The new Medicare payment system and expanded list of procedures brought with them new, profitable opportunities for centers performing urological procedures or considering offering urology in the future.
In fact, while over 80 percent of urology procedures tracked in quarter four of 2007 were performed in hospitals, Millenium Research Group says it fully expects "these numbers will begin to shift to ASCs and office settings - providing additional market potential."
"The reimbursement shift may encourage physician and patient adoption of in-office procedures, expanding the number of facilities performing them," says Nadia Lachowsky, senior Marketrack analyst at MRG.
But to ensure a profitable return on this volume-driven specialty requires good business sense and careful planning and analysis. Follow this advice offered by several urology experts to help your ASC achieve financial success when offering and performing urological procedures.
1. Identify the best surgical location.
Since urology is often a volume-driven business, it is critical for you to determine which procedures you should perform in your surgery center and which should go to an office or hospital setting, says William C. Mobley, MD, FACS, of Spring Park Surgery Center in Davenport, Iowa.
With the fee changes, "some of the more sophisticated procedures pay better, but some of those procedures, even though they pay better, still don’t pay enough to justify moving them from a hospital to a surgery center partly because the volume is not there and partly because the fees still haven’t really caught up to the technology," Dr. Mobley says.
In some instances, Medicare is now paying less for less-sophisticated procedures, making them better candidates for an office environment where the facility offset for the professional services is not applied.
"It really comes down to a challenge of determining the best place to perform the surgical procedure: in the office, surgery center or hospital, then really clearly establishing each of those niches," he says. "The most valuable thing you can do to make this work is to have a clearly established relationship with the office of urologists that you’re working with."
Developing this relationship becomes easier if your ASC is partly owned by a group of urologists who will perform the office-appropriate procedures in their offices. If you do not have such an ownership structure, you will want to hold discussions with a nearby urology office and discuss the business relationship you are looking to build.
Once you have established a relationship with an office, then it’s just a matter of working with a local hospital to ensure you can refer patients to that location when performing the procedure is impractical for either the ASC or office.
"It’s important to realize that the surgery center business is a boutique business; it needs to establish its niche," says Dr. Mobley. "What is not profitable is trying to be as big and sophisticated as the hospital. There really are limitations to what you ought to be doing in a surgery center from a quality and a profit standpoint.
"You do a number of things really well and you’re happy with that. And the hospital does what makes sense. Once you have that little niche agreement, worked out, things go better."
So what are some of the more common urological procedures that should be performed in each setting?
• ASC. Some of the procedures that used to be performed in the hospital but are now ripe for the surgery center include implantation of penile prostheses and more advanced kidney stone procedures, Dr. Mobley says.
His surgery center also invested in a lithotripsy machine to perform related procedures.
"Medicare, in its most recent revision, has established the fact that a surgery center can directly bill for lithotripsy services and that reimbursement is much more commensurate with what it costs and is more profitable now than it used to be," he says. "A lot of those procedures used to flow through the hospital but now they’re done directly by the surgery center."
He has also seen some more sophisticated incontinence procedures that were once performed in a hospital, as an outpatient procedure, now finding their way into ASCs.
• Office. "We’ve moved all of our prostate biopsies to the office over the past few years," Dr. Mobley says. "It used to be that we did most of them in the surgery center, but they don’t pay well in the surgery center and some advancements in technology have allowed this (procedure) to be done easier, better, faster, quicker and more profitably in the office, and patients appreciate that efficiency."
Other procedures that Dr. Mobley suggests for the office include almost all plain, diagnostic
cystocopies and occasionally the removal of small bladder tumors.
• Hospital. Examples of some of the more sophisticated procedures now allowed in ASCs that Spring Park has not moved from the hospital include implantation of radiation seeds and cryosurgical destruction of prostate cancer.
"They really don’t have the volume or we have determined that reimbursement is inadequate," Dr. Mobley says.
2. Achieve cost-effectiveness.
Unlike a specialty such as orthopedics in which a single case can bring your ASC a very high profit, you’re probably performing several urological cases each surgical day to bring in a strong return. Since many of these cases are likely repeat procedures, it is vital that you ensure maximum cost-effectiveness on these cases so you can turn the most profit each time you perform the procedure.
"Once you start to do things the same way each time in a cost-effective way, you have a well-established boutique business," Dr. Mobley says.
To achieve such cost-effectiveness, you will certainly want to focus on typical areas such as turnover time, payor contracts and efficient scheduling, says Bryan Zowin, administrator for the Peoria (Ill.) Day Surgery Center. Another crucial area you should examine regularly for
urology is supply costs, he says.
"Direct costs are huge right now," Mr. Zowin says. "We’re looking at that one hard for every case to make sure we’re maximizing our profit margin.
"(Ask yourself), how much do you have on inventory? How quickly are you turning it? How much are you paying for it? If you do a ton of cystoscopies and manage those costs, it’s a good deal."
