Here are seven tips to position your ASC for higher profits in the future.
1. Invest in the ASC real estate to generate extra income. With declining reimbursement rates, physicians have to figure out how to generate additional income, says Pedro Vergne-Marini, MD, managing member of Physicians Capital Investments. One way to do that is by investing in real estate, such as an office building or an ASC. Surgeons working out of surgery centers have the potential to receive a higher percentage of the reimbursement from the cases they perform. "Every time a patient is admitted to a hospital, the bill generally is two to three times higher than it would be in the ASC. Furthermore, the physician doesn't receive the additional compensation," he says. "A procedure that would cost $1,800 in an ASC, the hospitals might charge $6,000 or higher per patient. Physicians operating in ASCs will make a higher profit while at the same time will improve the quality of care and decrease the overall cost of healthcare."
2. Perform case-costing to obtain data. Many ASCs do not have cost data because they typically don't need it when sending out claims, says Ron Brank, a group vice president for Symbion in Nashville, Tenn. For example, Symbion ASCs are mostly paid through a set fee schedule or a grouper methodology. To capture cost information, ASC staff members need to perform case-costing, which involves reviewing the chart for each case, determining what supplies, such as implants, were used. Then they add up the supply and labor costs for each case and enter the data into the patient accounting system. "This will require extra staff time, but the cost is well worth it," Mr. Brank says. Symbion's IT department captures this information into its data warehouse, adds indirect and fixed costs and provides reports on case-profitability in a number of views, such as by CPT code, specialty, financial class and physician.
The data can be used during managed care negotiations. In managed care contract negotiations, "an ASC needs meaningful data about the costs of each particular type of case to know whether it can make a profit on the rates the payor is offering," Mr. Brank says. Ambulatory surgery centers that cannot do this often end up accepting a money-losing rate. Alternatively, the data-poor ASC may compare the payor's offer to estimates of costs or a small sample of cases. This is risky because it may not accurately reflect the true average cost per case.
3. Think twice before depending on out of network contracts. As it becomes more difficult to bill for out-of-network claims, the value of ASCs with a high proportion of OON cases has been sinking. "Buyers are assuming that out-of-network centers will have to go in-network in the future," says Jon Vick, president of ASCs Inc. in Valley Center, Calif.. Going in-network means accepting a substantially lower reimbursement than was possible out-of-network. For example, a case that is paid $15,000-$20,000 at an OON center might get only $8,000-$10,000, or even less, at a contracted in-network rate.
Buyers see reliance on out-of-network volume as one of the most important risk factors for perceived ASC value. In a recent survey of buyers by VMG Health, 93 percent said heavy reliance on out-of-network payors had a "very high" impact on the ASC's value, resulting in a reduction in the multiple, and 7 percent said it had a "high" impact. "In other words, fully 100 percent of buyers thought out-of-network had at least a high impact on value," Mr. Vick says.
4. Negotiate payor contracts with the future in mind. Set yourself up for the next contract during current negotiations, says Mr. Odom. Stay abreast of the ever-changing healthcare industry and know which types of procedures are profitable and how that may change. "If you position product lines you know are going to decline over the course of the current contract, establish a foundation now, so the pain is less when the contract kicks in down the road," says Tom Faith of The C/N Group. Additionally, ask payors about their timeline for switching to the APC reimbursement model. "We've been listening to what they say and how they answer to position ourselves better for the future," says Jim Odom of The C/N Group. "We ask the payor what they are talking about internally for one or two years down the road, such as which procedures are bring pushed into ASCs and which have pressure to be performed at hospitals."
5. Prepare for the ICD-10 future. Older coders may be considering retirement as the ICD-10 implementation deadline looms, Rosalind Richmond, CCS, interim coding compliance officer for Genascis. "Older coders don't want to learn a new classification system, especially one that is alpha-numeric," she says. These coders may have experienced the switch from ICD-8 to ICD-9 in the early 1970s and know the transition will be a significant undertaking, she says. She expects the move to ICD-10 to be even more complicated because of the numerous software applications affected by the change in each facility.
She says facility leaders should speak with coders to determine whether they plan to slog through training and implementation of ICD-10 — or whether they are planning to move to different positions or retire prior to Oct. 1, 2013. Getting a sense of coders' plans will help facilities prepare for coder shortages.
6. Breed a culture of customer service. Great organizations strive for great customer service, high patient satisfaction, and high physician satisfaction, says Tom Jacobs, CEO of MedHQ. Leaders in the organization must become experts at spotting behaviors that support the organization's values. The values have their greatest real meaning within the context of defining how the organization delivers the products and services promised to its customers. A players, then, will naturally be those that excel at customer service. And great leaders in the organization will be those that find ways to be most supportive of A players' efforts. How the front lines of the organization treat your customers is critically important, and supporting your front line personnel starts by supporting them in their daily routines and then goes deeply into the inner workings of the organization, as it pertains to investment decisions, organizational prioritization, assignment of job duties, etc. The companies with great culture will make great customer service the focal point of their efforts.
10 Steps to Boost Patient Satisfaction in ASCs
8 Points on Construction When Renovating a Surgery Center
1. Invest in the ASC real estate to generate extra income. With declining reimbursement rates, physicians have to figure out how to generate additional income, says Pedro Vergne-Marini, MD, managing member of Physicians Capital Investments. One way to do that is by investing in real estate, such as an office building or an ASC. Surgeons working out of surgery centers have the potential to receive a higher percentage of the reimbursement from the cases they perform. "Every time a patient is admitted to a hospital, the bill generally is two to three times higher than it would be in the ASC. Furthermore, the physician doesn't receive the additional compensation," he says. "A procedure that would cost $1,800 in an ASC, the hospitals might charge $6,000 or higher per patient. Physicians operating in ASCs will make a higher profit while at the same time will improve the quality of care and decrease the overall cost of healthcare."
