5 Questions to Ask Before Transitioning Spine Cases to an ASC

The following content is sponsored by Paradigm Spine.

Linda Sanchez serves as both the practice director at the Center for Spine Care in Dallas and as the administrator for the Institute for Minimally Invasive Surgery, the center's affiliated ambulatory surgical center, managed and co-owned by Meridian Surgical Partners, LLC. She was integral in helping the Center for Spine Care develop a freestanding surgery center to perform as many procedures as possible outside of the hospital.

Alice Doverspike is the administrator of Thomas Johnson Surgery Center in Frederick, Md. The multispecialty surgery center added spine procedures in 2008 before Ms. Doverspike joined the center, and she has helped build the program into a successful venture.

Here are the five questions Ms. Sanchez and Ms. Doverspike recommend asking and exploring before bringing spine cases out of the hospital and into an ASC.

1. Do we have the appropriate cases and patients for a spine ASC? The first step in bringing spine to an ASC is to conduct a feasibility study. Ask questions such as:

•    How many spine physicians are in the group?
•    How many cases is each surgeon performing?
•    Which of those cases can be done in an ASC setting?
•    What is the case load?
•    What is the patient population?
•    What is the payer mix?

Consider the patients, as well, Ms. Sanchez says. The majority of the Center for Spine Care's patients were coming from out of town or paying with cash. Creating an outpatient space for spine procedures is more convenient for patients traveling long distances to see a physician and more cost-effective for cash-pay patients, she says.

To provide the best service for the patients, an ASC should consider a design that integrates the clinic and other ancillary services such as imaging, as part of a campus in the same location.

"Our out-of-town patients don't have to go to four facilities for one procedure," Ms. Sanchez says. "While they are here, they can have an MRI or get pain injections. We examined all aspects to find a scenario that would be lucrative enough to keep us in business while being cost-effective and convenient for the patients."

2. What is the capital investment? You must detail the amount of capital required to successfully deliver the facility and allow for a nine to 12-month ramp-up of operations, including costs associated with interior tenant construction, equipment, and working capital. Ensure you raise enough capital for the crucial start-up phase and commit to the right amount of working capital in the beginning stages of planning to avoid future capital calls. Also, obtain a commitment for financing before starting the project.

Rates may vary and non-recourse financing is virtually impossible to secure in today's banking environment. Financing will always be contingent upon the strength of the financial projections for the business. It's important to raise enough working capital to have nine to 12 months of operating expenses covered. A proper plan allows the partnership to leverage with debt the tenant improvement construction cost and equipment, and invest cash to cover the working capital needed pre-and and post-opening.

Get clear on the capital investment, including equipment costs to ensure being in the best position when the surgery center opens. Ms. Sanchez encourages practice managers to consult with all the surgeons and a reputable equipment planner determine what is necessary to purchase for the ASC.

"We bought everything we needed up front with the exception of a few tools," she says. "Our physicians utilize an O-arm navigation system, which is the most expensive piece we have. You don't want to bend on any of the tools they need and use on a daily basis."

One way to save some on the initial investment is to work with vendors and supply representatives to borrow a certain supply for the first five cases and then negotiate a fee or to use a tool at a rented rate for a certain amount of time.

"We have some reps we've worked with for seven-plus years," she says. "It's easy for us to talk to our vendors that we know and use all the time. They are willing to work with you when you have a relationship."

Having surgeons who know what they need and help create a bare-bones instrument set is also a big money saver, Ms. Doverspike says. For surgery centers with other specialties, she recommends building on the equipment already in use to avoid some of the up-front expense. Her surgeons use a large C-arm for other specialties and were able to put that in use for spine as well.

"It helps to have the most expensive capital equipment being used by other specialties," Ms. Doverspike says. "Setting up a new specialty can mean a large start-up cost of equipment with lingering costs of implants, so to succeed I suggest building off of what you have."

3. What will be the reimbursement and insurance challenges? The biggest and most challenging obstacle has been securing in-network contracts with commercial payers, Ms. Sanchez says.