Peoria Day Surgery Center makes sure to take advantage of the services offered by two group purchasing organizations, which send representatives to the ASC periodically.
"They review our data and look to see where we can maximize what we’re purchasing for similar products," Mr. Zowin says. "It really helps with analysis."
But the most important piece of advice Zowin can offer for your ASC to become cost-effective with its urological procedures is to focus on...
3. Effective carve-outs.
"The biggest tip I have for surgery centers is for the procedures that require any type of implant or male/female slings, it’s so important on those procedures that, if you’re managed care, to get those carved out at invoice plus cost," Mr. Zowin says.
Mr. Zowin offers the following tips to effectively carving out implants with your payors:
• Meet face-to-face. "Get in front of them," he says. "If you can eliminate the telephone and e-mails, I’ve had a lot more success doing the face-to-face meetings. Once you get them face-to-face, I think you’re able to get a lot more accomplished than either phone or e-mail allows."
• Educate your payors. "Tell them the story of what these things cost. We’re not looking to make any real profit on them; we just want to get paid our service plus the invoice cost with a little bit of a handling fee type of deal," Mr. Zowin says. "The biggest thing is just making sure you can have that dialogue with those payers."
• Show them the data. Bring any data you can share with your payors to your meetings.
"If you’re paying us $1.500 for this case and we’ve got an implant cost of $1,100, all we’re asking for is to pay that plus the invoice cost," says Mr. Zowin. "Be right up front with them. We’re not trying to up-charge, and that’s the biggest thing. And they will appreciate it. A lot of times, hospitals will mark those up considerably and I’m willing to just take regular invoice cost on them."
• Reference Medicare. The new Medicare APC system includes a service-fee portion, which Mr. Zowin says he references and then asks for a little above invoice costs for his implants and devices.
"I tell them my service fee is X times Medicare and you’ve got some parameter to go off of, whereas in the past you really didn’t have that," he says. "It was a grouper model, here’s the flat rate. Now they have a service portion for a lot of these implantable devices, I (point out) what Medicare is paying — 200 percent or 250 percent — and then we’ll use that and the invoice cost."
• Solicit your vendors’ help. Your vendors want you to use their products so you will order more from them. But if you can’t get good carve-outs for the implants or devices they provide you, your
physicians will be forced to move the cases to the hospital. Part of the physician’s blame for this inconvenience of moving the procedure may fall on the vendor for providing a product for
which payors are unwilling to fairly compensate the ASC.
"So we’re even trying to get the vendors to go to the payors and say they should be paying for this in the surgery center," Mr. Zowin says. "The vendors benefit from this as well."
• Explain benefits. As your center invests in new technology, you will want to inform your payors of the reason for your investment and its benefits, and show them why you should receive additional compensation for your commitment to quality.
"Tell them, ‘We were doing it this way but we’re doing it this other way now because the outcomes are better, the retreats are less,’" Mr. Zowin says. "You have to be able to stay on top of that. If your direct costs start to jump as new products come out, which it does in many cases, and then you have to get that message out there" to your payors to receive more reimbursement because of the improved patient outcomes.
4. Add procedures.
With better reimbursement and an expanded list of Medicare-approved procedures, you have a great opportunity to expand the types of cases you perform in your ASC.
"The number of procedures we can now do in a surgery center has increased significantly," says Herbert Riemenschneider, MD, founder of Knightsbridge Surgery Center in Columbus, Ohio. "The question is whether a procedure can be done profitably, and can we do it in a way that benefits our patients beyond what the system provides that exists now?"
Dr. Riemenschneider suggests the following procedures as worthy considerations for addition.
• Shorter, less-complex procedures. "Look at smaller procedures that have a known, black bottom-line that’s not huge," Dr. Riemenschneider says. "What’s the advantage? Most of those are short procedures and if scheduled efficiently, you can do quite a few procedures in a morning or block day and benefit from rapid turnover of cases. It isn’t unusual to be able to do eight or more cases in your allotted time."
Here are some procedures to consider.
• Bladder pathology — "Biopsy or resection of small- to medium-sized bladder tumors is quite appropriate for the ASC environment," he says.
• Incontinence treatments — By use of urethral sphincter collagen injections and, in those who have recalcitrant overactive bladders, you can consider Botox injections and even InterStim, Dr. Riemenschneider says.
• Urethral stricture — This includes treatment with balloon dilatation or urethraplasty, and treatment of bladder neck contracture using transurethral incision of bladder neck.
• Vasectomies — "There are centers that do a many vasectomies," Dr. Riemenschneider says. Why do them in a surgery center? If a patient has the choice to have sedation or an anesthetic in the secure ASC environment when he has anxiety, he will be pleased with this option in the current reimbursement system."
