Spine surgeons have seen reimbursements drop over the past few years, and will likely continue to experience downward pressure in the future. Medicare recently announced a 2 percent reimbursement reduction as part of sequestration spending cuts as well. Here are eight strategies spine surgeons can use to tackle dropping reimbursements with contract negotiations, cost cutting and increasing patient volume.
1. Show insurance companies market comparisons during contract negotiations. Insurance companies are offering lower rates than in the past for spinal procedures, which means surgeons must come to payor negotiations armed with more than just clinical documentation; they must also bring redacted payor data to show reasonable market rates.
"Present redacted payor data from other payors to compare their rates with other payors for high volume procedures," says Danielle Koelbl, president of MedRev Solutions, a healthcare revenue cycle and receivable management company. "If you are having coverage problems with a major player, show outcomes data along with other payor rates to help bring them on board."
Figure out where you can use positive reimbursement trends to correct negative ones. Physicians have assumed the responsibility for proving their case, and payors respond best to data.
2. Explore initiatives to lower the cost of care. One of the biggest efforts of healthcare reform is lowering the cost of care. Stephen Hochschuler, MD, co-founder of Texas Back Institute, is working with his colleagues on several initiatives to lower the cost of care while remaining profitable as an independent spine practice. One of the potential opportunities will be investing in an ambulatory surgery center in the future, which will lower the cost of the minimally invasive procedures performed there and enhance the practice's ancillary revenue stream.
"Our hospital chain agreed to build 30 surgery centers over the next three years with a corporate partner," says Dr. Hochschuler. "For the average spine or orthopedic surgeon, this is a great opportunity to be part of the operation structure and make ancillary income where their own healthcare dollar is being tremendously compromised. That's a huge potential lucrative area for Texas Back, and we are looking at that very seriously."
3. Save money on each case by cutting costs for supplies and implants. There are some devices and systems that use a high volume of disposables, which significantly increases the cost per case. Pay attention to the supplies such as bipolars and dural grafting material that are disposable but extremely expensive.
"There are certain retractor systems with disposable pieces that drive up costs," says Brian R. Gantwerker, MD, of The Craniospinal Center of Los Angeles. "Push more toward using a reusable package that is just as effective. That should be one of the top priorities to cut costs."
When surgeons are actively working with hospitals to cut their costs, especially if their work includes materials changes and vendor negotiations, they can add a consulting agreement to their relationship. "Nobody in this country works for free," says Dr. Gantwerker. "We are entitled to charge for our time if we are doing that service to the hospital, and we can be compensated for it at a reasonable rate."
Another option is to purchase cheaper implants, especially for routine cases. The commodity implant can be used for a variety of cases, such as one-level lumbar fusion, basic rotator cuff repair or a basic suture anchor. For example, the commodity implant for a one-level lumbar fusion costs $2,500-$3,000, compared with $14,000-$15,000 for full invoice price for the premium version for a savings of $12,000 on one case. Even with typical hospital and provider discounts, the surgeon can still save $5,000-$7,000 per case.
"A spine surgeon who uses commodity implants for most of his surgeries could realize a half-million dollars in savings a year," says Richard A. Kube, MD, CEO of Prairie Spine & Pain Institute in Peoria, Ill. However, make sure the implant is able to provide the same quality of care.
4. Find a way to work more patients into your schedule. Spine surgeons aren't paid as well today as they were a few years ago for the same amount of work as each unit of work receives smaller payment. To maintain their income level, some surgeons will take on more cases than in the past. "We'll need to bring more cases into the practice and surgery center. I think having a good physician extender is going to be key in the future," says Bryan Oh, MD, a spine surgeon with BASIC Spine in Orange, Calif.
If spine surgeons aren't routinely running more than one operating room at one time, the PA can open and close the cases. This allows surgeons to work the same number of hours but see increased patient flow.
"Obviously spine surgeons still need to be mindful of not cutting corners in the OR and have the same attention to detail as in the past," says Dr. Oh. "But this strategy should allow for increased efficiency and revenue."
