DOING BUSINESS
between Medicare and Medicaid as a secondary insurer means actual reim- bursement to the ASC is 20 percent lower—just $7,120 toward the ASC’s costs of $8,750—creating a loss of $1,630. If an ASC doesn’t have the band- width to dig into the profitability of every single case, a good place to start is with high dollar cases or anything with an implant. In many instances, payer contracts will not provide separate reimbursement for an implant, bundling it instead within one price. Knowing which payer con- tracts allow separate reimbursement for implants helps manage profitabil- ity, especially on cases where a more expensive implant is needed. One final point to understand about payers and reimbursement is the trend toward higher deductibles and patient responsibility. Studies from Kaiser Permanente, TransUnion and Advisory Board show that within the next few years, as much as 50 percent of total ASC reimbursements will come directly from patients. As the percentage of the bill to be paid by the patient continues to increase, ASC profitability can be at risk. Cen- ters that are used to collecting pri- marily from insurers need a different strategy for patient collections and should begin to think about collect- ing up front and focusing on finan- cial counseling with the patient to avoid bad debt.
Controlling Costs
When it comes to case profitability, the other side of the coin from reimburse- ment is managing costs such as staffing, supplies and inventory management. Most ASCs are adept at manag-
ing variable staffing by controlling schedules and sending people home when case volume is low. Centers also need to think about optimiz- ing their fixed staffing equation, like the business office staff doing insur- ance verification, scheduling, call-
18 ASC FOCUS AUGUST 2020|
ascfocus.org
Maximizing case profitability comes down to proactively managing two key activities: understanding payers and reimbursement and, of course, controlling costs.”
— Erin Petrie, Regent Revenue Cycle Management
ing patients and doing check-ins. An ASC-specific benchmark is 1.5 full- time equivalents (FTEs) per 1,000 cases for business office staff, based on the number of cases a center does in a year, according to the Regent Gold Standard. To manage profitability well, it is vitally important that ASCs stay on top of the business side of the oper- ation and do all the work to ensure they are not leaving money uncol- lected. For example, staff should not be so lean that there is not time to confirm that payer authorizations are on file, because more and more codes are moving to requiring pre-authori- zation and cases will be denied. On the flip side, if there is too much administrative staff, chances are good that it will impact the ASC’s profit margin.
Another important factor in con- trolling costs is supplies and inven- tory management and working to get as close to just-in-time inven- tory on commodity items as possi- ble. Ideally, an ASC should be fore- casting needs and putting in supply orders every day to avoid having too much sitting on the shelf, but also to ensure needed supplies are available so every case can be performed on schedule. Every inch of space needs to be productive in an ASC, espe- cially for supplies that are required
to be stored in a sterile space. Cen- ters pay a premium to lease space, so ASC leaders really need to make sure they are not overbuying inven- tory and storing too much.
In terms of implants, it is critical
to have a standardized process for handling physician requests. Cen- ters want to do due diligence before honoring a request for a new higher cost item, to make sure there is not a reasonable alternative in inven- tory or a more cost-effective alter- native. Having a process moves the conversation away from personal, directing questions to the practical: “Are there ways that this will save OR time?” or “Are there ways that this could replace other supplies we would normally have to use in tan- dem with the implant?” These ques- tions go beyond just looking at the bottom line to help uncover different ways a new implant might be more cost-effective.
Getting Started at Managing Case Profitability Any center already doing any advance modeling of case profitabil- ity is ahead of the game. Many ASCs look only at profits in arrears, com- paring case profitability to the last quarter or the last month. A good first step might be looking at these numbers on a weekly basis and look- ing ahead to review the high-dollar cases coming up. With case-by-case analysis, ASCs can identify trends and see if there is opportunity on the cost side. If a center is already tightly managed on the cost side, the next step is improving reimbursements and contracts and, in the meantime, becoming diligent about not taking on cases that will not be profitable.
Erin Petrie is the vice president at Regent Revenue Cycle Management in Westchester, Illinois. Write her at
epetrie@regentsurgicalhealth.com.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30
