Outpatient spine surgery is predicted to grow 300 percent between 2005 and 2015, according to Chris Bishop, partner and senior vice president of acquisitions for Blue Chip Surgical Center Partners. This growth is driven in large part due to improvement in technology, smaller incisions and improvement in postoperative pain control, and makes spine a terrific fit for ambulatory surgery centers.
"If they're not currently talking to spine surgeons at this time about investing in an ASC, they really should be," he says.
Here are five steps ASCs should take to add and develop spine as a profitable specialty.
1. Understand spine to recruit effectively. Surgeons practicing specialties traditionally found today in ASCs have most likely been recruited by multiple facilities during their career, which makes it difficult to formulate an enticing recruiting strategy for them. "What you're doing is hoping to find, for example, young ENTs who are new to the market or potentially an ENT practice that is backing out from a center they are not happy in," says Mr. Bishop. This does not hold true for spine. "An advantage to recruiting spine is most spine surgeons still are not involved or haven't yet invested in ASCs."
There are several important things Mr. Bishop says ASCs should know about spine surgeons, which encompasses both orthopedic spine as well as neurosurgical spine surgeons. "They have slightly different training programs but what happening is there's now quite a bit of overlap," he says. "It used to be that an orthopedic surgeon would train to be an orthopedist and then specialize in spine, which meant that when he started his spine practice, he would potentially still do some orthopedics. Neurosurgeons began by really focusing a lot on the brain and the upper part of the spine but have now shifted down. So you have neurosurgeons with a brain-down approach and orthopedists have become a bottom-up approach."
While these two groups of surgeons have sometimes struggled to work together, Mr. Bishop says a melding between them is occurring in ASCs as they begin to understand the benefits of collaborating as investment partners. The groups are finding that their techniques are more similar than they realize and they've become more comfortable agreeing upon the same equipment needs, he says, which further enhances the appeal of working together in an ASC.
Spine and pain can also make a solid pairing, Mr. Bishop says. Since spine surgeons see many patients who need epidural injections, unless their practices have associated physiatrists or pain fellowship-trained anesthesiologists that can perform these injections, the spine surgeons will refer these procedures outside of their practice. An ASC has the opportunity to potentially capture these cases.
"When you're successful recruiting spine surgeons, you often will also have some success recruiting pain physicians to join your group as well because it's a nice logical fit," he says. "Because of kickback laws, you have to have a good healthcare attorney counseling you before proceeding [with these arrangements], but our experience has been those two specialties do a lot of cross-referring and it's a logical fit for them to invest in an ASC together."
One more important thing to know about spine surgeons is the number of cases they will typically perform in an ASC. Mr. Bishop says it is not uncommon to hear expectations of 150-200 cases annually from a single surgeon, but he says experience has shown that number is more like 75-80 outpatient cases a year from a good, busy surgeon. "It's obviously beneficial to recruit a neurosurgical group with four doctors in it or an orthopedic spine group with a few doctors in it," he says.
Even if your ASC is already performing orthopedics, and has a C-arm and some of the basic hand instruments, you can still expect to invest a few hundred thousand dollars to add spine. Therefore, it is critical to determine if you can add enough surgeons and generate the case volume needed to support such an investment.
2. Capture "inside" cases. Mr. Bishop says it's not uncommon to find surgeon-partners who do not bring all of their acceptable cases to an ASC, and that can hold true to spine as well. Finding ways to capture these cases is usually much easier than recruiting a new physician. He says ASCs should expect their physicians to bring at least 80-percent of their cases to the surgery center. If that's not occurring, the surgery center should work to identify the reasons why and bring that number higher.
Some ways to do such, according to Mr. Bishop, include the following:
- Shift highly committed surgeons to the afternoon. If some surgeons aren't bringing their cases because they cannot perform procedures in the morning (typically the most sought after blocks), talk to your most committed surgeon-partners, explain the situation and see if you can move some of their current blocks to afternoons to free up earlier blocks.
- Invest in equipment. If a surgeon isn't bringing cases to the ASC because the facility lacks the technology to perform the procedures, consider investing in the equipment if it makes financial sense.
- Audit physician's practices book. In the operating agreements Blue Chip has with its ASC partners, a surgery center's governing board can approve Blue Chip to audit every physician-partner's practice's books to identify cases potentially missed for the ASC, Mr. Bishop says. An audit might reveal trends that can be fixed, such as a practice's scheduler not sending cases covered by a particular payor to the ASC because he or she thought the surgery center did not have a contract with the payor.
