Spine surgery is increasingly moving into outpatient ambulatory surgery centers, which operate on a highly efficient and cost-effective basis. However, with regulatory changes and downward pressure on reimbursements, ASCs may need to dig deeper in cost-cutting measures.
"Every year more minimally invasive surgeries are being performed in the ASC instead of the hospital, and that will help reduce the cost," says Douglas Won, MD, director and founder of Minimally Invasive SpineCARE, based in Irving, Texas. "It's more expensive to operate in a hospital than the ASC. The nationwide healthcare costs related to spine surgery will come down, and I think we will see this become more of a trend in the future."
Here are six ways for ASCs to slash costs on spinal procedures.
1. Engage surgeon partners. Ambulatory surgery center administrators must engage partners and investors in the surgery center on cost-cutting efforts. This means going further than just examining the numbers and implementing new rules; the surgeons must be part of that process.
"Administrators are trying to make it enticing for surgeons by accommodating their schedules and giving them the materials they want so they'll operate at the center. However, that won't really help with costs and overhead for the facility. It's not cost-effective for the ASC or the healthcare system," says Dr. Won.
Call a meeting with all the surgeons — investors and non-investors — to help them really understand what makes the center profitable. From there, you can focus on areas with the most opportunity for cost reduction.
"They have to understand and they have to be involved," says Dr. Won. "If you just demand or dictate to the surgeons, they won't come back to the center. Engage the physicians and help them understand where you are coming from. If they are partners, they will want the ASC to be successful and profitable so they can see a return on investment as well."
2. Streamline supplies. One of the quickest ways to decrease supply costs at the surgery center is by streamlining the implants. Work with the surgeons to consolidate supplies and choose one company to purchase from.
"If the surgeons are in line with the ASC and can work together to select specific implant companies or suppliers and decide what disposable supplies to utilize, I think the surgery center can negotiate better with vendors," says Dr. Won. "They have more purchasing power with implant companies, and where available they can purchase implants at a wholesale price."
ASC administrators can also renegotiate shipping and handling prices for supplies and drugs. Finally, bring anesthesiologists into the discussion as well to lower costs on the drugs they use. "Utilize generic products to help reduce the cost for the ASC," says Dr. Won.
3. Use refurbished supplies. In addition to cutting down on disposables, surgery centers should consider opportunities to re-sterilize their supplies. Refurbished equipment and instrumentation is available from several companies — including some of the biggest orthopedics and spine suppliers — and can make an impact on the bottom line.
"Consider using refurbished equipment because it can create a significant cost savings," says Dr. Won. "If you engage the surgeons and help them understand how these things can make the center more profitable and lower healthcare costs, that makes a big difference."
However make sure all providers are comfortable with the quality of refurbished and re-sterilized equipment before making the full switch.
4. Talk with surgeons about business. Most spine surgeons have never taken a business class and may need training to think like a savvy business partner.
"Informing surgeons about best business practices can be very helpful," says Dr. Won. "Bring them all into a room and give them an idea of the big picture of the surgery center and where the costs are involved. Make sure the surgeons feel invested as true partners and once they are more involved, they are likely to assist administrators in cost-cutting initiatives."
The initial meeting about cost cutting may take a few hours to bring everyone up to speed, but after that administrative duties and check-ins shouldn't take more than a few hours per month.
"Once they are engaged in the ASC, they want to know about the health of their business," says Dr. Won. "This is something surgeons want to be involved in."
5. Arrange physician-to-physician conversations for outliers. Hopefully all surgeons will be onboard with cost-cutting initiatives from the beginning, but if one or two are resisting change then whole program could fail. Coordinate a meeting between the ASC's medical director or senior physician and the outliers so they can discuss their issues at the same level.
"If a surgeon is not cooperative, first you need to have him sit down for a one-on-one discussion with the surgery center's medical director because it's always easier when physicians speak to other physicians with the support of the administrator," says Dr. Won. "Reason with them and give them proof on how they need to assist the ASC."
This may be particularly challenging with non-investors because they don't have the same financial incentives to maintain a profitable ASC. However, instead of relaxing on cost-cutting initiatives, the administrator can work harder to accommodate them by providing high quality service to their patients and make their experience as surgeons better.
"Even with the non-investors, we are going to do due diligence on what implants they use and what their convenient hours are," says Dr. Won. "We'll ask them to schedule cases at a certain time and help us with negotiating prices with their vendors because physicians have a lot of influence over implant companies. If there is something they want to use, the ASC can negotiate those contracts, but it's easier if the surgeon is involved."
6. Don't bring in unprofitable cases. Profitability at the surgery center depends on spending resources wisely and performing cases where costs are lower than overall payment for services rendered. As a result, advise surgeons to perform unprofitable cases at the hospital instead of the ASC.
"For certain types of products we shared our costs per case with the surgeons and showed them we were losing money on those cases," says Dr. Won. "The physicians had no idea — they thought just bringing cases into the ASC was making it profitable."
Another important aspect of profitability is case scheduling. While it may be convenient for surgeons to obtain block time or schedule last minute cases at the ASC, it may not always make the most economic sense when running a business.
"Sometimes they want to schedule cases in late afternoon on Mondays or Tuesdays when all our other cases are in the mornings," says Dr. Won. "When this happens, the full team must be available all the way through the afternoon, which increases staffing costs. Staffing is a significant cost to the ASC, so we need the surgeons to understand how to schedule so it's convenient and cost-effective."
If all cases are finished in the morning one day, the staff can go home early. On the other hand, if there is a day when only a few cases are scheduled — such as on Fridays — the ASC can shut down one of the operating bays to save overhead costs.
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10 Ways to Negotiate Better Rates for Orthopedics Cases in ASCs