OASC | RETINA

Adding Retina to an ASC

There are numerous advantages to adding retina — chief among these are improved patient care and outcomes.

By Michelle Dalton, ELS, Contributing Editor

Hospitals were once the preferred venue for retina surgeries, but technological advances have made the majority of cases relatively straightforward, and improved reimbursement fees have made ASCs more attractive to retina surgeons.

Some physician-owners believe ASCs should incorporate retina not because the segment will generate additional income, but because it’s more convenient for the patient and the surgeon. ASCs are already well known for efficient and expedient surgical practices, and retina is no exception to that rule.

Adding a retina subspecialty to an ASC is a large financial undertaking — one retina room may cost close to $1 million to properly equip. So, when considering adding retina to an ASC, both the surgeon and the ASC owners have to understand the economics of running a retina surgical practice.

The Draw (and Drawbacks) of an ASC

Better patient care and increased profits are primary reasons a retina specialist should consider joining an ASC. If a retina specialist takes an ownership position at an ASC, it becomes more profitable for the surgeon than keeping his cases at a hospital, as the surgeon is being paid for the procedure and receives a portion of the ASC facility fee.

When Medicare improved reimbursement fees to ASCs in 2008, the number of procedures performed increased to 44,381 up from 36,392 in 2007 and billings jumped 71% to $39.8 million; in 2009, ASCs performed more than 50,000 retinal procedures and billings increased an additional 23% (to $48 million), says Victor Gonzalez, MD, founding member of McAllen Specialty Surgical Center and the Harlingen Surgical Center.¹ For instance, the average reimbursement at an ASC for pars plana vitrectomy has increased from $630 in 2007 to $1,540 in 2011 (a 145% increase).^1,2 And, as equipment ages, fewer hospitals are investing in new retina equipment and are often unable to provide a staff member who reliably knows the nuances of retina surgery, says Ralph Paylor, MD, managing partner at Florida Eye Associates/ASC of Brevard.

“The original reason our ASC began performing retina surgeries was improved patient care. We just felt we could not continue to efficiently take care of patients in the hospital,” Dr. Paylor says.

“ASCs have focused personnel. It’s a more comfortable environment and a less stressful one for the patient, and the surgical turnover is significantly more efficient in an ASC than in a hospital,” Dr. Gonzalez says. From a surgical perspective, the efficiency means more cases in a shorter period of time; conversely, the patient doesn’t have to wait for hours for a room to open up.

Dr. Gonzalez added that for cash-paying patients, or with an 80/20 split with an insurance provider, the facility fees and out-of-pocket expenses will be much less at an ASC than in the hospital as well. For example, in an ASC the Medicare patient copayment for a pars plana vitrectomy with removal of internal limiting membrane (CPT code 67042) would be 20% of the allowable ($1,663.54 multiplied by 0.2 = $332.71). In a hospital outpatient department, the minimum unadjusted copayment that CMS allows to be charged is $612.07, explains Stephen C. Sheppard, managing principal, Medical Consulting Group.

“The structure of an ASC gives me access to more patients in general,” Dr. Gonzalez says. “Patients are getting the same procedure at the same quality for significantly less out-of-pocket cost.”

Provided the surgical center isn’t hospital-owned, Dr. Gonzalez says facility fees are almost 40% less. For example, the 2014 Medicare national average reimbursement rate for a macular pucker performed at an ASC is $1,663.54, while the national average reimbursement in a hospital outpatient department is $3,060.33, Sheppard says.

A surgery center environment also provides peace of mind, Sheppard added. “At an ASC, they’re not competing with all the other surgical specialties. Retina cases aren’t going to be bumped because the orthopedist needs the room for a trauma case.”

“ASCs have the potential to provide the best of care because they’re specialized, and if you’re an owner, it’s an outstanding investment,” says Pravin U. Dugel, MD, managing partner of Retinal Consultants of Arizona, and Founding Partner of Spectra Eye Institute. “It’s one of those rare opportunities to attain excellent patient care as well as an excellent investment.”

Attracting Retina Doctors

Business savvy retina specialists are going to want an ownership stake, Dr. Gonzalez says, and they’ll also be attracted to having more access to the most updated equipment.