2. Perform case-costing to obtain data. Many ASCs do not have cost data because they typically don't need it when sending out claims, says Ron Brank, a group vice president for Symbion in Nashville, Tenn. For example, Symbion ASCs are mostly paid through a set fee schedule or a grouper methodology. To capture cost information, ASC staff members need to perform case-costing, which involves reviewing the chart for each case, determining what supplies, such as implants, were used. Then they add up the supply and labor costs for each case and enter the data into the patient accounting system. "This will require extra staff time, but the cost is well worth it," Mr. Brank says. Symbion's IT department captures this information into its data warehouse, adds indirect and fixed costs and provides reports on case-profitability in a number of views, such as by CPT code, specialty, financial class and physician.
The data can be used during managed care negotiations. In managed care contract negotiations, "an ASC needs meaningful data about the costs of each particular type of case to know whether it can make a profit on the rates the payor is offering," Mr. Brank says. Ambulatory surgery centers that cannot do this often end up accepting a money-losing rate. Alternatively, the data-poor ASC may compare the payor's offer to estimates of costs or a small sample of cases. This is risky because it may not accurately reflect the true average cost per case.
3. Think twice before depending on out of network contracts. As it becomes more difficult to bill for out-of-network claims, the value of ASCs with a high proportion of OON cases has been sinking. "Buyers are assuming that out-of-network centers will have to go in-network in the future," says Jon Vick, president of ASCs Inc. in Valley Center, Calif.. Going in-network means accepting a substantially lower reimbursement than was possible out-of-network. For example, a case that is paid $15,000-$20,000 at an OON center might get only $8,000-$10,000, or even less, at a contracted in-network rate.
Buyers see reliance on out-of-network volume as one of the most important risk factors for perceived ASC value. In a recent survey of buyers by VMG Health, 93 percent said heavy reliance on out-of-network payors had a "very high" impact on the ASC's value, resulting in a reduction in the multiple, and 7 percent said it had a "high" impact. "In other words, fully 100 percent of buyers thought out-of-network had at least a high impact on value," Mr. Vick says.
4. Negotiate payor contracts with the future in mind. Set yourself up for the next contract during current negotiations, says Mr. Odom. Stay abreast of the ever-changing healthcare industry and know which types of procedures are profitable and how that may change. "If you position product lines you know are going to decline over the course of the current contract, establish a foundation now, so the pain is less when the contract kicks in down the road," says Tom Faith of The C/N Group. Additionally, ask payors about their timeline for switching to the APC reimbursement model. "We've been listening to what they say and how they answer to position ourselves better for the future," says Jim Odom of The C/N Group. "We ask the payor what they are talking about internally for one or two years down the road, such as which procedures are bring pushed into ASCs and which have pressure to be performed at hospitals."
5. Prepare for the ICD-10 future. Older coders may be considering retirement as the ICD-10 implementation deadline looms, Rosalind Richmond, CCS, interim coding compliance officer for Genascis. "Older coders don't want to learn a new classification system, especially one that is alpha-numeric," she says. These coders may have experienced the switch from ICD-8 to ICD-9 in the early 1970s and know the transition will be a significant undertaking, she says. She expects the move to ICD-10 to be even more complicated because of the numerous software applications affected by the change in each facility.
She says facility leaders should speak with coders to determine whether they plan to slog through training and implementation of ICD-10 — or whether they are planning to move to different positions or retire prior to Oct. 1, 2013. Getting a sense of coders' plans will help facilities prepare for coder shortages.
6. Breed a culture of customer service. Great organizations strive for great customer service, high patient satisfaction, and high physician satisfaction, says Tom Jacobs, CEO of MedHQ. Leaders in the organization must become experts at spotting behaviors that support the organization's values. The values have their greatest real meaning within the context of defining how the organization delivers the products and services promised to its customers. A players, then, will naturally be those that excel at customer service. And great leaders in the organization will be those that find ways to be most supportive of A players' efforts. How the front lines of the organization treat your customers is critically important, and supporting your front line personnel starts by supporting them in their daily routines and then goes deeply into the inner workings of the organization, as it pertains to investment decisions, organizational prioritization, assignment of job duties, etc. The companies with great culture will make great customer service the focal point of their efforts.
7. Follow product rules for infection control. Every ASC wants to have good infection control practices so patients are satisfied with their excellent results and spread the word about the great care at your facility. Infection control experts know that some microorganisms, such as the hepatitis b virus and staphylococcus aureus bacteria are able to survive for long periods of time on dry surfaces and both have long been identified as causes of serious outbreaks from cross-contamination, says Jack Wagner, president of Micro-Scientific.
Infection control experts also recognize that disinfectants intended for use on patient care equipment must kill mycobacteria TB and list it on the label along with its appropriate kill time. Using an EPA-registered disinfectant in a manner inconsistent with its labeled instructions is a violation of federal law and is so stated on all EPA-approved disinfectant labels. Proper and consistent use of a disinfectant solution, per its label instructions, is so critical that use directions are required to be clearly written on every registered disinfectant product label.
Related Articles on ASCs:
3 Internal Benchmarks to Share With Surgery Center Physicians10 Steps to Boost Patient Satisfaction in ASCs
8 Points on Construction When Renovating a Surgery Center