12 Best Practices, Lessons Learned and Future Goals for Spine Surgery ASCs

Three veteran owners of orthopedic and spine ASCs share best practices on ensuring profitability, lessons they have learned and plans for the future.

Steps to ensure profitability
1. Do not get locked into disadvantageous agreements with insurers. Neurosurgeon John Caruso, MD, co-owner of Parkway Surgery Center, a one-OR center in Hagerstown, Md., says his ASC initially stayed out of most payor networks. He says insurers aren't familiar with outpatient spine surgery, have no payment structure for it on their books and may be getting negative assessments from hospitals that are afraid of losing business.

"Payors always begin by saying, 'We'll pay 105 percent of Medicare,' but that doesn't work for us," Dr. Caruso says. "We waited them out and negotiated a much more favorable rate than if we'd signed their initial contract offers." When he finally negotiated with the payors, he could provide them with convincing data on costs and quality.

2. Develop a strong case for insurers. The data is important because the ASC will be negotiating non-standard payment options, basically from scratch. Orthopedic surgeon David Abraham, MD, co-owner of the Reading Surgery Center, a multispecialty ASC with three ORs in Wyomissing, Pa., says cost data can be very convincing for payors. "You're saving that insurer tens of thousands of dollars by doing it in the ambulatory setting," he says. For example, while the hospital pays $25,000-$30,000 for cervical spine surgery, an ASC charges $7,000-$8,000 for the same procedure.

Dr. Abraham urges surgeons to get directly involved in contract negotiations because the data is more convincing coming from them. "When a surgeon says, 'If you don't allow us to pass these implants through, you're going to pay four times as much,' insurance executives sit up and listen," he says.

3. Supplement spine surgery with other procedures. Orthopedic surgeon Kenneth A. Pettine, MD, co-owner of Loveland Surgery Center, a three-OR facility that is a joint venture with National Surgical Care, says technological advances are rapidly making it possible to perform most, if not all, kinds of spine surgery on an outpatient basis, but many factors — ranging from payor requirements to state regulations — stand in the way of that goal. Medicare still refuses to pay for most outpatient spine procedures. Many states do not allow 23-hour stay ASCs, which are often needed postoperatively for many spine procedures. And insurance coverage for outpatient spine procedures still lags behind what would be considered clinically appropriate and technologically possible.  

Therefore, to have enough volume to make an appropriate profit, ASCs usually have to supplement spine with other types of procedures. Dr. Pettine says his three-OR ASC hosts ENT, orthopedics and pain management as well as spine.

Dr. Abraham says pain management is a good fit for a spine ASC because it involves the same kind of evaluation as a spine case. "Before you are a candidate for spine surgery, the full course of pain management, two to three injections, needs to have failed," he says. He adds that the pain management, which is administered by a physiatrist or an anesthesiologist specializing in pain management, is often performed in an ASC rather than a doctor's office.

4. Select patients wisely. "To avoid complications, you need to be very careful about patient selection," Dr. Pettine says. Surgeons should pay special attention to patients who are elderly, obese or have a history of respiratory problems. Undertaking a prospective study of every spine surgery patient of his, Dr. Pettine found that almost everyone who required an unplanned transfer came from one of these three groups (Note: See the end of this story to learn how to can obtain a copy of this study.).

5. Choose physician-partners wisely. Infighting among surgeons can take a serious bite out of profits, Dr. Pettine says, so it is wise to choose surgeons who can work in a cooperative team. "You can work through any issue if you have a good team, but one unreasonable doctor can make your life miserable," he says. "That's the most important lesson of all."

Dr. Pettine adds that there is a threshold number of physician-partners beyond which achieving cooperation becomes more difficult. He thinks an ASC can operate with as few as five surgeons while 25 surgeons would be too many. Size matters because partners have to agree on a number of key decisions, such as the OR scheduling and selecting which equipment to buy, he says.

6. Offer alterative medicine. To keep ASC volume high, Dr. Caruso believes it is important for a practice to branch out into all kinds of therapy that involve neuro-muscular conditions. He says about one-fifth of the people who go to the doctor have to be treated for neuro-muscular conditions, and many of them go to a chiropractor, so it is important to cover chiropractic care. His practice offers acupuncture and weight control as well as chiropractic care. "If you won't cover these things, you're going to have to send the patient out," he warns.

Lessons learned
7. Make sure there are enough overnight beds. Dr. Pettine says his ASC has a sufficient number of ORs, but it doesn't have enough overnight beds. "We have four beds, but we should have built six or eight," he says. He adds that it becomes too expensive to add beds after the facility is built.

8. Don't expect every spine surgeon will be interested in joining. Dr. Caruso says he learned that some spine surgeons simply aren't interested in ASCs, no matter how much you try to persuade them. "You can't convince everyone of everything," he says. "Some people are going to buy into this niche and some won't."

9. Control orthopedic implant costs. Dr. Abraham says the key to moving spine cases into the ASC is control of implant costs. ASCs that use expensive cervical plate implants, for example, will have trouble covering the cost in reimbursements, he says.

Plans to grow in 2010
10. Benefit from newly recruited spine surgeons. Dr. Pettine says recently adding fourth spine surgeon to his practice will increase volume at his ASC. The existing facility can easily accommodate volume by expanding operations into the weekend, he says.

Dr. Pettine reports that his ASC has never been busier. Many of the patients are trying to fit in surgery before the end of the year, either because they have already met their deductible or because they anticipate that their insurance will end. But he doesn't expect a sharp drop in volume come the start of the new year.

11. Open another ASC and urgent care center. Dr. Caruso says his group is planning to build a second one-OR ASC for orthopedics, freeing up his current ASC for more spine surgeries. Maryland CON regulations favor single-OR ASCs. He is also considering a neuromuscular urgent care center, which would increase ASC volume. The plan may involve state approval if it is not set up as an extension of the practice.

12. Open a surgical specialty hospital. With a proposed ban on new physician-owned hospitals in the health reform bills, Dr. Abraham is considering transforming his ASC into a physician-owned surgical specialty hospital before the deadline. He says it would be relatively easy to get approval for it because there are no CON requirements in Pennsylvania. A specialty hospital could handle greater volume than the ASC because both inpatient and outpatient spine surgeries could be performed there, he says.

Dr. Abraham says he has a strong case for surgical specialty hospital. "It doesn't make sense to send spine surgery patients, who are basically not sick, into a hospital where there are a lot of sick people," he says. And when these relatively healthy spine patients are recovering with very sick people, "they are not going to get the nurse's attention."

Learn more about Dr. Caruso's Parkway Surgery Center.

Learn more about Dr. Abraham's Reading Surgery Center.

Learn more about Dr. Pettine's Loveland Surgery Center.

To request reprints of Dr. Pettine's study of his spine patients, please contact him at kpettine@spinerevolution.com.