13 Reimbursement and Business Concepts You Should Know About GI in ASCs

GI and endoscopy continue to be profitable specialties for ASCs in spite of some declines in reimbursement. Here are 13 important reimbursement, business and physician concepts you should know for your ASC.

Reimbursement
1. Reimbursement for GI centers will continue to decrease. As has been the case for the last few years, reimbursements for GI procedures have decreased across the board. This has hit ASCs especially hard as surgery centers often receive reimbursement at a percentage of hospital outpatient departments.

“We anticipate that CMS will continue to pressure facility fees in a downward fashion,” says Barry Tanner, president and CEO of Physicians Endoscopy. “It is at least conceivable that freestanding ASCs could get rates at 50 percent of HOPD rates in the next four to five years.” 

With CMS setting lower rates, a problematic trend could be seen across private insurers and third-party payors as their rates are often set relative to what CMS pays for Medicare-covered procedures. As a result, gastroenterologists and GI-driven ASCs must continue to run their centers efficiently and economically.

“Unfortunately, reimbursements are likely to steadily decline over the next few years,” says Stephen Sears, MD, a gastroenterologist in Loveland, Colo. “This effect will cause ASCs to become more efficient or to stop operating. This may also drive more cases into the hospital setting. By doing so the procedural cost will double and in the end healthcare costs will increase. To remain profitable, the GI physician must focus on delivering quality care in the most efficient manner. That can be done with better bowel preps, training, state of the art technology and assessing quality measures.”

One consequence of decreasing GI reimbursements may be a reduction in the number of Medicare patients a GI ASC sees in a year, according to Fernando Bermudez, MD, medical director, and Beth Miller, administrator, of Eastside Endoscopy Center in Saint Clair Shores, Mich.

“Unless Congress changes the existing rules, Medicare will reduce the professional fees for procedures by 20 percent in 2010,” Dr. Bermudez says. “This won’t directly affect ASCs, but it may affect the willingness of gastroenterologists to perform endoscopies on Medicare patients and to do procedures on Medicare patients in the ASC setting.” 

Irving Pike, MD, president of Gastroenterology Consultants in Virginia Beach, Va., has seen some ways in which physicians at ASCs have tried to combat declines in reimbursement. “Several ambulatory endoscopy centers have reported to me that they have recently negotiated an increased fee schedule from non-government insurance companies. In the past when Medicare payments to facilities were decreased, insurance companies did not follow with similar cuts, but ASC fee schedules remain substantially below HOPD fee schedules. In my opinion, insurance companies do not want to discourage physicians performing endoscopy in ASCs. I think at some point it may be plausible for ASCs to move more CMS cases to the hospital and fill the slots opened at the ASC with patients covered by non-government insured patients,” he says.

2. Gaining access to HOPD rates alone is not reason enough to partner with a hospital. Although partnering with a hospital in order to gain access to outpatient department reimbursement rates can be a potentially attractive strategy, GI-driven ASCs should be aware that they may not receive access to full HOPD rates, although they may be better than current reimbursements. Since many hospitals want to own 100 percent of the GI center, physicians may be asked to give up your ownership and access to future distributions.

“HOPD rates can increase GI center facility revenue 35-40 percent for non-Medicare patients,” says Jon Vick, president of ASCs Inc.. 

“If the GI physicians are going to be owners, then the expectation of getting HOPD rates is misplaced,” Mr. Tanner says. “Better rates may be possible, but HOPD rates are highly unlikely.”

In some cases the hospital and an ASC management development company may form a joint venture that then purchases a 51 percent interest in the center, according to Mr. Vick. “I suggest partnering with a management company first and letting the company negotiate with the hospital as the hospital partner will want to control the deal,” he says. “The management company would then work on the side of the physicians and ensure that the hospital doesn’t ’steamroll’ the physicians into accepting less than the center is worth. Additionally, with the ASC management company managing the center it will retain it efficiencies and economies.” 

It is important to remember when considering this arrangement that even if a physician-owned ASC partners with a hospital, it is still a freestanding ASC and it does not become an HOPD nor does it share in the HOPD reimbursement rates, according to Rick Jacques, president and CEO of Covenant Surgical Partners. “Sometimes, however, a hospital may have such good contracts with third-party payors that a partnership with the hospital would increase the reimbursement rates with payors other than Medicare,” he says.

3. Declining pay may force GI physicians to seek new revenue opportunities. The proposed 21.5 percent cut in the physician fee schedule for specialists, including gastroenterologists, coupled with decreasing reimbursements for GI procedures, may encourage GI physicians to consider additional revenue streams.

“We believe that professional fees will continue to be pressured downward, and GI physicians will be forced to resign themselves to reduced income or to capture a portion of the technical fees,” Mr. Tanner says. “Those GI physicians that have not yet captured a portion of the technical fees through ASC ownership are increasingly under pressure to do so by forming coalitions, mergers with larger groups, etc.” 

General business concerns
1. Good case volume depends on the market. While there is no definitive average number of cases GI centers should see to remain profitable, most GI ASCs have a good referral base from which they can pull patients. However, there are some figures to keep in mind to help you determine if your center is on target.