- Stay abreast of rules changes. Changes in Medicare rules can present opportunities for ASCs to capture more cases from their current physicians. For example, while not a spine procedure, unicompartmental knee replacement is now a Medicare-approved procedure and one that more ASCs are performing. By stating abreast of changes to this list, an ASC might be able to add cases it would not have performed in the past.
3. Leverage spine to negotiate better contracts. Since spine is relatively new to ASCs, payors are still trying to determine whether and how to cover the procedures. Surgery centers need to present a strong case for why payors should cover the procedures and reimburse appropriately for them.
"If I'm taking spine cases and I'm shifting them from a hospital setting to an ASC setting, there are huge savings to be had because these are high acuity cases," Mr. Bishop says. "It's a great win-win for both the insurance company and the ASC, and that's the beauty of leveraging spine from an inpatient setting to outpatient." ASCs will want to make sure payors will create carve outs for implants or reimburse higher for the procedure.
If a payor isn't offering acceptable rates, Mr. Bishop says an ASC can consider using an out-of-network strategy for the short term (although this is becoming harder to do as payors continue to cut back on reimbursing for OON). The surgery center should meet with the payor quarterly and note what the ASC was reimbursed for the procedure under OON rates, then make a case for bringing the cases in-network at the OON rate minus a certain percentage that keeps the procedures profitable but still yields savings for the payor. "Tell them you want to bring all of your patients in but you're only willing to do that in a fair market rate," he says.
If you lack a corporate partner or do not have experience negotiating these types of contracts, Mr. Bishop says you should seriously consider outsourcing. "Do it for the same reason I don't do my own taxes — [accountants] find legal deductions I wouldn't necessarily find," he says. "I look at managed care negotiations the same way. Find someone and pay them." It may cost you up-front, but a well-negotiated contract should easily cover those expenses.
4. Compress schedule to reduce costs. Mr. Bishop says some of the most profitable ASCs he has been involved with operated two or three days a week, performing all procedures on those days, and were closed the other days of the week. Surgeons usually initially resist the idea of closing the ASC for a day or two, but doing so can be one of the most effective ways to reduce costs. "Once they understand why, it becomes a pretty valuable tool," he says. "It obviously saves on staffing costs … and has a positive impact on their distribution."
It can also increase the satisfaction of your anesthesia provider. "Oftentimes our ASCs have anesthesia providers that are frustrated they're staffing the center [on slow days]," Mr. Bishop says. By compressing the schedule, it will free up your anesthesia provider to work at other facilities, therefore increasing anesthesia profitability and likely making your anesthesiologists a more satisfied and productive provider for your center.
There is the risk when you compress your schedule of losing a staff member who insists on working a full week and getting paid for it. Mr. Bishop says most staff members usually come to accept the change when the reasoning for it is explained. If you are actively recruiting physicians, you may be able to reopen the ASC on those closed days if you add enough cases to make doing so worthwhile.
5. Case costing. The more case costing an ASC can do, the better, says Mr. Bishop. "It's really an educational tool for your physician partner and I highly recommend it."
Case costing is valuable for several reasons, including standardizing equipment. By sharing cost information about similar procedures performed by different surgeons, and identifying how a certain piece of equipment can increase the cost of a case over using another device, you can bring about the competitive nature of physicians and encourage the surgeon using the more expensive device to standardize to a single vendor, he says.
Case costing can also be used to negotiate lower rates with a manufacturer in instances when a physician is resisting changing devices to a lower-cost product. If you can demonstrate that a particular device is significantly more expensive than a product that can accomplish the same task, you can bring this data to the manufacturer of the more expensive device and explain that the cost difference will force you to move away from using that particular product unless the manufacturer will come down on cost, Mr. Bishop says. "When you arm physicians with this kind of information, the next logical step is to negotiate better rates," he says.
By providing your physicians with case cost data, you may even encourage them to improve their performance. "I've seen Dr. X scrub in with Dr. Y to find out what steps he has eliminated or combined to get the same great surgical outcome with less OR time," Mr. Bishop says. "[Dr. X] wanted to know what [Dr. Y] was doing to allow him to do it faster. Eventually they start to share best practices."
Learn more about Blue Chip Surgical Center Partners.