Ms. Sanchez encourages other ASCs to be data-driven when presenting the benefits of performing spine procedures in a surgery center to insurance negotiators. The practice obtained hospital-based explanation of benefits for specific outpatient procedures that were then analyzed and presented to the commercial payers to show the drastic cost savings ASCs bring all parties.

Surgery center administrators should also work with payers and surgeons to make implant costs as affordable as possible. Many payers do not cover implants, which are a huge expense for spine.

"Being able to negotiate good pricing on implants and supplies and having a surgeon who is cost conscious are the two key components in generating revenue with spine procedures," Ms. Doverspike says.

Ms. Doverspike says a spreadsheet helps her track expected revenue and against cases expenses. She will watch a new procedure intently for three months to make sure the center is profiting from the surgery or if adjustments need to be made. It is never too late to renegotiate supply costs and implant costs, she says. Often, payers will negotiate carve-outs for high-cost implants.

Other challenges to keep in mind include whether the patient population's insurance includes out-of-network benefits. If patients cannot go to an out-of-network provider, then the ASC is not a viable option. Additionally, the beginning of the year is always a challenging time because most health plans renew and patients have not yet met their deductible. Keep this in mind for planning and cash flow purposes.

4. Which cases work best in an ASC? Different spine procedures and patients can work well in an outpatient setting; it's largely dependent on the comfort level of the surgeon, Ms. Sanchez says.

The office staff members at the Center for Spine Care will often analyze specific procedure to identify trends. For instance, maybe the majority of one-level TLIF patients within a specific age range were all discharged from the hospital within 23 hours. Surgeons' staffers can research these trends to help them decide which cases to consider moving from inpatient to outpatient.

"It's the office paying close attention to what the physician does," she says.

It's also crucial to hire operating room staff members who have spine experience or has worked with your surgeons previously. Having adequate resources who understand the needs of these patients preoperatively and postoperatively will make a significant difference in your ability to have a successful program out of the gate.

Patient education and physician mindset are also big factors in which cases ultimately are performed at the ASC. Patient preparation is key to your success, so it's important to inform patients and manage expectations. Physicians should be comfortable with the outpatient arena and motivated and understand the enhanced patient outcomes and satisfaction rates represented by an ASC-based program. Surgeons should be experienced with MIS techniques, a shorter period of post-op care and modified discharge criteria.

Ms. Doverspike keeps ASC-appropriate cases in mind when marketing the surgery center and looking for potential physicians to recruit. When she gets the name of a physician who might be interested in joining her center, she will inquire as to the procedures the physician performs and how that fits with the codes and reimbursements currently operating in the ASC. This information tells her from the start if the physician will be a good fit clinically.

"Appearing knowledgeable and prepared gives a confidence to the new recruit that they will be in good hands and enables a working relationship," she says. "Our surgeons and their offices are customers, like our patients. Treat them with respect, offer a good ear and show results and a wonderful experience can be expected."

5. What will the business structure look like? Surgery center or practice leaders should consider the business and ownership structure to decide what additional partners may be required. Ms. Sanchez's center decided to partner with an ASC development and management company to help drive the planning and delivery of the facility and handle the center's operations, allowing the surgeons and other staff members to focus on the clinical aspects.

Surgeons may choose to develop and manage the ASC without external assistance or partners, while aligning with a hospital or health system meets the needs of other surgeons based on their market demographics. Other options exist, including ASC owners outsourcing their billing and revenue cycle operations on a temporary or permanent basis to alleviate management burden. Look at all aspects of ownership and management to find the best fit.

Regardless of ownership structure, patient experience should always be the focal point of bringing spine to an ASC. While spine will be a revenue generator for the center, it will also serve as a vehicle for giving patients higher-quality, more cost-effective care.

Patients undergoing spine surgery at Thomas Johnson Surgery Center will spend approximately 65 percent less time from pre-op through post-op than at the local hospital, Ms. Doverspike says. Their recovery time will be quicker and the same nurse will likely see them through the entire operation spectrum, which can be calming and reassuring during a typically stressful experience.

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