“The key is to maximize utilization of each available procedure room,” Mr. Tanner says. “There is an average of 251 operating days per year, and full utilization for a GI procedure room operating eight hours each day would be approximately 16 cases per day (30 minute time slots per case) or roughly 4,016 annual cases. Sixteen cases per day is rarely achieved due to cancellations, no shows, etc. However aiming for 80 percent utilization is certainly reasonable (around 3,200 cases annually). Achieving that sort of utilization per room, and assuming that the ASC is not overbuilt, should result in a successful GI ASC.” 

Dr. Sears notes that physicians at the ASC where he practices average 12 procedures per day, or one every 30 minutes.

Mr. Jacques agrees that around 3,000 annual cases can lead to a successful center. “Most physicians [who use GI ASCs] have well-established practices, and it is very unlikely that those cases will go away. The key is keeping your relationships within the community strong,” he says.

2. Some GI centers have benefited from providing anesthesia. In the past, most GI procedures were performed under conscious sedation, which the gastroenterologist administered prior to the procedure, according to Mr. Jacques. Since the patient was not fully sedated, monitoring by an anesthesiologist was not necessary. However, over the past decade, the trend with GI procedures has moved toward monitored anesthesia, using drugs such as propofol, which must be administered by an anesthesiologist or CRNA. 

“I believe that monitored anesthesia care is fast becoming the standard of care,” Mr. Jacques says. “Patients who are under monitored anesthesia often allow physicians to provide a more successful colonoscopy, because they are more comfortable. Under conscious sedation, although the patient may not remember the procedure, they are still awake and uncomfortable, which may cause them to react and compromise how well the colonoscopy is performed.”

Mr. Jacques notes that centers have three options to keep them in compliance with what states mandate regarding anesthesia administration: 1) the physicians who own the ASC arrange to ‘employ’ an anesthesiologist or anesthetist who provides anesthesia through their private practice, 2) the ASC employs its own anesthesiologist or 3) the ASC contracts with an independent anesthesiology practice. 

However, anesthesia is not covered for many GI procedures, so some gastroenterologists have benefited by directing the administration by propofol. Mr. Tanner cautions that if physicians choose to do this, they must be aware of the regulations in their area regarding anesthesia administration.

Dr. Pike also notes a trend towards anesthesia in GI procedures but cautions that colonoscopies performed while the patient is under propofol have not been indicated for use by many gastroenterology societies. 

“It is true some ASCs have turned to various models of anesthesia as an additional source of revenue,” he says. “I have seen information estimating that currently 40 percent of GI endoscopy is performed with deep sedation involving propofol. One concern I have about this practice is that as the total cost of GI endoscopy increases due to the additional cost of providing anesthesia [and] the payment for both the professional fee for the endoscopy and anesthesia will be cut to control overall cost to insurers. It should be noted that the three GI societies have jointly written a letter indicating the opinion deep sedation with propofol administered by anesthesiologists or CRNAs is not warranted for standard GI endoscopic procedures.”

3. Beware of potential kickback scenarios with contract anesthesia companies. As more GI centers consider providing anesthesia services, they may look to an outside company to assist them with the process. Mr. Jacques warns that some companies may enter into joint ventures with GI centers in ways that “push the envelope” with regard to the law.

“Some companies have been extremely aggressive when approaching gastroenterologists about these joint ventures,” he says. “We’ve seen gastroenterologists approached at a much higher rate over the past 1.5 years. Some scenarios have the company essentially providing kickbacks to the gastroenterologists for the contract to provide anesthesiology services to the center. The government is now looking very hard at these ‘pay for play’ arrangements.” 

Procedures and gastroenterologist issues
1. The number of procedures performed per endoscopy case can lead to lower reimbursements for secondary procedures. According to Mr. Tanner, the typical number of procedures per endoscopy case is 1.10-1.20. Many payors, including Medicare, often reimburse any secondary procedures at a much lower rate, which can affect revenue and efficiency in the ASC.

“The number of procedures per case impacts upon revenue per case because for many payors, the second and third procedures are reimbursed at half and then 25 percent of the first procedure,” Mr. Tanner says. “Therefore, valuable procedure room time is being utilized at an ever decreasing rate. If the facility is essentially fully utilized, the impact is not as strong; however, if an ASC is struggling with utilization, then it may not be profitable to perform these secondary procedures at one time.” 

2. Payment data for some of the most common procedures in GI ASCs. Here are 2008 CMS payment data for some of the most commonly performed GI procedures in ASCs.

Upper stomach-intestine scope for biopsy (CPT 43239)

• average submitted charge: $1,451
• average allowed charge $408
• average payment: $321

Scope of colon for diagnosis (CPT 45378)

• average submitted charge: $1,502
• average allowed charge: $422
• average payment: $330

Scope of colon with biopsy (CPT 45380)

• average submitted charge: $1,549
• average allowed charge: $406
• average payment: $318

3. With the number of certified gastroenterologists decreasing, it is important to focus on recruiting. As with many medical professionals, the number of practicing gastroenterologists is decreasing as physicians retire or leave practice, and the number of GI physicians coming out of medical school is not enough to sustain the rate of departing physicians. A recent New York Times report indicated an additional 1,050 GI physicians is needed by 2020 to meet the demand, with current employment around 10,390 as reported in the Times. According to Mr. Tanner, around 20 percent (2,000-2,500) of practicing GI physicians are at or close to retirement, and only 300 GI fellows graduate each year. Thus, competition for new, talented GI physicians is high.

