By Bill Hazen, CEO, Surgery Center at Pelham and Aaron Davis, Vice President of Operations, National Medical Billing Services
Nearly all ASCs suffered a loss when elective surgeries paused in the spring of 2020. ASCs with highly functioning business operations have not only overcome those losses, but will benefit from a rebounding and growing market. ASCs with orthopedics have the advantage of offering one of the most financially desirable specialties.
According to a ZS report, orthopedic procedures performed in ASCs grew from 10 percent in 2018 to a projected 68 percent in 2020. Joint replacement surgeries account for much of that growth. It gets better: as of this year, both total knee and total hip replacement procedures are eligible for Medicare payment in the ASC setting.
Surgery Center at Pelham, a multispecialty ASC in Greer, South Carolina, has implemented a number of business strategies over the years that helped it profit in 2020 despite the pandemic. These strategies center on one key quality: transparency.
Everyone at Surgery Center at Pelham lends a hand where it’s needed—executives included. Everyone shares the work; therefore, everyone shares in its success. The facility passes on five percent of its distributions to its employees in equal share.
Profit-sharing yields multiple benefits:
• The facility has a less than one percent turnover rate, which leads to dramatically lower direct costs.
• Employees recognize the value they provide to the ASC and to patients.
• Employees understand the end result of maintaining and managing costs.
The CMS Hospitals Without Walls program accelerated the shift of higher-acuity cases to ASCs. This shift, combined with CMS’s decision to eliminate the Inpatient Only (IPO) list, will be integral for ASC growth.
Hospitals Without Walls helped the Surgery Center at Pelham regain volume after the Spring 2020 shutdown. Enrolling in the program has allowed us to take on a broader range of cases due to relaxed reimbursement requirements. Total hip replacements came to the ASC well before Medicare added the procedure in January 2021.
The Surgery Center at Pelham advertises on seven radio stations daily. That didn’t change during the pandemic, but the messaging did.
To build back trust in patients concerned about COVID-19 exposure, Pelham reworked it’s advertising campaign to stress the safety of the ASC setting. Radio ads communicated COVID-19 protocols, the importance of quarantining before surgery, and why ASCs are safer than hospitals, among other campaigns.
The Surgery Center at Pelham website serves as a valuable educational resource as well. The site provides COVID-19 education as well as an online cost estimate created with the help of Clariti Health’s Catalyst platform.
Knowing out-of-pocket cost ahead of time helps ease patients’ concerns and allows them to make more informed decisions. It also cut down Pelham pre-procedure patient calls by more than 50 percent.
Transparency During Uncertainty
By discussing cost with patients up front, Surgery Center at Pelham has reduced post-procedure calls to the billing department by about 75 percent. Transparency and financial education also keeps receivables in check. Pelham finds patients are willing to pay when they fully understand their financial responsibility.
Know Your Costs Down to the Penny
Transparency extends to discussing costs with physicians and payers. Surgeons at the Surgery Center at Pelham know how much supplies and implants cost so they can make cost-effective choices without compromising quality.
Pelham’s honesty policy also helps ASC administrators negotiate favorable managed care contracts. Surgery Center at Pelham employees know every item’s price—from implants to the crayons used in the preop area (65 cents). With that information, Pelham can present a strong case to managed care organizations as well as implant vendors. Pelham outlines exactly how much each case costs and the profit margins with the goal of arriving at a fair agreement for everyone—including the patient.
Pick the Right Patients
All surgery centers have strict criteria for surgical candidates. Surgery Center at Pelham is no different. Patients participating in our total joint replacement program undergo an involved process to determine whether they are appropriate candidates for surgery. That process starts with a home health survey and continues with an evaluation of health criteria and insurance.
After surgery, home health professionals meet patients within an hour of their arrival at home to ensure they have a healthy home environment. This support helps with recovery as well as lowers risk of complications.
Stop Using Paper
An amazing number of ASCs still do cost accounting on paper. Invest in a system that itemizes exactly how much each procedure costs. Costs have increased dramatically over the past year due to additional PPE and cleaning protocols. ASCs that perform to-the-crayon cost accounting will thrive. Educate your surgeons and staff about the cost of each item so they can perform procedures safely, effectively, and cost-effectively.
Choose a Single-Vendor Solution
Moving to a single vendor for medical supplies, whenever possible, allows ASCs to cut costs, streamline supply chain, and improve efficiency. Single-source vendors can also develop custom trays and packs which helps speed up OR turnover time. We use the same vendor for all implants, which allows us to negotiate a lower cost based on volume. We bill for implants at cost which means no mark up to patients.
Walk Before You Run
Don’t take on total joint procedures without the policies, procedures, and staff in place to do so safely. Don’t risk poor outcomes for the sake of more income.
The orthopedic market is poised to grow substantially over the next few years. Shore up your cost accounting and operational practices to take full advantage of this clinically and financially rewarding specialty.
This post was first published March 16, 2021 and was updated July 1, 2022.