Article
Author(s):
This is an exciting time to be in the endoscopy center business. Although there are many pressures on the industry, there are also some terrific opportunities to be gained by the consistent focus in a few key areas.
This is an exciting time to be in the endoscopy center business. Although there are many pressures on the industry, there are also some terrific opportunities to be gained by the consistent focus in a few key areas. Below are four key trends we at Physicians Endoscopy see for 2009, along with some helpful hints to improve your practice and center.
1. Offset CMS declines by bold third-party payor renegotiations.
In the last six months of 2008, I met with probably about 20 potential GI centers in which our company was considering purchasing a minority equity position. Being relatively new to the acquisition business, we didn't quite know what to expect — however, we often found what we clearly did not expect: Many of these centers hadn't actively negotiated their third-party payor contracts in years. Even in those ASCs that did, many of the practices affiliated with the respective facilities often didn't re-negotiate their professional fees at all.
Renegotiating your fees isn't about being greedy — it's simply about receiving the compensation you deserve for the quality, safety-focused patient care you provide. Medicare will continue to decline in reimbursement over the next several years — and on top of that there's probably a good chance that further cuts are ahead to help pay for the multi-trillion dollar governmental bailouts occurring these days. Third-party payors clearly have a different view of the contracting world. Most, but not all, are willing to increase their fees when pressed — particularly if the facility can demonstrate it runs a quality-focused service program. Be assertive, even aggressive in your re-contracting efforts. Show the quality data you've harnessed to prove you are good. Expect increases — don't take no for an answer.
2. Ancillary revenue streams can be captured.
Gastroenterology services are an inbound pathway into the healthcare system. An amazing array of ancillary revenue streams stem from a simple colonoscopy. In a recent analysis of a coalition of 10 GI physicians in a major northeast urban area, we determined that more than $3M dollars of radiology business is generated from the physician coalition annually. Another $1.5M in pathology revenue is generated. Various other revenues from oncology, anesthesiology, surgery as well as inpatient admissions are recognized as well.
For today's GI physician, there is a focus on legally capturing some of these revenue streams. Two common methods focus on the pathology and anesthesiology portions of the outpatient visit. There are a number of models in the market that allow the GI physician to enjoy a financial benefit, in a legally compliant fashion, in the anesthesia revenue stream. Hiring the MD anesthesiologists and CRNAs and billing for their services is one approach. Other non-employee models exist as well — consult your healthcare attorney for their advice and direction as to the best model for you.
The pathology revenue stream can also be attractive to today's GI physician. Many models exist in the United States, all of which tie back to the "in-office ancillary exception" regulations. All these models have one common thread — they operate exclusively through the professional practice, not the ASC. Pathology is a Stark-regulated designated health service, so keep it out of your ASC financials.
A word of strong caution for those ASCs in which a hospital joint venture exists: Tread lightly. The ancillary revenue streams may look attractive at first; however, these services may be very important to your hospital partner — and partners need to work together, not against each other.
3. There's a new emphasis on quality.
Quality has always been the cornerstone of almost every GI center but sometimes the message emphasizing this quality got lost in the mix in past years. It is so rewarding to see the momentum of a renewed focus on quality and quality measurement gaining such a strong foothold in our marketplace. Many people deserve a tremendous amount of thanks and appreciation — folks like Irving Pike, MD, down in Norfolk, Vir., who took it upon himself to be one of the many town criers of this important message.
As another example, scope reprocessing has got to be one of the most tedious jobs in the endoscopy center. That said, it is probably also the most important responsibility for any of your staff members. Every scope must go through a distinct, multi-step process to ensure it is clean and safe for patient care. If your ASC board hasn't reviewed your reprocessing protocols recently, it's time you hold your next meeting in the decontamination room and get acquainted with the most important room in the house.
We firmly believe that quality will someday allow those that can live it, demonstrate it, measure it and report it to receive increased financial benefits. Pay for performance isn't ready for primetime yet in most markets, but preparing your practice and center for the future can improve your local reputation today while positioning you for better reimbursement in the future.
4. Basics deliver.
A focus on implementing strong business fundamentals is now, more than ever, vital to your continued success in today's GI center. Let's face it: There's plenty of pressure on reimbursement, increasing staffing costs, higher supply costs and a parade of other horribles that could begin to degrade your profitability. Maybe that is already happening.
Now is the time to institute strong business rules in your center. A focus on driving utilization while aggressively renegotiating payor contracts will deliver positive results on the revenue portion of your financial statements. On the expense side, evaluate all vendor agreements annually and selectively re-bid contracts even if you are happy with a vendor's current services — the end result generally is you retain the same vendor but at a lower cost per unit. Ensure your staff is "right sized" and the amount of staff each day is tailored to your caseload. Staffing expenses are typically the largest expense item in the facility — generally 25-30 percent of your budget. Reward employees that come forth with cost saving ideas — no matter how small the savings; reward the behavior and this culture.
1. Offset CMS declines by bold third-party payor renegotiations.
In the last six months of 2008, I met with probably about 20 potential GI centers in which our company was considering purchasing a minority equity position. Being relatively new to the acquisition business, we didn't quite know what to expect — however, we often found what we clearly did not expect: Many of these centers hadn't actively negotiated their third-party payor contracts in years. Even in those ASCs that did, many of the practices affiliated with the respective facilities often didn't re-negotiate their professional fees at all.