“Recruiting new physicians is difficult especially because there is such a demand for their services,” Mr. Tanner says. “They can literally pick a place on the map where they want to work and go there with near certainty of getting a good job. This makes it more difficult for smaller, more out of the mainstream communities to find and recruit GI physicians. Many physicians graduating today are seeking a better quality of life, and, for them, the employment model is a better option.”

Although the outlook for recruiting new physicians may seem grim, Mr. Tanner notes some new physicians may be looking for options outside of the employment model. “There are still many entrepreneurial physicians not seeking employment, but they are looking for ownership in an ASC knowing that the ASC will be responsible for a significant portion of their total medical practice income,” he says.

4. Single-specialty GI ASCs have a lot to offer gastroenterologists. Although some concern has been raised by the trend of many specialists and practices seeking employment with local hospitals, single-specialty GI ASCs offer gastroenterologists an additional source of income and autonomy that may not be available through the hospital. As a result, ASCs should demonstrate the potential benefits of ASC ownership to physicians looking to partner with the center.

“Many GI physicians who have ownership in a single-specialty ASC earn a substantial amount of ancillary income from their ASC ownership, sometimes as much as they earn from their professional fees,” Mr. Jacques says. “A single-specialty ASC is an excellent recruiting tool for practices, because it gives the practice the ability to offer new physicians ownership in the center. A hospital trying to recruit physicians to their [facility] might not be able to offer the new physician the same ancillary income potential an independently-owned, single-specialty ASC can. Typically, once a hospital buys a physician practice and ASC, the physician income decreases substantially.” 

Dr. Sears notes that some GI specialists may turn to the hospital to avoid feeling the financial hit of reduced reimbursements, but that reason alone is not enough for all GI physicians to turn away from private practice and ASCs. “I feel that remaining as a private practitioner, I have more to offer than as a salaried hospital employee,” he says. “In order to keep the edge on the hospitals, we will need to focus on an equivalent or better product for the same cost. Patients will be able to see what procedures cost at different facilities and in the future may refuse to be treated in the hospital setting due to the additional charges.”

5. Although GI physicians aren’t running to the hospitals, primary care physicians are. Primary care physicians, who refer cases to gastroenterologists, are increasingly employed by hospitals. As a result, GI centers and their physicians should develop a positive relationship with hospitals.

“We have seen a significant number of PCPs employed by the hospitals,” says Dr. Bermudez. “This gives the hospitals significant leverage in the referral pattern to specialists, and it is very important that specialists, including gastroenterologists, maintain a good relationship with the hospital and work more like a partner than a competitor.”

6. Surgery centers should look to grow their referral base. When it comes to recruiting new physicians to your surgery center, looking within the local community still remains one of the best tactics. According to Mr. Jacques, there are probably unaffiliated physicians nearby who would jump at the opportunity to invest and perform cases at a single-specialty center, if approached properly and given a fair proposal.

“In order to grow, you also need to expand your referral base,” Mr. Jacques says. “Look into the areas of the community that are not getting screened for colon cancer. The same tried and true techniques that have worked in building a physician’s practice are still successful. Make sure you are consistently making call backs and follow-ups to local referring physicians.”

7. Salary information for gastroenterologists. In respect to other surgical and medical specialties, salaries for gastroenterologists have increased at an average rate. For example, the median salary in 2008 was $389,385, up 3.93 percent from 2007, compared with a 6.58 percent increase for ophthalmologists and a 5.80 percent for orthopedic surgeons over the same period, according to data from the American Medical Group Association’s 2009 Medical Group Compensation and Financial Survey. The average starting salary for GI physicians was $275,000, according to the same report.

Here are regional median salaries for gastroenterologists, according to the AMGA:

• East — $401,615
• West — $385,611
• South — $385,542
• North — $394,417

Liquidity Analysis for Surgery Centers Based on Facility Size

Here are the median amounts of cash, net accounts receivable and working capital for surgery centers and their relative percentages of total assets, based on the number of operating rooms at a facility, according to VMG Health’s2009 Intellimarker.

1. Cash

• All facilities — $511,000
• 1-2 ORs — $346,000
• 3-4 ORs — $386,000
• More than 4 ORs — $731,000

2. Cash as a percent of total assets

• All facilities — 15.8 percent
• 1-2 ORs — 13.5 percent
• 3-4 ORs — 163 percent
• More than 4 ORs — 14.5 percent

3. Net A/R

• All facilities — $653,000
• 1-2 ORs — $649,000
• 3-4 ORs — $570,000
• More than 4 ORs — $929,000

4. Net A/R as a percent of total assets

• All facilities — 21.1 percent
• 1-2 ORs — 21.4 percent
• 3-4 ORs — 23.3 percent
• More than 4 ORs — 17.1 percent

5. Working capital

• All facilities — $900,000
• 1-2 ORs — $802,000
• 3-4 ORs — $800,000
• More than 4 ORs — $1.392 million

6. Working capital as a percent of net revenue

• All facilities — 13.5 percent
• 1-2 ORs — 14.5 percent
• 3-4 ORs — 13.1 percent
• More than 4 ORs — 13.6 percent

To receive a free copy of VMG Health’s 2009 Intellimarker, click here

Know Your APCs for ASCs

APCs for outpatient procedures performed in ambulatory surgery centers (ASCs) are part of an averaging and bundling system using CPT® procedure, HCPCS Level II and revenue codes submitted to Medicare on CMS=1500 forms, with UB-04 claim forms used by ASCs to file claims to most other payors. The APC system utilizes “packages” of CPT® and HCPCS Level II codes, based on clinical and facility resources and establishes payment rates for each APC grouping. This means the physical and human resources needed to provide the service and the geographic costs are bundled together using annually adjusted formulae, much as in hospital inpatient billing. Certain medications, services, and durable medical equipment are considered “pass through” and can be reported separately from an APC revenue code.