Dr. Paylor’s group bought a competitor’s ASC and practice in the early 1990s. Retina remained in the hospital until 2002, and the trend toward moving retina out of hospitals and into specialty ASCs will continue, he says.

Surgeons will also want to know how the ASC addresses non-profitable cases, Dr. Dugel says.

“At our ASC, there are some cases we perform that are clearly not going to be profitable, for example very complex cases, such as proliferative vitreoretinopathy that require silicone oil and may be time-consuming,” he says.

The facility fee for lasers is “around $230,” Sheppard says. “It would make sense to perform some of those cases in the surgery center,” but with a “substantial” site of service differential between the office and the ASC, “unless the retina surgeon is a significant owner of the ASC, they’re going to lose profitability by bringing those cases to a surgery center.” For example, the surgeon’s professional fees for 6720 (focal photocoagulation) in a clinical office is $540.92, which is reduced to $523.37 if the procedure is done in an ASC or a hospital outpatient department, he says.

“Plus, taking these procedures to an ASC requires some disruption of the clinical procedures and another trip for the patient,” Sheppard says. “The economic problem is that the retina surgeon only benefits by their percentage ownership in the ASC, but takes 100% of the reduction in professional fees.”

The amount of medical, laser and surgical cases any retina specialist treats will become a factor in whether or not to join an ASC.

Dr. Paylor’s advice is that if the surgeon only wants privileges (and not ownership), it makes sense for retina specialists to be affiliated with several ASCs.

“There are really no cookie-cutter answers as to whether the ASC is appropriate and advantageous to a particular person,” Dr. Dugel says. “Referrals are the most important aspect of my practice; without them I would have nothing.” Dr. Dugel advises others to evaluate if joining a particular ASC would affect referral patterns in the community. “If it does, then joining is a no-go. It’s possible that joining a particular ASC — especially if ownership is on the table — may antagonize other referring physicians who don’t work in that ASC. Never jeopardize your primary referrals.”

Bringing in Retina

Most ophthalmic ASCs aren’t being utilized to their full potential, Sheppard says. From an owner’s perspective, if the center is “periodically dark, looking around for other physicians to fill that time and bring surgical cases is very, very profitable,” he says. “Adding cases at the economic margin rather than at the average rate will boost profitability,” says Sheppard.

For centers that are predominantly anterior segment, however, Dr. Dugel stresses that the equipment and instrumentation overhead must be factored into the equation.

“Adding retina from scratch is very expensive, it’s a large capital outlay, and it’s extremely surgeon-dependent as to whether it will be successful and profitable or not,” he says.

Equipping a facility from scratch can be cost-prohibitive: a vitrector with a 532nm laser may cost between $100,000 and $125,000; add on another $90,000 to $120,000 for a good quality microscope with an indirect view system, another $20,000 to $30,000 in surgical trays, $7,500 to $11,000 for cryo equipment, and it adds up, Sheppard says. “It’s not inexpensive to get into the retina business.” Centers should ensure they have the bandwidth to accommodate the number of surgeries necessary to recoup the costs.

Yet if you’re considering adding retina is to fulfill an unmet need in the community, then cost should not be the driving factor, Dr. Dugel says.

For ASCs that already employ (or give privileges to) retina specialists, however, adding another “isn’t a real game changer because the cases are longer,” Dr. Paylor says.

Most retina specialists will continue to perform intravitreal injections in their own offices, but will pay a facility fee for performing laser treatments. Dr. Gonzalez noted it’s becoming less common to use a laser, so a facility may not deem it cost-effective to purchase the “latest, greatest” machine unless it can serve multiple surgeons.

“From a center’s perspective, medical retina is not going to use lasers as much — even for their diabetic population, treatment is moving toward injection,” he says. “If the ASC adds a laser that can be used by multiple subspecialties, then it may be worth the investment.”

Adding cases at the end of the day is much easier in the ASC environment than in a hospital one, Dr. Paylor adds, making it a bit less arduous for the staff who incurs the overtime.