5. Maintain the same OR team to improve efficiency. Spine surgeons must have a high level of expertise among their operating room staff to appropriately utilize OR time. Staff members should be familiar with the minimally invasive technique and experienced with the surgeon, which means working with the same team for every surgery if possible.
"Everyone should know everyone else and be comfortable in the operating room, and understand who the patient is and what is being done," says Dr. Gantwerker. "There should be specialized teams formed where people know spine very well and others are cross trained to speed up the process. There is a lot of teamwork in the OR and everyone has to be comfortable working together and having an open and efficient discussion when issues come up."
Just like surgeons, the operating room staff will have a learning curve when you first begin performing the minimally invasive procedures. However, with the right preparation work and repetition, the staff will become as efficient as the surgeon in the operating room.
6. Drive additional case volume with comprehensive marketing. An effective marketing plan will identify the key markets to pursue. Spine centers are finding success in the employer, third-party payor, niche and consumer markets. Spine centers should find industries that carry a risk of back injury and reach out to employers in these areas. "The employer market is a very large opportunity for spine centers," says Marcy T. Rogers, M.Ed., president and CEO of SpineMark. These efforts can help open lines of communication for referrals and the possibility of contracted business.
Adopting an attitude of complete transparency is one of the best ways to cater to your specific markets. "One of the initiatives we highly recommend is quarterly white papers on patient outcomes," said Ms. Rogers. Education is a vital aspect of your marketing strategy, which is particularly important for third-party payors. Spine surgeons can explain the training they have received, new advances in the field and what a payor should be looking for to determine when to cover procedures.
7. Enter into partnership with the hospital. Surgeon groups may also want to enter into partnerships with hospitals than call coverage or payment agreements by contracting professional service agreements or co-management arrangements. These arrangements will allow surgeons to become more involved with the hospital while remaining independent and strengthening their revenue stream.
"I think you'll see more surgeons doing professional service agreements," says Michael Webb, MD, a neurosurgeon with NeuroTexas Institute in Austin. "In these types of arrangements, hospitals start a clinic and a physician or physician group contracts to provide services for the clinic. The two most common reimbursement arrangements are based on RVU or a percentage of collections."
Surgeons may also have an opportunity to roll call coverage into a medical directorship position or form a management company that will provide expertise in running the orthopedic or spine service line at a hospital.
"These are some of the more complicated relationships available with hospitals, and I think they are a good option for people who are relatively new to the practice, or even those who are established who want to prop up their fee-for-service income but still have the freedom to control their own practice," says Dr. Webb. "For co-management arrangements, the management company is compensated for reaching goals like patient satisfaction or lowering hospital implant cost, which can prop up income without being directly employed."
8. Participate in new payment models. New payment models such as accountable care organizations and bundled payments are forcing providers to take more risk for patient care than in the past. Insurance companies are passing the risk by negotiating a single pay rate for global coverage, including conservative care, spine surgery and postoperative rehabilitation.
"Our practice has spine surgeons, physical medicine and rehabilitation, physiatry, pain management, pain psychology and chiropractic care," says Dr. Oh. "This is the beginning of a spine care ACO model. In the future we could go to big carriers and offer to handle all spine care for their customers. We haven't executed any contracts yet, but they are in the works."
Under these agreements, if there were complications insurance companies wouldn't pay more to cover them. "However, if the providers execute quality care, they can actually stand to increase their revenue," says Dr. Oh.
In the future, Texas Back Institute will also be looking at bundled payments and other ways to assume risk in accordance with national healthcare provider trends. Providers are also marketing their services to patients more now than in the past, and patients are taking control of their healthcare experience.
"We've got to make the patient in charge of their healthcare dollar," says Dr. Hochschuler. "We need to get health savings accounts on a bigger level so patients can shop for a surgeon or program based on quality, cost and outcomes."