APCs are assigned based on the CPT® and HCPCS Level II codes reported by the provider for each service. Usually, more than one code will fall into an APC category. More than one CPT® and HCPCS Level II codes can be reported if needed.

But not all CPT® and HCPCS Level II codes qualify. They are all assigned a status indicator denoting the code’s relation to APCs — whether they qualify and how. The ASC must be careful to avoid reporting a code denoted as not reimbursable for ASC services unless a modifier and documentation support it. As a result, a limited group of modifiers are recommended as well. The status indicators can be found on CMS files including the CPT and HCPCS Level II codes, and most commercially published codebooks include them as icons.

Examples of the indicators include the following:

• A: Services furnished to a hospital outpatient that are paid under a fee schedule or payment system other than OPPS. This means fiscal intermediaries are reimbursing this code via a fee schedule not under APCs.
• C: Inpatient procedures. This is the kiss of death for an ASC claim’s success. This procedure is expected to be done in a hospital with the appropriate resources and an overnight stays.
• N: Items and services packaged into APC rates. This is paid under the APC OPPS and payment is packaged into payment for other services; there is no separate payment for this.

Restricted CPT® modifiers include:

• 50: Used when the exact same procedure is done on the exact body part of the opposite side. Also known as “bilateral”. Some insurance companies prefer the biller use the CPT® code twice instead. Ex: 10220-RT, 10200-LT. Check with carrier on which to use. Payment should be 150 percent.
• 51: Indicates multiple procedures were performed. The 51 appends to the second CPT® code and all CPT® codes thereafter. Medicare does not recognize modifier 51 for ASC services as this modifier is for use on physician claims only.
• 52: Indicates reduced services. Use when procedure is not completed as described in the official CPT® description.
• 73: Used when a procedure is discontinued before the anesthesia administration. Patient must be in the room where the procedure would have taken place. Payable at 50 percent of the Medicare allowable rate. Typically seen when patient’s blood pressure arises to a dangerous rate.
• 74: Used when a procedure is discontinued after the anesthesia administration. Patient must be in the room where the procedure would have taken place. Payable at 100 percent of rate. Typically seen when patient’s blood pressure arises to a dangerous rate.
• 78: Used when the patient has to return to the operating room during the global period for a procedure related to the first procedure, such as control of bleeding following a colonoscopy or sinus procedure.
• 79: Unrelated procedure or service by the same physician during the postoperative period. (Same day for an ASC setting.)

Rhonda Buckholtz, CPC, CPC-I, CGSC, COBGC, CPEDC, CENTC, is vice president of business and member development for the American Academy of Professional Coders (AAPC).

Average Surgery Center Debt/Leverage Ratios for ASCs With More Than 50% Orthopedics

Here are the average and median debts and leverage ratios for surgery centers that perform more than 50 percent of the case volume in orthopedics, according to VMG Health’s 2009 Intellimarker.

1. Total debt (all interest-bearing debt outstanding)

• Average — $1.50 million
• Median — $1.17 million

2. Net debt (total debt less cash on balance sheet)

• Average — $1.40 million
• Median — $1.44 million

3. Total debt/assets*

• Average — 41.9 percent
• Median — 35.4 percent

4. Total debt/equity

• Average — 150.8 percent
• Median — 67.3 percent

5. Total debt/EBIDTA

• Average —1.56x
• Median — 0.60x

6. Net debt/assets*

• Average — 41.2 percent
• Median — 50.6 percent

7. Net debt/equity

• Average — 177.8 percent
• Median — 184.9 percent

8. Net debt/EBIDTA

• Average — 2.05x
• Median — 1.01x

*Ratios and percentages are calculated as total/net debt divided by total assets, equity or EBIDTA.

To receive a free copy of VMG Health’s 2009 Intellimarker, click here.

National Surgical Hospitals Opens New Surgical Hospital in Corpus Christi, Texas

Chicago-based National Surgical Hospitals, an owner, operator and developer of surgical hospitals and surgery centers in partnership with local physicians, has opened its newest surgical hospital, South Texas Surgical Hospital, in Corpus Christi, Texas, according to an NSH news release.

The 63,000-square-foot surgical hospital, adjacent to the Company’s Coastal Bend Surgery Center, is equipped with five operating rooms and 33 inpatient beds, according to the release. Surgeons will provide a range multi-specialty surgical care, including orthopedics, general surgery, gynecology, otolaryngology and other surgical specialties.

NSH will operate the new hospital in partnership with a group of 55 area physicians. This is the company’s fifteenth surgical hospital and its fifth surgical hospital in Texas.

“Like all of our surgical hospitals, South Texas offers a specialized approach to quality healthcare, playing an important role in the continuum of surgical care,” John G. Rex-Waller, chairman, president and CEO of NSH, said in the release. “We think our ability to offer expanded healthcare choices to consumers in South Texas will bring greater cost efficiency and convenience to the area while creating increased practice efficiencies for the surgeons who utilize our facility.”

