Can Spine ASCs Be Profitable? 5 Considerations

Here are five considerations from industry experts on how to be profitable as a spine ASC. 1. Take ownership of healthcare dollars. A huge "don't" on improving spine center profits is allowing physicians to ignore efficiency as a benchmark of great care. A spine center cannot have physicians that want the latest and greatest — who want to spend healthcare dollars frivolously, said John Caruso, MD, a neurosurgeon with Parkway Neuroscience & Spine Institute. Thinking of healthcare expenses as coming out of their pockets will help curb costs. Physicians should claim ownership of patients in two ways: in the treatment they prescribe and in the cost of that treatment.

When you look at old methods for healthcare, most actions came from a physician's pen. It is still that way. Most healthcare costs come from medications or treatments physicians prescribe or recommend to "There are some physicians who are not as conscientious of costs associated with treatment, therefore, placing a high financial burden on the healthcare system," Dr. Caruso said.

A surgical center makes physicians acutely aware of healthcare costs because they have ownership in the facility. This concept changes the approach to healthcare delivery and has the potential to lower costs on a grand scale. Those who claim ownership of healthcare dollars will become more informed physicians, and will improve the healthcare system, he said.

2. Carefully consider case volume and mix. Jeff Leland, CEO of Blue Chip Surgical Center Partners, said spine center success is predetermined long before the doors open. No spine surgery center should be launched until the right volume and mix of cases is assured, he said. While many ASCs start with the assumption that they'll grow into sufficient volume over time, Blue Chip Surgical Center Partners aims to be a fixed-cost business; hence, a baseline volume is required to support operations.

Business plans should be based on fully accurate, highly detailed and rigorously validated case volume projections. In spine, this often requires the addition of pain management cases to augment the lower number of major spine procedures (pain cases are also an effective way to orient patients to the notion of outpatient treatments and to the ASC itself). These projections should be viewed as a "go/no-go" decision in the planning process for new ASCs.

Once facilities are operational, case volume and mix should be monitored and analyzed carefully, by surgeon, with the results communicated to all stakeholders and compared each month to actual projections. That way, issues can be identified proactively and addressed quickly, long before the hole gets too deep.

3. Contracts with payers must address implant costs. Just as with orthopedic cases, considering implant costs are critical to profitable spine cases. In fact, they may even be more important for spine cases because implant costs typically run higher with spine — as much as $2,000-$5,000 per case — than in traditional orthopedic cases, said Jay Rom, president of Blue Chip Surgical Center Partners.

Mr. Rom said spine cases must be carved out or the case rate must be built to assume implant costs. Since implant costs can vary from physician to physician — sometimes by as much as $3,000 — rates must also cover the most expensive physician, he said.

"While we do a lot of work trying to minimize cost differences, there are practice differences that are going to exist. Some physicians are trained with different materials that just cost more," Mr. Rom said.

4. Engage in social media. Before social media, health information flow came only from physicians and healthcare groups. Physicians could, to an extent, dictate disease and treatment perceptions, Dr. Caruso said. Social media offers a wide-open arena and it is giving patients a voice in the healthcare information flow — they can engage in a dialogue about their aliments with other patients, with physicians and with healthcare organizations. According to Dr. Caruso, social media will push physicians towards better outcomes and more transparency, not just for the cost but the quality of the care.

Many strategies exist for improving spine center profitability. Overall, increasing patient flow and reducing costs are pillars in the best practice arena for profitability. Utilizing new technology, embracing different healthcare perspectives and hiring individuals that have the mindset and drive for success among healthcare reform are best practices that may guide a spine center to a better tomorrow.

5. Find the right surgeons. In identifying new surgeons to invite to East Portland Surgical Center, there was healthy dialogue among the ownership group, said surgery center partner Joseph Stapleton, MD. The center sought clinically distinguished physicians with excellent reputations but also wanted hard workers and team players. These qualities make for excellent partners in any type of surgery center. But the most important criterion was a high level of caution in patient selection. Not every spine case is appropriate for outpatient facilities. Surgeons must carefully examine patient weight and respiratory history, incision routes and other factors before choosing between an ASC and hospital for specific procedures.

"We first engaged with one neurosurgeon we knew and regarded highly and, several months later, invited a few more to bring cases to our surgery center," Dr. Stapleton said. "So far, it's been a very good fit. I think what these physicians like most about operating at EPSC is that their patients are more comfortable and that it's so easy to check on them after procedures are complete. Of course, these benefits apply to all specialties, not just spine."