• Hydrocele repairs
• Hernia repairs
• Orchiectomy
• Varicocele ligation
• Circumcision
• Moderately complex procedures
• Laser treatment of prostate for benign prostatic hypertrophy (BPH) — This may be the GreenLight Laser prostatic vaporization procedure (PVP) or the holmium laser ablation of the prostate (HoLAP)
procedure.
"Either is well-suited to the ASC environment," Dr. Riemenschneider says. "For this to be a successful and productive case, the resources used must be monitored and the billing procedures refined. Patients are usually discharged to home after 60 to 90 minutes of recovery time."
• More complex procedures
"These have a higher cost structure but also have a good bottom-line provided you manage the process well," Dr. Riemenschneider says (see "Should You Add These Complex Urology Procedures?" on p. 13 for more).
Consider the following procedures and technologies:
• Stone disease treatment — "With fiber-optics, there are very few places in the urinary tract we can’t access. When using flexible ureteroscopy plus laser technology, almost all of the urinary tract is accessible and treatment is possible and practical."
"A patient can present with a significant problem and pain, be treated and be back at home in his own bed that evening," Dr. Riemenschneider says. "We can respond very quickly to make these things happen. This is also a great marketing technique for your practice and center."
One challenge a surgery center will face is that fiber-optic instrumentation is fragile and it is essential to educate those who handle the instruments. For example, ureterscopes used in the upper urinary tract can cost around $15,000 and probably have a case life of 40 cases, Dr. Riemenschneider says.
"At the same time, the reimbursement is such that if you use them carefully, you can have a nice bottom-line profit," he notes.
• Extracorporeal shockwave lithotripsy — "While it’s not new technology, the Medicare Modernization Act (MMA) opened the door for ASCs to consider investing in this equipment," Dr. Riemenschneider says. This non-invasive technology is based on electrically generated shockwaves that are transmitted percutaneously through the body to treat a stone in the kidney or ureter. It has been in use for years in hospitals.
"It’s more available now than it has been in the past. In the commercial environment, you can make a very nice return on the application of lithotripsy in the surgery center," he says. Patients can often pass the stone fragments and go back to work a day or so after this treatment is performed.
While the equipment is expensive, it is not unreasonable for a group of urologists to invest in it.
"There are lithotripsy partnerships involving groups of urologists who have banded together to buy this million-dollar type of equipment and placed it in a surgery center," he says. "We have had a lithotriptor at the Knightsbridge center for two and a half years. The technology has become smaller, mobile and more capable. A surgery center is an ideal place for a lithotripter and ureteroscope."
• Artificial urinary sphincter — This can be implanted in the ASC, Dr. Riemenschneider says. "It takes an interested support staff and careful management of costs and reimbursement. The MMA has cleared the way for the Medicare patients and opened the opportunity for commercial patients, however, the carve-outs have to be negotiated."
5. Online scheduling.
The use of an online scheduling resource has helped improve the efficiency of the Knightsbridge Surgery Center, Dr. Riemenschneider says.
"It allows the office schedulers to see what is available in a very timely fashion. However, it still gives the center control over its scheduling process. It makes it possible to do many cases very efficiently on relatively short notice; it makes apparent the OR time that would not otherwise be used such as when cases are unexpectedly cancelled or blocks are not filled. It has made taking care of urgent cases, such as the painful stone case, possible."
Online scheduling has allowed the offices of physicians who use Knightsbridge to see the availability
of ORs and resources, such as the C-Arm, even after-hours, so that many patients can be put on the ASC’s schedule very quickly.
"It’s been very effective in helping Knightsbridge grow, even attracting patients experiencing stone pain from hospital waiting rooms," Dr. Riemenschneider says.
6. Diversify services.
While it may prove to be a difficult venture, Dr. Mobley believes a diversity of services offered is an asset to a surgery center.
"The way fee structures change from specialty to specialty, we would not want to be a surgery center that only practiced urology," he says. "We have expanded and have a group of ophthalmologists that practice here as well."
Spring Park was approached by a group of ophthalmologists who would not be able to secure a certificate of need to build their own center. The urology group welcomed the new investors and it has worked out very well for the ASC.
"They are a very profitable portion of it," Dr. Mobley says.
In fact, the urologists and ophthalmologists have expanded beyond what their existing ORs can handle, so the center is considering physical expansion. The challenge facing the center is that it has determined an addition of one and half ORs is all that is needed to handle the overflow from current ORs. Unfortunately, it is not possible to build half of an OR, so the ownership is looking to recruit some general surgeons to fill the available space.
"If you have to build two ORs, it makes sense to get a group of general surgeons in there to fill that other half. It would be a lot easier to make this (expansion) investment. They won’t be as profitable as the ophthalmologists, but given their volume it does offer some additional diversity," Dr. Mobley says. "I think diversification within the group spreads out the risk and we’re looking at appropriate areas that are still profitable to get into."
Contact Rob Kurtz at rob@beckersasc.com.