Read the release on South Texas Surgical Hospital.

Learn more about National Surgical Hospitals.

Innovation & Excellence Intersect at Renaissance Surgical Arts of Newport Harbor

Even before the Centers for Medicare and Medicaid Services (CMS) issued its new conditions for coverage relating to improved infection control practices in ambulatory surgery centers (ASCs), Bruce Wallace and Anthony Pings knew that infection prevention would be the cornerstone of their latest development project — a world-class multi-specialty ASC that would be destined to set the bar enormously high in terms of innovation, patient care, and surgeon and staff satisfaction.

Wallace, the CEO of Congero Development, architect Ping, the CEO of Anthony C. Pings and Associates, and Kathy Just, vice president of Congero and interior designer on the project were the driving forces behind Renaissance Surgical Arts of Newport Harbor, LLC, designed to be a preeminent medical facility led by notable surgical specialists working with cutting-edge operating room technologies within an innovation-rich, patient-focused, healing environment.

“This facility was truly designed around exceptional patient outcomes,” Wallace says, “and much of that has to do with integration of some newer equipment and emerging technologies that were not readily available before in the U.S. It also more fully addresses the needs of healthcare providers, as we have identified the challenges that their lifestyles incur and we have provided solutions for them.” In addition, Congero desired to bring a center of excellence to Orange County, California, as well as a project that was scalable to emerging technologies as they became available, with minimum invasiveness to the operations overall.

This 360-degree approach starts with the patient. “I conduct a lot of direct research with patients and physicians to determine what makes them happy,” Pings says. “We don’t ask patients what they want; instead, we ask them to describe their experiences and that’s when they are going to tell you what works and what doesn’t. Nobody wants to have surgery, so when we work on a project like this, we want to provide patients with the physical and emotional support they need.” To that end, Just worked to ensure that Renaissance was designed as a healing environment, with a sophisticated and rich décor that promotes pre-operative calm and facilitates post-operative recovery. To maintain normothermia and ward off post-surgical complications, patients are provided with forced-air heated garments and blankets, as well as IV solution warmers.

Pings adds, “We start a project like this from a patient-focused standpoint and blend that with needs of the clinical staff to create solutions that supports both parties in the best possible way.” For example, the center places a high priority on patient privacy; patient entrances and exits are separated, and private spaces have been created all throughout the pre- and post-surgical experience. “We believe in giving patients separate waiting areas,” Wallace says. “Because we are multi-specialty facility we don’t want patients sitting just anywhere — we don’t want a woman who has had a mastectomy sitting next to a woman having augmentation.” Wallace continues, “We accommodate patients in a tremendous number of ways, including doing what we can to make them feel welcome, lower their anxiety and make them comfortable. I want them to feel as though the staff and center was there for each of them personally.”

From the time the patient is prepped for surgery until recovery, aseptic technique is an omnipresent concern. “Infection control considerations were integrated into every decision we made,” Wallace affirms. That starts with the replacement of traditional gurneys with operating tables that first function as patient transport systems and then transfer – along with the patient – to a fixed base in the OR. Not only does this system – the first of its kind in the U.S. — save as much as 40 minutes in transfer time, but it helps eliminate cross-contamination during patient transfer. What’s more, the German-made tabletops by Trumpf can be completely sterilized.

“The tabletop you are on was never shared by another person between being sterilized,” Wallace emphasizes. “A classic place where bacteria transfers is the OR table itself. At other facilities, someone goes in with a squirt bottle between patients and they have 5 minutes to sterilize the table and the fact of the matter is that the table is definitely not sterilized in 5 minutes.”

Recognizing that proper decontamination and sterilization of medical devices and surgical instruments eliminates infections and produces operational cost-savings, the facility features a system that has taken patient and staff safety to the next level. Driven by selective automation, Renaissance’s sterile processing department, supported by Belimed equipment, is able to achieve efficiencies in the way surgical instruments are transported, washed and decontaminated, sterilized, reassembled and contained. Upholding the dedication to stringent infection control practices, instruments are sealed in trays and then pass from a “dirty” room to a “clean” room where they are sterilized and processed further, all in a department that has been designed with the goal of becoming more environmentally responsible in water and energy usage. All instruments have been marked with RFID technology, bar-coded, catalogued and tracked from purchase, and when an instrument approaches a sterilizer, the cycle is automatically set to the individual manufacturer’s care parameters – thus ensuring a longer instrument life and a repeatable sterilization process that ensures uniform processing and meets infection prevention standards. According to Pings, the backbone of the facility is a chamber sterilization system comprised of two discreet, low-intensity, stand-alone sterilization areas located between the operating rooms, and a central, high-intensity processing area in the operating corridor. The combined effect of the chamber system, sterilization process and smart utility use, allows for the elimination of up to eight full-time employees, with processing cut to a fraction of standard times while delivering vastly improved sterility assurance.

“Our system reduces staffing in central sterile (CS) and eliminates a lot of the cross-paths that exist elsewhere,” Pings says. People think if you are six feet away from dirty, you are OK, but those numbers don’t work anymore. Hospital CS departments are essentially one big room with workstations, and even the best-trained staff will violate those boundaries. That’s why the chamber sterilization concept works.”