More Articles on Spine Surgery:
10 Big Healthcare Policy Trends for Spine Surgeons to Know
5 Qualities of Effective Spine Surgeon Leaders in Profitable Practices
Big Trends in Spine Technology Research & Development: Q&A With Dr. Marc Cohen
1. Show insurance companies market comparisons during contract negotiations. Insurance companies are offering lower rates than in the past for spinal procedures, which means surgeons must come to payor negotiations armed with more than just clinical documentation; they must also bring redacted payor data to show reasonable market rates."Present redacted payor data from other payors to compare their rates with other payors for high volume procedures," says Danielle Koelbl, president of MedRev Solutions, a healthcare revenue cycle and receivable management company. "If you are having coverage problems with a major player, show outcomes data along with other payor rates to help bring them on board."
Figure out where you can use positive reimbursement trends to correct negative ones. Physicians have assumed the responsibility for proving their case, and payors respond best to data.
2. Explore initiatives to lower the cost of care. One of the biggest efforts of healthcare reform is lowering the cost of care. Stephen Hochschuler, MD, co-founder of Texas Back Institute, is working with his colleagues on several initiatives to lower the cost of care while remaining profitable as an independent spine practice. One of the potential opportunities will be investing in an ambulatory surgery center in the future, which will lower the cost of the minimally invasive procedures performed there and enhance the practice's ancillary revenue stream.
"Our hospital chain agreed to build 30 surgery centers over the next three years with a corporate partner," says Dr. Hochschuler. "For the average spine or orthopedic surgeon, this is a great opportunity to be part of the operation structure and make ancillary income where their own healthcare dollar is being tremendously compromised. That's a huge potential lucrative area for Texas Back, and we are looking at that very seriously."
3. Save money on each case by cutting costs for supplies and implants. There are some devices and systems that use a high volume of disposables, which significantly increases the cost per case. Pay attention to the supplies such as bipolars and dural grafting material that are disposable but extremely expensive."There are certain retractor systems with disposable pieces that drive up costs," says Brian R. Gantwerker, MD, of The Craniospinal Center of Los Angeles. "Push more toward using a reusable package that is just as effective. That should be one of the top priorities to cut costs."
When surgeons are actively working with hospitals to cut their costs, especially if their work includes materials changes and vendor negotiations, they can add a consulting agreement to their relationship. "Nobody in this country works for free," says Dr. Gantwerker. "We are entitled to charge for our time if we are doing that service to the hospital, and we can be compensated for it at a reasonable rate."
Another option is to purchase cheaper implants, especially for routine cases. The commodity implant can be used for a variety of cases, such as one-level lumbar fusion, basic rotator cuff repair or a basic suture anchor. For example, the commodity implant for a one-level lumbar fusion costs $2,500-$3,000, compared with $14,000-$15,000 for full invoice price for the premium version for a savings of $12,000 on one case. Even with typical hospital and provider discounts, the surgeon can still save $5,000-$7,000 per case.
"A spine surgeon who uses commodity implants for most of his surgeries could realize a half-million dollars in savings a year," says Richard A. Kube, MD, CEO of Prairie Spine & Pain Institute in Peoria, Ill. However, make sure the implant is able to provide the same quality of care.
4. Find a way to work more patients into your schedule. Spine surgeons aren't paid as well today as they were a few years ago for the same amount of work as each unit of work receives smaller payment. To maintain their income level, some surgeons will take on more cases than in the past. "We'll need to bring more cases into the practice and surgery center. I think having a good physician extender is going to be key in the future," says Bryan Oh, MD, a spine surgeon with BASIC Spine in Orange, Calif.If spine surgeons aren't routinely running more than one operating room at one time, the PA can open and close the cases. This allows surgeons to work the same number of hours but see increased patient flow.
"Obviously spine surgeons still need to be mindful of not cutting corners in the OR and have the same attention to detail as in the past," says Dr. Oh. "But this strategy should allow for increased efficiency and revenue."
