In Addition …

Bringing Retina Into the ASC

Reimbursements for many retina surgeries performed in ASCs have increased 40% in the past 2 years, from $1,136.36 in 2009 to $1,586.79 in 2011¹. As a result of this dramatic increase in revenue, more ASCs are taking on retina surgeons, and many retina surgeons are starting their own ASCs to reap the financial benefits, as well as the professional satisfaction, of controlling the operating room and its schedule.

Deciding if an ASC is right for you requires reflection on your situation and your motivations. It takes a significant effort to get an ASC started — from investment to construction to staffing and equipping — but our anterior segment colleagues have shown that it can be well worth the effort. If you want to forge ahead and move to the ASC setting, focus on the key areas that will ensure you will have an efficient, profitable retina ASC.

Look at the Numbers

In the hospital, reimbursement is higher for more complex cases. In the retina ASC, reimbursement is the same without regard to complexity or use of additional tools (forceps, adjuvants). According to the 2011 Medicare fee schedule, the ASC is paid the same reimbursement ($1,586.79) for nearly all retina surgeries, whether surgeons perform a straight vitrectomy for vitreous debris (67036), fix a macular hole (67042), repair a retinal detachment (67108) or proliferative vitreoretinopathy (67113), or treat ocular hemorrhage related to diabetic retinopathy (67040).

That $1,586.79 top-line revenue is then reduced by both the overhead costs required to run the ASC and the equipment required to perform the case. In our ASC, the overhead cost approaches $1,000 per hour, leaving about $586 in profit for each procedure that turns over in 1 hour. However, a pack for the machine is $450-500, and depending on other equipment needed (forceps, laser probes, silicone oil and so on), the potential profit decreases very quickly. It's impossible for a single retina surgeon, even a very busy one, to make a profit while running his own freestanding ASC.

To make retina surgery profitable in the ASC setting, the overhead costs must be spread out over several surgeons working simultaneously. In our example above, if three surgeons work simultaneously, each case would only cost $333/hour in overhead (assuming the same $1,000/hour ASC overhead), which brings the profit per procedure (before equipment and disposables) to $1,253 instead of $586. This gives the profit margin a much better cushion, but it can still decreases very quickly if cases are complex and utilize more disposable instruments.

Make it Profitable

Other subtracted costs, equipment and disposables, vary depending on the procedure. A straightforward “floaterectomy” has a reasonable profit margin due to the lack of additional equipment needed (no forceps, no laser, no oil and so on). More complex procedures that require numerous disposables diminish the profitability of the case, causing a loss to the surgery center in some cases. Even with two doctors splitting the $1,000-per-hour overhead costs, a complex case such as a diabetic traction macular detachment requiring forceps, a laser probe, perfluoron and oil may cost the ASC over $1,000 more than the revenue provided for the case.

Surgeons at our ASC handle easier, more efficient, more profitable cases in house and perform more complex procedures at the hospital. Hospital reimbursement rates are 35% higher than ASC rates, so the hospital can more easily shoulder the expense of more complex cases. That's a convenient choice at our location, with a hospital two blocks away from our ASC, but it may be harder for surgeons in situations where the hospital is not readily accessible. Retina surgeons working at highly profitable ASCs (with busy anterior segment surgeons) may choose to continue handling difficult retina cases at the ASC as long as their overall revenue and profit is positive. Problems can arise between physician owners when the retina specialist continues to perform difficult, time-consuming, less profitable cases in the ASC when other alternatives are available.

In addition to case selection, case volume and efficiency are also important contributors to financial success. As more cases per hour are generated, the impact of that $1,000 hourly overhead cost is reduced. While this sounds intuitive, in practice it is difficult to realize. Performing, for example, 10 to 15 vitrectomies for vitreous debris (67036) per week would be quite profitable, but it would be quite difficult to increase the clinical volume to consistently generate that many straightforward cases. Easier, faster, and less cost-consuming cases provide a financial cushion for high-cost cases, such as those requiring oil, perfluorooctane or numerous disposables.

Cut Costs, Not Disposables

In most ASCs, staffing costs make up the largest percentage of nonfixed overhead (43% at our center). However, when surgeons want to cut their ASC's overhead costs, they often target disposables. such as forceps and laser probes, in an attempt to boost the profitability of each case. But disposables total a much smaller percentage of non-fixed overhead (20% in our center), and these tools can make the difference between success and failure. Doing surgery “on the cheap” will often serve to diminish your satisfaction, efficiency, and possibly outcomes. Targeting staffing makes more sense than putting your surgical success and satisfaction at risk.