Contributing to maintaining the line between sterile and unsterile is Congero’s proprietary LED system built into the floor and walls with a laser that resembles a light fixture placed before each terminal end of the OR corridor; this system replaces the traditional red-line tape used to delineate non-sterile areas from sterile areas. The center also features sterile lounges in the sterile corridor for staff to use on surgery days without having to gown out into non-sterile cover-ups to conduct business outside of the OR corridor. Staff can use phones and computers in the area while saving vast amounts of time in gowning out both ways; it adds up to a cost savings of approximately $8 per trip per staff member.

Contributing further to physician convenience is an adjacent, separate entity, the “hot office” area, instead of a conventional medical office building set-up where surgeons can have a place for pre-op and post-op patient consults, a design that extends the full use of the facility to office-based surgery convenience, according to Pings, who notes, “When you provide ways for physicians and staff not to work harder but to work more efficiently, they prefer it, and they are happier people.”

Pings continues, “What I push for the most is an understanding of the different needs of everyone involved at the center, and that includes surgeons. That physician lounge is one way to provide them with the productivity tools they need without having to leave substerile. We wanted to give them the support tools they need within their domain; for example, while they chart they can observe monitors that assist them in real-time tracking of pre-op and post-op patients. Go into the average surgical corridor and you see surgeons sitting on stools trying to have some sort of defendable territory between cases, and that’s neither appropriate nor conducive to surgeon satisfaction.”

The center is powered by a sophisticated IT platform that enables a number of progressive processes such as ultrasonic tracking of patients, staff and physicians for quick-location purposes; biometrics identification for narcotics dispersion; Bluetooth wireless monitoring of patient vitals; advanced telemedicine capabilities; RFID-driven nurse call system and much more. The IT capabilities extend to center management and operations such as inventory control, setting par levels and supplies ordering, plus patient scheduling, patient flow and H&P, and coding and billing, all handled with HIPAA-approved transmittal processes. The center’s eight ORs are equipped with state-of-the-art LCD displays, booms and an audiophile system, as well as CT and MRI in-room imaging. Renaissance is also home to a showroom and telemedicine center of excellence for Olympus Corp., which has installed a digital integration system utilizing rigid and flexible scopes, with one cart handling multiple surgical specialties.

How Renaissance fit into the existing Pacific Medical Plaza building is an achievement in itself, Pings says, since the entire project was a retrofit and where the anchor of the building was the nearly 19,000-square-foot ASC. “We were able to be extremely aggressive in our design in the allotted square footage,” he says. “The original ASC design had elements that were extremely challenging when you realized our space limitations. The design had to be created around the main stairwell in the very center of the structure and we relocated a second stairwell from one side of the building to the other.”

The innovations abound at Renaissance, which required a coordinated process of value engineering driven by the collective experience of the development team to deliver a cutting-edge ASC for very close to the cost of a standard facility. “We knew the challenges related to cost control for an ASC as ambitious as this,” noted Wallace. “However, what we could not have anticipated was trying to accomplish this amid one of the worst economic environments in U.S. history.” The upfront effort will continue to be realized through much lower operating costs thanks to better outcomes, automation and other inherent cost controls. “Cost is an overriding concern at any center but you must remember that upfront costs are ameliorated by cost savings in patient safety and efficiency,” Pings notes.

Key to Renaissance’s success is the partnership between stakeholders, according to Wallace. “This center is a culmination of many years of collaboration with Tony and Kathy as well as the relationship with a cooperative landlord who was of tremendous help in the development process and extremely supportive through the financial crisis. It was also critical to have physicians buy into your vision. We couldn’t have done it without the overwhelming support of the physicians; most of them put their money in, signed on the dotted line and sat back, leaving us to do what we were supposed to do.”

According to Wallace, the center is 70 percent physician owned, with Congero operating as a minority management company. Being a physician-driven facility, the opportunity to do things differently presented itself repeatedly, including how the center was staffed. “We created our own registry and share our staff with other facilities in the area,” Wallace explains. “By doing so we can reduce the labor-related load on the facility; for instance, on slower days with a lower case volume, we can share our staff with other facilities in the area. We believe having people standing around is bad for morale and bad for efficiency’s sake, and this arrangement is better for staff, if they need to take a day to meet personal or family obligations. The registry concept is a better way to accommodate staff who can work the hours they would like to work. And it allows physicians to have a schedule that fits their lives, too. It creates a real team spirit. We also incentivize staff to help increase the efficiency and profitability of the center, linking together their individual success and the success of the center for even better outcomes and operations.”

TeamHealth Acquires Anesthetix Management

Knoxville, Tenn.-based TeamHealth has acquired Palm Beach Gardens, Fla.-based Anesthetix Management, a national provider of comprehensive anesthesiology and pain management service solutions to hospitals and surgery centers in 10 states, according to a TeamHealth news release.

Steven Gottlieb, MD, one of the co-founders of Anesthetix, will serve as CEO of TeamHealth’s anesthesia service line. Anesthetix’s other co-founder, Tushar Ramani, MD, will remain with the organization as president of TeamHealth’s anesthesia service line, according to the release.

“Anesthetix has a reputation for recruiting and retaining high quality physicians and CRNAs. We are pleased to have a group of their caliber join TeamHealth,” Greg Roth, president and CEO of TeamHealth, said in the release. “Our partnership with Anesthetix also demonstrates our commitment to meeting the needs of our hospital clients by providing them with a broader spectrum of services.”