“With the advances in vitrectomy surgery and the way we repair retinal detachments, a 25-gauge vitrectomy case is much faster than it used to be,” he says. So, efficient surgeons can turn over cases at a much higher rate in a single-specialty ASC compared to the hospital.

The ASC-friendly Surgeon

ASCs need to consider the surgeon as well, Dr. Dugel says. “The same case may be quite profitable to the ASC and may not take very long and may not require a lot of resources in one surgeon’s hands but in someone else’s hands, it may not be profitable and be a drain on resources and time. But it’s also about how the surgeon uses the resources he/she has — some may require perfluorocarbon or silicone oil in more cases than others. Some may require multiple instruments whereas other people may require less.”

ASCs should also consider reimbursement issues, Sheppard says. A handful of CPT codes are likely to cover about 80% of the retina cases performed in an ASC — vitrectomy, membrane peels, macular puckers, holes, retinal detachments with or without a scleral buckle — are all in the same ambulatory payment classification group for Medicare, with a national average $1,663.54 for facility reimbursement.

Facilities should evaluate whether or not a surgeon is “ASC-friendly,” Sheppard says. “Are their equipment needs and surgical times reasonable?” If so, ASCs benefit from having those surgeries performed at their locations. On average surgical supplies cost approximately $500 to $650 for the consumables, the contribution margin of typical retina cases (after labor is included) is close to $800 to $900, he says.

Not every retina surgeon needs to be a partner, Dr. Paylor says. ASCs may consider granting privileges to several surgeons — if a handful of retina specialists bring several cases (especially if they are elective macular puckers or macular holes), “it could be a very savvy business decision,” he says.

An advantage multispecialty centers may have over an ophthalmic center is the ability to tout neutrality. With referrals the primary base for most retina surgeons, an alignment with a multispecialty center isn’t likely to be viewed as “choosing sides among the anterior segment surgeons,” Sheppard says.

“Close to 90%” of surgical cases in smaller ASCs (those with up to four rooms) are referred to the center by the owner-physician, he says. It’s unrealistic for an ASC to develop a relationship with a busy surgeon and not include an ownership option.

“Medicare is paying ASCs, on average, 56% of what they’re paying hospital outpatient departments for the same surgery case. Profit is neither literally or figuratively a four-letter word,” Sheppard says. “Quality of care is still your prime directive here. ASC owners have to pay attention to the numbers.”

Other Considerations

Dr. Dugel says the surgeon should consider how receptive the ASC is for not-so-profitable cases in addition to how willing it is to purchase state-of-the-art equipment. If it becomes clear the ASC is pushing difficult or non-profitable cases to the hospital, patient care is going to suffer, he says.

“What that attitude forces a surgeon to do is take the most difficult cases to a place that may have the least amount of experience, and that’s the last thing surgeons want to do,” Dr. Dugel says.

Dr. Gonzalez is a firm believer that all cases may be performed in an ASC environment, but says patients who are not medically stable may be better served in a hospital.

“Facility fees are such that we can cover the cost of the silicone oil in the more difficult patients,” he says. “The only cases I bring to the hospital are infant pediatric cases and the medically unstable patients, just in case something goes wrong and we need cardiology readily available.”

He acknowledges that some payors are dictating where the surgery occurs — but he has yet to find a device or implant where the reimbursement is less than the cost of the device. In his research, moving most surgeries to an ASC “could save Medicare $2.5 billion in retina reimbursements alone.”

The benefits of moving to an ASC “may not necessarily be financial, but they definitely offer improved patient care,” Dr. Paylor says.

Dr. Dugel emphasized both the facility and the physician must be willing to adapt to change. Newer devices allow surgeons to reduce the amount of personnel needed, reducing overhead while still improving patient care and outcomes.

“There is absolutely no reason for a retina surgeon not to join an ASC. They are the best alternative for higher quality care at lower cost,” Dr. Gonzalez says. ■

References

Dr. Dugel may be reached at pdugel@gmail.com. Dr. Gonzalez may be reached at maculadoc@aol.com. Dr. Paylor may be reached at tbarker@floridaeyeassociates.com. Mr. Sheppard may be reached at ssheppard@medcgroup.com.