6 Ways for Orthopedic and Spine Surgery Centers to Stay Profitable in 2011

Practice Management

Here are six ways orthopedic surgery centers can stay profitable heading into 2011.

1. Benchmark infection control and surgery data. Benchmarking the performance of your ASC on key indicators, such as infection control, patient falls, patient burns, antibiotic protocol, case cost and OR turnover time, within the orthopedic service line is important for identifying areas where improvement is possible, says Becky Mann, director of Houston Orthopedic Surgery Center in Warner Robins, Ga.. ASC leaders can use national ASC surveys and data to benchmark or join formal or informal groups of ASCs to share data.

From "8 Best Practices to Make Orthopedics Profitable in Surgery Centers."

2. Investment in EMR. Investing in an EMR for an ASC can be intimidating, but Patrick Doyle of SourceMedical, says the investment should pay off after 18 months (assuming a license/self-hosting model, where the ASC owns the software and hardware and pays a higher upfront fee on both). He says ASCs should plan for the "hard costs" of software and hardware as well as "soft costs," including the cost of labor for three months to implement the software and some case disruption while the staff adjusts to using the EMR. The savings associated with EMR include the money spent on chart materials, such as dividers and tabs, chart folders and covers and pre-printed forms, and money spent on document security, including shredding and storage. EMR can also save ASCs money in hours per day spent preparing a paper chart by business office personnel, including chart pack assembly, collating, document and chart retrieval, and copying and faxing. These hard and soft costs can add up to over $120,000 per year and should make the EMR a profitable investment after 18 months.

From "5 considerations for Adding EMR to Your ASC."

3. Hire physician assistants. While not technically an ancillary service, practices that employ PAs to see patients and assist with surgery can generate substantial additional revenue. PAs typically command salaries of $70,000-$100,000, on the very high end, but are often able to generate 2-3 times more, according to Mr. Davis. In order to generate the most revenue possible for a practice, Mr. Davis recommends PAs have their own schedules, treat patients and assist in surgery. "I recently worked with a practice whose two PAs were generating $250,000-$300,000 annually in collections," says John Davis, MBA, principal of Medical Practice Consulting, a medical practice consulting firm based in Bantam, Conn. "While not every PA can collect this, if you let them treat patients and assist in surgery, they can be very profitable, even if you're paying them a $100,000 salary."

However, in order for PA revenues to cover practice costs, as opposed to supplement physician incomes, the practice would need an employed physician model since PAs bill under the supervision of a physician when treating patients in the office. Other models for employing PAs include assuming their salaries as overhead costs divided among all physicians and then allowing the revenues they generate to be distributed to the physicians supervising them. This model is the one used by Rockford Orthopedic Associates, says Don Schreiner, CEO, of Rockford (Ill.) Orthopedic Associates. However, he says other practices use a revenue-neutral model for employing PAs, where physicians who want a PA pay the PA's salary out of their own revenues but are able to keep the addition revenue generated by the PA.

From "6 Ancillary Services to Increase Your Orthopedic Practice's Revenue."

4. Drop your worst payor if necessary. Increasing legal struggles regarding out-of-network contracts have provided more impetuous for practices and their ancillaries to stay in-network. However, practices should not be afraid to drop payors that are no longer profitable for them. William R. Pupkis, CEO of Capital Region Orthopaedics in Albany, N.Y., says practices should consider their managed care contracts as an "investment portfolio." He says, "Both provide economic returns, and the more diverse they are, the better. Both demand careful management."

Payors can be tracked as a percentage of a practice's total payments. Medicare should be the lowest payor in this model; commercial payors should represent a higher percent. Practices should then decide if payors who are closer to Medicare's numbers are profitable for their businesses. Mr. Pupkis warns that dropping out of a payor's network can be a long, painful process for the practice, its physicians and patients, and the decision should be considered carefully. However, the practice needs to be dedicated the decision. "[The process] does not work unless you are willing to 'fire' a payor, because you will have no leverage in the process if you back down," he says. The process of dropping a payor requires a few major steps. Mr. Pupkis' practice began its process by first sending out letters to patients and posting notices in their office saying they would no longer be in-network for the payor. This began well in advance of the contract termination date. In the notices, payor contact information was provided so patients could respond to the company directly and voice their concerns. In a few instances, this action resulted in the payor returning to the table willing to negotiate, resulting in a contract that worked for both the practice and the payor.

Not every attempt ends this way, however. Mr. Pupkis says the main fact to know before moving out-of-network is that practices must follow-up and attempt to collect payments from patients in order to avoid legal troubles. "In the past, many practices would only submit claims to the payors for their 80 percent of the payment, and then 'forgive' the patient's contribution. Now, practices are legally required to make rigorous attempts to follow through on outstanding patient payments," he says.

From "5 Things Orthopedic and Spine Practices Can Do Immediately to Improve Profits."

5. Pursue workers' compensation cases. Worker's compensation cases traditionally reimburse well for spine in the ASC setting, so physician-owners should consider performing these cases in the ASC, when appropriate. Kamshad Raiszadeh, MD, director of the Advanced Spine Institute of Alvarado Hospital in San Diego and a physician-owner of the Physicians Surgery Center in San Diego, says many of his workers' compensation cases, including most anterior cervical and lumbar discectomies and some fusions, can be performed in the outpatient setting. These cases bring additional revenue to an ASC, and building relationships with workers' compensation representatives can be beneficial.

From "6 Reimbursement and Business Concepts for Spine in ASCs."

6. Employ selective marketing efforts. One way orthopedic and spine practices can boost their profits is by selective marketing, which is increasing marketing efforts to a target audience and those people most likely to have need for a practice's services. According to Alan Davidson, executive director of the Orthopedic Institute of Pennsylvania in Camp Hill, "Selective marketing efforts pay off." He suggests that practices should improve their phone response to patients and processing of patients at all levels of service (reception, clinic visit, etc.) in the practice. Adding an online service or electronic medical records can help with scheduling and registration by allowing patients to take care of this information before they come into the office.

"Efforts to make it easier for referring practices to communicate with an orthopedic practice are essential," says Mr. Davidson. "Aging baby boomers and young sports participants are obvious markets. The middle-aged market with candidates for preventative and life-improving services such as joint resurfacing is likely to be a good population for targeted marketing."

As an example, Mr. Davidson's organization is resuming a once defunct DEXA scanning service in an osteoporosis service, not in expectation of profits but rather in fulfillment of a community need for the identification and treatment of osteoporosis.

By making efficient use of the practice's Web site, these services can reach a broader audience and offer more information to potential patients than what they can find on online directory sites, according to Curt Mayse, a principal with LarsonAllen.

From "Improving and Maintaining Profitability in Orthopedic and Spine Practices: 12 Areas of Focus."

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