Read the release about TeamHealth’s acquisition of Anesthetix.

EBITDA Margin Analysis for Surgery Centers by Number of Operating Rooms

Here are the average EBITDA margins for surgery centers based on the number of operating rooms at the center, according to VMG Health’s 2009 Intellimarker.

1. Net revenue less than $3 million

• All facilities — 11.3 percent
• 1-2 ORs — 16.5 percent
• 3-4 ORs — 2.5 percent
• More than 4 ORs — 4.9 percent

2. Net revenue $3-$4.9 million

• All facilities — 18.8 percent
• 1-2 ORs — 41.2 percent
• 3-4 ORs — 16.4 percent
• More than 4 ORs — 18.2 percent

3. Net revenue $5-$6.9 million

• All facilities — 33.0 percent
• 1-2 ORs — 43.6 percent
• 3-4 ORs — 32.4 percent
• More than 4 ORs —22.7 percent

4. Net revenue $7-$8.9 million

• All facilities — 29.3 percent
• 1-2 ORs — 46.0 percent
• 3-4 ORs — 34.3 percent
• More than 4 ORs — 28.1 percent

5. Net revenue more than $9 million

• All facilities — 37.4 percent
• 1-2 ORs — 55.4 percent
• 3-4 ORs —35.6 percent
• More than 4 ORs — 32.4 percent

To receive a free copy of VMG Health’s 2009 Intellimarker, click here.

Average Surgery Center Debts and Leverage Ratios by Annual Case Volume

Here are the average debts and leverage ratios for surgery centers by total annual case volume, according to VMG Health’s 2009 Intellimarker.

1. Total debt (all interest-bearing debt outstanding)

• All facilities — $945,000
• Less than 3,000 cases — $822,000
• 3,000-5,999 cases — $804,000
• More than 5,999 cases — $1.17 million

2. Net debt (total debt less cash on balance sheet)

• All facilities — $1.00 million
• Less than 3,000 cases — $870,000
• 3,000-5,999 cases — $627,000
• More than 5,999 cases — $1.19 million

3. Total debt/assets*

• All facilities — 32.3 percent
• Less than 3,000 cases — 35.4 percent
• 3,000-5,999 cases — 32.2 percent
• More than 5,999 cases — 29.1 percent

4. Total debt/equity

• All facilities — 65.2 percent
• Less than 3,000 cases — 64.3 percent
• 3,000-5,999 cases — 70.8 percent
• More than 5,999 cases — 56.7 percent

5. Total debt/EBIDTA

• All facilities — 0.53x
• Less than 3,000 cases — 0.58x
• 3,000-5,999 cases — 0.51x
• More than 5,999 cases — 0.59x

6. Net debt/assets*

• All facilities — 27.7 percent
• Less than 3,000 cases — 39.8 percent
• 3,000-5,999 cases — 21.1 percent
• More than $5,999 cases — 29.9 percent

7. Net debt/equity

• All facilities — 62.2 percent
• Less than 3,000 cases — 75.4 percent
• 3,000-5,999 cases — 42.7 percent
• More than 5,999 cases — 71.9 percent

8. Net debt/EBIDTA

• All facilities — 0.49x
• Less than 3,000 cases — 1.24x
• 3,000-5,999 cases — 0.38x
• More than 5,999 cases — 0.49x

*Ratios and percentages are calculated as total/net debt divided by total assets, equity or EBIDTA.

To receive a free copy of VMG Health’s 2009 Intellimarker, click here.

5 Steps to Creating a Balanced Pain Management Surgery Center

Pain management can be a profitable addition to a surgery center. However, due to the nature of the specialty, balance is essential to the success of pain management.

Mike Heifferon, Ph.D, MBA, chief operating officer, and Marie Masztak, RN, BEd, vice president of nursing, of Deca Health, a management, billing and development company specializing in interventional pain management services, provide the following five steps to creating a balanced pain management practice in your ASC.

What is a balanced pain management practice?
Mr. Heifferon says that a balanced practice is based upon four different relevant benchmarking standards — financial, patient, provider and staff perspectives. According to Mr. Heiffron, a high performing pain management practice will be in the 90th percentile on each of these areas in benchmarking surveys.

Each area measures different competencies of the practice. “The financial perspective comes from the point of view of collections and net income,” Mr. Heiffron says. “The patient perspective looks at patient satisfaction and outcomes. The provider perspective looks at the provider satisfaction and productivity. The staff perspective looks at the staff satisfaction and productivity.”

In order to keep track of how your pain management practice is performing, Mr. Heifferon suggests using metrics to measure areas like satisfaction and productivity at least monthly, if not daily or weekly. “The more frequently you measure the results, the more frequently you will be able to take action and improve performance,” he says.

Step one: Recruit good physicians
Dedicated, talented physicians are essential to any successful service line in an ASC. Because of increased scrutiny over procedure overuse and abuse, surgery centers need to ensure that their interventional pain physicians are qualified and dedicated to proper patient care. According to Mr. Heifferon, the Accreditation Association for Ambulatory Health Care requires that all physicians performing pain management at an ASC should be certified.

Mr. Heifferon and Ms. Masztak agree that pain management physicians should be board certified and/or fellowship trained. Other areas to consider are the physician’s experience with the procedures he or she will be performing and the percent of the physician’s new patients who will receive procedures according to evidence-based medicine.

