Brian Mathis, vice president of strategy at Surgical Care Affiliates in Birmingham, Ala., discusses surgical specialties with the highest profitability in ASCs and how to achieve profitability.
Orthopedics. This specialty shows consistently strong profitability, provided that the ASC can manage supply costs and negotiate payor contracts effectively. SCA has aggregated the spend of 130 centers, achieving 15-20 percent supply cost savings relative to independent centers. Such savings can make all the difference in ASC profitability.
Because of the high volume of orthopedic procedures and the heavy use of implants, there must be a sophisticated contract negotiation strategy that ensures appropriate payment for each procedure. This requires understanding the profitability of individual case types and, where necessary, structuring contracts to provide carve-outs from standard fee schedules.
For statistics on the average charges and revenue per case for orthopedics, click here.
Otolaryngology (ENT). At SCA we are very focused on helping each of our partnerships achieve success and use a data-driven process to help optimize decision-making. When one of our centers has open block time or is looking to optimize their case mix, we provide them data on profitability per minute by specialty, and ENT is at the top of the list to pursue.
We foresee slow but steady volume growth for this specialty. The implant and supply costs are generally less of a concern for ENT than for orthopedic cases. While there is rarely enough ENT volume to develop a single-specialty center, otolaryngology is a terrific addition to multi-specialty ASCs. Unlike faster-paced procedures like GI or eye, which require a single-specialty center or a focused area within your multi-specialty center, ENT cases can be intermingled with a wide variety of other cases and still be efficient and profitable.
For statistics on the average charges and revenue per case for ENT, click here.
Gastroenterology. GI is very different from ENT. It is a low-margin specialty in which profitability depends almost entirely on utilization. Single-specialty GI centers with five or six active physicians and tight management of labor and supply costs are attractive partnerships for us. In fact, simply the management of supply costs can make all the difference between average and excellent returns. This applies to individual centers or even ones owned by small chains.
Utilization is the key in GI, so we try to determine if we can help our physicians grow their volumes through joint marketing efforts or other means. The volume outlook for GI is stable and there will continue to be downward rate pressure, so ASCs need to keep utilization high.
For statistics on the average charges and revenue per case for GI, click here.
Bariatrics. While this specialty is a very small part of our portfolio, we know it can be profitable and the volume outlook is terrific. Bariatrics is shifting to the outpatient setting, making ASCs an attractive site to do these procedures. Not all insurers cover ASC-based bariatrics but coverage is increasing. Some of our centers have successfully negotiated with payors by forming a team of physicians, the center administrator and our corporate managed care team. They meet with the payor and present data on both the clinical and financial advantages of ASCs. The self-pay market is significant for these procedures and is likely to recover with the economy.
ASCs do not necessarily need to create and manage total care programs in order to add bariatric procedures to their case mix. One alterative is partnering with a company that already manages a total care program and would be attracted to a high quality, lowering cost at site of service. Another is relying on physicians to manage or engage in their own total care programs. The latter is typically more attractive from a profitability standpoint, but can be tougher to initiate.
For more information on developing a bariatrics program in an ASC, click here.
Spine. ASCs can handle specific types of spine cases from orthopedic surgeons and neurosurgeons. The volume of procedures that can be done safely in an ASC will continue to grow as technology improves. Cost savings for payors shifting these cases from hospitals to ASCs is enormous, but the shift requires significant payor education. Because spine implants are so expensive, the contracting team must make sure payments are appropriate. Each case will represent substantial income if contracting goals are met. Only two to three spine surgeries a week are needed to make a great contribution to a multi-specialty center.
For more information on developing an outpatient spine program, click here.
Contact Brian Mathis at brian.mathis@scasurgery.com.