Co. found that ASC cardiology volume has increased by 230 percent since 2015. With continued advocacy and legislative efforts to expand cardiology service offerings, the growth of this specialty does not appear to be slowing.
Adding cardiology as a specialty requires substantial investment in both equipment and people. However, ASCs that take time to evaluate the market, their contracts and their finances can significantly increase the economic value of their surgery center. More importantly, offering cardiology in an ASC provides another way for physicians to engage with their patients and ensure that new and established patients receive high-quality care.
Why cardiology in ASCs?
Let's look at the actions of the Centers for Medicare and Medicaid Services and the business impact associated with adding this specialty. CMS has been moving cardiology procedures to the ASC-covered procedure list for several years. In 2018, CMS added 17 cardiology codes to the ASC-CPL, then quickly added several cardiology diagnostic procedure codes the following year after the revision of the definition of "surgery." Just last year, CMS added six more procedure codes, including three coronary intervention procedures.
Along with improved outcomes in the outpatient setting, another driver for this transition to ASCs has been cost savings. In 2020, CMS indicated "if 5 percent of coronary intervention procedures migrate from the hospital outpatient setting to the ASC setting as a result of this proposed policy, Medicare payments will be reduced by approximately $20 million in CY 2020 and total beneficiary copayments will decline by approximately $5 million in CY 2020." The lower cost of service positions an ASC favorably in contract negotiations with commercial payers, who can reimburse the ASC a fair rate while reducing their overall spend.
Patients also benefit from the transition to ASCs, as they enjoy a lower patient financial responsibility and are drawn to the more personalized environment with reduced exposure to infection. Compared to hospital outpatient, ASCs have shown a reduction in patient payments by 30 percent or more, ultimately making critical elective procedures more accessible to more patients. Add to this the advances in technology, an aging population, and improvements for safety and outcomes, and you have a recipe for impressive growth in a complex specialty.
When evaluating the revenue impact, it's important to consider that most cardiology procedures performed in ASCs are complex procedures with a significant reimbursement on an average cash-per-case basis. Incorporating cardiology with these strong revenue numbers, an ASC can significantly increase its top line, bottom line and equity value. To improve the ASC's equity value, the surgery center should undertake thoughtful planning, pay strict attention to their revenue cycle management, along with proper payer and vendor contract management and negotiations.
Before beginning your cardiology specialty planning and facility impact assessment, be sure to review your state guidelines and regulations, as some states may limit these procedure types in the ASC setting. You will also need to review and plan for properly designing and outfitting cardiology suites either in your existing footprint or through a new build or renovation.
Key business considerations for ASCs
Specific to the business impact, there are several key areas of focus. First, assess market opportunity. Evaluate the ASCs, cardiologists and cardiology practices in your area. Evaluate not only the competition, but also research surgeons or groups that could potentially join your ASC. Many physicians have been drawn to ASCs for increased autonomy and schedule flexibility, opportunities for ownership, and improved relationship with the patient. Once your physicians are on board, compile a pro forma financial statement. This statement breaks down the cost to build a cardiology center. An ASC planning to expand an existing facility may spend $1 million to $2 million if adding additional procedure and operating rooms. A de novo cardiology-focused ASC will likely require a more substantial investment. During this stage, ASC owners should also conduct a return-on-investment analysis. That analysis includes the projected revenue, revenue growth and profit margin based on varying assumptions related to the numbers and types of cases per year, the estimated break-even point, as well as an exit strategy.
Of course, as with anything in medicine, evaluate the clinical benefit. Assess the cardiology procedures that both private payers and Medicare cover for the ASC setting. What are the clinical protocols and best practices for these procedures? New facilities will need to meet Medicare requirements and get accredited. You will also need to consider your referral base: Do you have one? Develop a strong patient outreach plan to recruit qualified candidates.
It is also important to negotiate effective managed care contracts to ensure procedures are covered at rates that make the best financial sense for your business. Remember most contracts are tailored to your existing specialties. After reviewing the complete contracts, review the full cardiology case as it will adjudicate. With a full case analysis, you have the data to prepare a strong argument when negotiating new contracts or renegotiating existing contracts.
Developing an outpatient cardiology facility or adding cardiology to an existing practice requires extensive planning and number-crunching. Take time to focus on business development, contract management and revenue cycle management to realize the maximum return on investment.
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