Mr. Heifferon recommends bringing in physicians who want to be partners in the center or who are existing partners that aren’t making maximum use of the center. “Both parties have the same risk [in this scenario.] When the physician is not partnered with the center, they look at things, such as cost effectiveness, time off, etc., differently,” he says.

Another issue to keep in mind when bringing pain management physicians on board is the importance of separation of office practices from that of the ASC. According to Ms. Masztak, the Medicare (CMS) Guidelines require separation of the surgery center from the office in order for the surgery center to be accredited. Therefore, the physician can see patients in the office at designated times prior to or after the completion of procedures.

Step two: Meet with and educate referring physicians
Marketing is an essential tool to a surgery center’s success, and when it comes to interventional pain management, education is an essential part of marketing. Mr. Heifferon and Ms. Masztak suggest that ASCs should devote one full-time equivalent position (ideally, two part-time staffers) to marketing efforts.

Meeting with referring physicians is an important part of this step, according to Mr. Heifferon and Ms. Masztak. Representatives from the ASC should provide physicians with information regarding customer and physician satisfaction at the center as well as educational material on pain management and how it can enhance their patient’s care.

“It is important to demonstrate to new physicians that performing pain management procedures in the ASC allows them to collect a facility fee while providing high quality and safe services to their pain patients,” Mr. Heifferon says.

Ms. Masztak says, “One aspect of care that can enhance access for patients into pain management is by promoting a good working relationship between the physicians of the ASC and the neurologists/orthopedists to gain same day access by following preset guidelines for intervention — what we call Fast Track MD.  Another would be when patients have experienced a pain management intervention previously, they are able to fast track their own care by following set guidelines for expedited care — what we call Fast Track Patient.”

Another important step, according to Ms. Masztak, is to educate the community on pain management and chronic pain treatment. “You want to create awareness and to educate physicians (and community) on what the surgery center does and show that it is about helping, rather than ’stealing,’ patients,” she says.

Step three: Consider the patient’s experience
As pain management is a high-volume specialty, addressing the patient’s experience is essential to the service line’s success. “We set a patient satisfaction goal of 98 percent at our centers,” Mr. Heifferon says. “When centers have patient satisfaction scores in the 90s, that is still good, but it is important to ask what they consider an issue (such as no-show rates) and to continually improve.”

Prior to adding pain management to your ASC, Mr. Heifferon suggests looking at three areas — patient flow, wait time and time from admission to discharge. “You need to respect the patients time as much as your own,” he says. “Because of the nature of an ambulatory surgery (need for another person to drive/pick up patient, etc.) it is important to be able to give the patient a close approximation of the amount of time they will spend at the center.”

For this reason, ASCs need to ensure they will be able to handle the patient load and the quick turnover time needed for pain procedures, which are typically about 15 minutes in length. The short procedure times often mean patients will wait longer in prep and recovery than in the actual time it takes to perform the procedure. Therefore, efficiency is critical.

Physician output may also be affected by poor patient satisfaction, according to Mr. Heifferon and Ms. Masztak. “Poor patient outcomes can often result in a physician using pain management or the surgery center less,” Mr. Heifferon says. “You may not know this until you drill down to and examine trends on a physician level.”

Step four: Understand payor issues specific to pain management
Communication is essential to ensuring the ASC and physician are reimbursed properly for pain management procedures. “You need to check whether a patient’s insurance covers the pain management procedures and make sure the billing department is aware of co-pays or what current outstanding debt may be,” says Ms. Masztak. “Also, communicate with the patient to know whether insurance is covering the procedure and with the physician to make sure medical necessity is demonstrated.”

Mr. Heifferon says it is important to communicate any costs to the patient prior to the procedure.

Mr. Heifferon and Ms. Masztak offer the following advice for ensuring proper billing and reimbursement of pain management procedures in your surgery center:

• Know your billing guidelines per insurance carrier for pain management procedure.
• Make sure the physician’s and ASC’s charges match exactly.
• The correct levels must be billed, so it is important to know the difference between disc levels and in-between levels and have this clarified on the physician’s report as necessary.
• Know modifiers that pertain to the ASC and its procedures.
• Anesthesia is billed per insurance carrier guidelines, so be aware of what is and can be used for the procedure.

Step five: Offer profitable procedures
As with any service line offered in your ASC, providing the right mix of procedures is essential to success. It is essential that all procedures be verified for insurance coverage in the ASC prior to the physician performing the procedure.

The following eight procedures are identified by Mr. Heiffron and Ms. Masztak as the most common performed in a surgery center:

• SI steroid joint injection
• Cervical epidural steroid injection
• Lumbar epidural steroid injection
• Spinal Cord Stimulator Trials are done to evaluate whether this is the best mechanism to control chronic pain
• Cervical facet injection
• Lumbar facet injection
• Transforaminal epidural steroid injections and selective nerve blocks
• Radiofrequency ablation procedures. It is important to not that prior to adding RFA to a surgical center, proper cost and volume analysis is necessary. These units are expensive and if volume is not adequate, then a per case arrangement with the unit cost built into the supplies often can be arranged.

“With the constant downward pressure on professional reimbursement, interventional pain management physicians should be looking for alternative sources of income and for reductions in practice overhead expense. Participation in an ASC offers an opportunity for both,” says Mr. Heifferon.

Learn more about Deca Health.

Next Page »