ASCs must follow Medicare regulations that dictate the minimum number of RNs required in pre-op holding, the operating room and the recovery room. These minimum requirements increase as patient volume increases. Since RNs command a higher salary than technicians and other non-RN staff, the number of RNs should be kept to these minimum requirements to maintain maximum profitability. Another strategy is to schedule surgeons appropriately to share staff as much as possible, ultimately reducing the overhead cost per case.

See More Patients, Comfortably

In an ASC, surgeons need to work efficiently and perform procedures at a pace that's profitable. Rest assured, that doesn't mean performing surgery at a lightning-fast rate. Rather, the ASC is positioned to be much more efficient than the hospital because it's smaller and the regulations are different. This efficiency tends to satisfy patients and surgeons alike.

The most efficient surgery isn't necessarily one that's performed at top speed — it's one that achieves a superior patient outcome and doesn't require a return to the operating room. The goal in surgery is simply to be reasonably quick and successful without excessive use of equipment and adjuvants. Take the time that's comfortable for you to do a good job, use the equipment necessary to be efficient, and save the majority of time elsewhere. This, of course, has limits. A surgeon spending 3 hours on routine cases will have a difficult time becoming profitable in an ASC. On the other hand, a very fast but marginally successful surgeon will become less and less profitable with each successive trip to the OR during the global period (not to mention the legal ramifications and patient satisfaction challenges that often accompany multiple trips to the OR).

There are many ways to increase efficiency. The ASC can gain time by making efficient use of check-in, preop and postop time, as well as making efficient turnovers. If you take the time to visit and learn from efficient surgeons and ASCs, you'll see that achieving maximum efficiency depends largely on having excellent nurses, medical assistants and anesthesiologists, as well as surgeons that embrace and adapt to new technologies (small-gauge surgery, local anesthesia, and so on). The surgeon and management at the ASC can establish protocols and mechanisms to constantly monitor and refine room and patient turnover times. In our ASC, we've developed protocols that have enabled us to achieve, on average, a 5-minute turnover for our single retina room. When we opened our ASC 3 years ago, turnover time averaged 13.9 minutes. The efforts of our entire staff have led to the decrease in turnover time, and this enables us to perform an additional two to three cases per day in our single retina room.

Embrace New Tools

Efficiency requires state-of-the-art tools. I discussed the fact that disposable equipment can be used to achieve the most efficient surgery, but they need to be used in fiscally responsible way. For example, in my ASC, we had been using a $230 laser probe from one vendor, but then found virtually the same probe from another vendor for $130. This simple switch saved thousands of dollars over the course of a year.

Choose equipment wisely from the start. While not an impossible hurdle to overcome, it's often difficult to get a partnership (especially your more profitable anterior segment colleagues) to agree to spend the center's additional profits to undo an ill-informed equipment purchase, especially when the equipment is in good working order.

Get the Anesthesia Right

Another key way to ensure that things run efficiently is to choose an efficiency-minded anesthesiologist. This is a factor that can be controlled in an ASC that often cannot be controlled in the hospital. (Much depends on the politics of how anesthesiologists are assigned to surgical cases in each institution.) The anesthesiologist must be motivated to make the ASC profitable, and that means making efficient use of time.

Our anesthesiologists all understand the nuances of ocular anesthesia. For example, if the anesthesiologist gives an excessive sedation for retrobulbar blocks, patients often “wake up” confused and disoriented just as the surgery is beginning. With less anesthesia, patients are cooperative, and that improves surgical success, satisfaction and overall efficiency. The ability of the anesthesiologist to perform retrobulbar blocks is a plus, but this is not imperative. In our ASC, the surgeons still handle the vast majority of the blocks, and we still achieve a very rapid turnover time.

While most cases can be performed under local anesthesia, in our ASC we have the ability to provide general anesthesia when needed — for example, for patients with language issues, mental challenges or Parkinsonian tremors. Many ASCs have no general anesthesia capabilities, but this necessitates increased hospital utilization. Of course, general anesthesia costs more in nursing time and equipment, but we save time by handling fewer cases in the hospital setting and keeping more cases in the ASC.

Make it Right for You

Retina ASCs are not “one-size-fits-all.” If you're thinking about it, consider your motivation, ability, practice situation and surgical volume before making the jump.

If a move to an ASC seems plausible, you'll find that efficiency isn't difficult to accomplish with focus, time and constant refinement. Surgical excellence is most important. Your profitability will benefit most from your efforts to reduce overhead, especially staff expenses, but don't be tempted to cut corners on the tools required to achieve excellent outcomes.

By setting realistic financial goals based on volume, surgeon mix and your individual practice situation, you'll find that a retina ASC is worth the effort. It can help give you the surgical satisfaction, improved lifestyle and healthy blood pressure that an efficient day in the OR provides. ◊

Reference

1. Medicare Physician Fee Schedule http://www.cms.gov/apps/physician-feeschedule/overview.aspx. Accessed December 12, 2011.