Renegotiating your fees isn't about being greedy — it's simply about receiving the compensation you deserve for the quality, safety-focused patient care you provide. Medicare will continue to decline in reimbursement over the next several years — and on top of that there's probably a good chance that further cuts are ahead to help pay for the multi-trillion dollar governmental bailouts occurring these days. Third-party payors clearly have a different view of the contracting world. Most, but not all, are willing to increase their fees when pressed — particularly if the facility can demonstrate it runs a quality-focused service program. Be assertive, even aggressive in your re-contracting efforts. Show the quality data you've harnessed to prove you are good. Expect increases — don't take no for an answer.
2. Ancillary revenue streams can be captured.
Gastroenterology services are an inbound pathway into the healthcare system. An amazing array of ancillary revenue streams stem from a simple colonoscopy. In a recent analysis of a coalition of 10 GI physicians in a major northeast urban area, we determined that more than $3M dollars of radiology business is generated from the physician coalition annually. Another $1.5M in pathology revenue is generated. Various other revenues from oncology, anesthesiology, surgery as well as inpatient admissions are recognized as well.
For today's GI physician, there is a focus on legally capturing some of these revenue streams. Two common methods focus on the pathology and anesthesiology portions of the outpatient visit. There are a number of models in the market that allow the GI physician to enjoy a financial benefit, in a legally compliant fashion, in the anesthesia revenue stream. Hiring the MD anesthesiologists and CRNAs and billing for their services is one approach. Other non-employee models exist as well — consult your healthcare attorney for their advice and direction as to the best model for you.
The pathology revenue stream can also be attractive to today's GI physician. Many models exist in the United States, all of which tie back to the "in-office ancillary exception" regulations. All these models have one common thread — they operate exclusively through the professional practice, not the ASC. Pathology is a Stark-regulated designated health service, so keep it out of your ASC financials.
A word of strong caution for those ASCs in which a hospital joint venture exists: Tread lightly. The ancillary revenue streams may look attractive at first; however, these services may be very important to your hospital partner — and partners need to work together, not against each other.
3. There's a new emphasis on quality.
Quality has always been the cornerstone of almost every GI center but sometimes the message emphasizing this quality got lost in the mix in past years. It is so rewarding to see the momentum of a renewed focus on quality and quality measurement gaining such a strong foothold in our marketplace. Many people deserve a tremendous amount of thanks and appreciation — folks like Irving Pike, MD, down in Norfolk, Vir., who took it upon himself to be one of the many town criers of this important message.
As another example, scope reprocessing has got to be one of the most tedious jobs in the endoscopy center. That said, it is probably also the most important responsibility for any of your staff members. Every scope must go through a distinct, multi-step process to ensure it is clean and safe for patient care. If your ASC board hasn't reviewed your reprocessing protocols recently, it's time you hold your next meeting in the decontamination room and get acquainted with the most important room in the house.
We firmly believe that quality will someday allow those that can live it, demonstrate it, measure it and report it to receive increased financial benefits. Pay for performance isn't ready for primetime yet in most markets, but preparing your practice and center for the future can improve your local reputation today while positioning you for better reimbursement in the future.
4. Basics deliver.
A focus on implementing strong business fundamentals is now, more than ever, vital to your continued success in today's GI center. Let's face it: There's plenty of pressure on reimbursement, increasing staffing costs, higher supply costs and a parade of other horribles that could begin to degrade your profitability. Maybe that is already happening.
Now is the time to institute strong business rules in your center. A focus on driving utilization while aggressively renegotiating payor contracts will deliver positive results on the revenue portion of your financial statements. On the expense side, evaluate all vendor agreements annually and selectively re-bid contracts even if you are happy with a vendor's current services — the end result generally is you retain the same vendor but at a lower cost per unit. Ensure your staff is "right sized" and the amount of staff each day is tailored to your caseload. Staffing expenses are typically the largest expense item in the facility — generally 25-30 percent of your budget. Reward employees that come forth with cost saving ideas — no matter how small the savings; reward the behavior and this culture.
Critical footnote
Patient safety is top priority at your ASC and this must never be forgotten or sacrificed. In reviewing any financial, operational or other possible change at your ASC, always implement the "sniff test" to ensure the modification will have no negative impact on patient safety (and satisfaction). One bad patient outcome is a horrible thing and could also rip apart years' worth of your hard work, taking down your ASC business in the process. Be safe.
Mr. Poisson ( jpoisson@endocenters.comThis e-mail address is being protected from spam bots, you need JavaScript enabled to view it ) is executive vice president and strategic partnerships officer for Physicians Endoscopy, which develops and manages endoscopic ASCs in partnership with practicing GI physicians and hospitals. Learn more about Physicians Endoscopy.
Poisson, J. 4 Key GI Trends in 2009. Retrieved February 20, 2009, from
http://www.beckersasc.com/news-analysis-asc/business-financial-benchmar
king/4-key-gi-trends-in-2009.html