5. Maintain the same OR team to improve efficiency. Spine surgeons must have a high level of expertise among their operating room staff to appropriately utilize OR time. Staff members should be familiar with the minimally invasive technique and experienced with the surgeon, which means working with the same team for every surgery if possible.
"Everyone should know everyone else and be comfortable in the operating room, and understand who the patient is and what is being done," says Dr. Gantwerker. "There should be specialized teams formed where people know spine very well and others are cross trained to speed up the process. There is a lot of teamwork in the OR and everyone has to be comfortable working together and having an open and efficient discussion when issues come up."
Just like surgeons, the operating room staff will have a learning curve when you first begin performing the minimally invasive procedures. However, with the right preparation work and repetition, the staff will become as efficient as the surgeon in the operating room.6. Drive additional case volume with comprehensive marketing. An effective marketing plan will identify the key markets to pursue. Spine centers are finding success in the employer, third-party payor, niche and consumer markets. Spine centers should find industries that carry a risk of back injury and reach out to employers in these areas. "The employer market is a very large opportunity for spine centers," says Marcy T. Rogers, M.Ed., president and CEO of SpineMark. These efforts can help open lines of communication for referrals and the possibility of contracted business.
Adopting an attitude of complete transparency is one of the best ways to cater to your specific markets. "One of the initiatives we highly recommend is quarterly white papers on patient outcomes," said Ms. Rogers. Education is a vital aspect of your marketing strategy, which is particularly important for third-party payors. Spine surgeons can explain the training they have received, new advances in the field and what a payor should be looking for to determine when to cover procedures.
7. Enter into partnership with the hospital. Surgeon groups may also want to enter into partnerships with hospitals than call coverage or payment agreements by contracting professional service agreements or co-management arrangements. These arrangements will allow surgeons to become more involved with the hospital while remaining independent and strengthening their revenue stream.
"I think you'll see more surgeons doing professional service agreements," says Michael Webb, MD, a neurosurgeon with NeuroTexas Institute in Austin. "In these types of arrangements, hospitals start a clinic and a physician or physician group contracts to provide services for the clinic. The two most common reimbursement arrangements are based on RVU or a percentage of collections."Surgeons may also have an opportunity to roll call coverage into a medical directorship position or form a management company that will provide expertise in running the orthopedic or spine service line at a hospital.
"These are some of the more complicated relationships available with hospitals, and I think they are a good option for people who are relatively new to the practice, or even those who are established who want to prop up their fee-for-service income but still have the freedom to control their own practice," says Dr. Webb. "For co-management arrangements, the management company is compensated for reaching goals like patient satisfaction or lowering hospital implant cost, which can prop up income without being directly employed."
8. Participate in new payment models. New payment models such as accountable care organizations and bundled payments are forcing providers to take more risk for patient care than in the past. Insurance companies are passing the risk by negotiating a single pay rate for global coverage, including conservative care, spine surgery and postoperative rehabilitation.
"Our practice has spine surgeons, physical medicine and rehabilitation, physiatry, pain management, pain psychology and chiropractic care," says Dr. Oh. "This is the beginning of a spine care ACO model. In the future we could go to big carriers and offer to handle all spine care for their customers. We haven't executed any contracts yet, but they are in the works."
Under these agreements, if there were complications insurance companies wouldn't pay more to cover them. "However, if the providers execute quality care, they can actually stand to increase their revenue," says Dr. Oh.
In the future, Texas Back Institute will also be looking at bundled payments and other ways to assume risk in accordance with national healthcare provider trends. Providers are also marketing their services to patients more now than in the past, and patients are taking control of their healthcare experience.
"We've got to make the patient in charge of their healthcare dollar," says Dr. Hochschuler. "We need to get health savings accounts on a bigger level so patients can shop for a surgeon or program based on quality, cost and outcomes."
More Articles on Spine Surgery:
10 Big Healthcare Policy Trends for Spine Surgeons to Know
5 Qualities of Effective Spine Surgeon Leaders in Profitable Practices
Big Trends in Spine Technology Research & Development: Q&A With Dr. Marc Cohen