Article Date: 10/1/2004

More Retina Specialists Considering ASC Feasibility
Less-involved posterior segment procedures can fit into the environment of a well-run ambulatory surgical center.
STEPHEN C. SHEPPARD, CPA, COE

For 20 years, anterior segment surgeons have been steadily moving their cases out of the hospital and into ambulatory surgical centers (ASCs), while retinal surgeons have been reluctant to do so.

Why the foot-dragging on the part of retinal surgeons to consider using ASCs?

The traditional arguments against ASCs for posterior segment procedures are familiar. Doubters point to lengthy case times, the high cost of equipment and supplies, and frequent use of general anesthesia as reasons to render posterior segment cases inappropriate and unprofitable for ASCs.

In the past few years, however, I've encountered an increasing number of posterior segment surgeons who are very curious about the feasibility of just such a move -- and who are increasingly willing to try it. Many are also hearing anecdotal reports of quality of life and economic benefits derived from surgery center ownership.

One of my clients, whose practice made the decision to acquire an ASC, has successfully and profitably relocated approximately 80 percent of his posterior segment cases to the surgical center.

In this article, I'll outline several indicators and factors that are predictive of successfully integrating retina surgery into an ASC.

DO THE NUMBERS MAKE SENSE?

At current reimbursement levels, it's difficult, although certainly not impossible, to make economic sense of a retina-only surgical center.

During the past few years, I've been able to have the opportunity to assist several well-established retina groups in evaluating the financial feasibility of proposed ambulatory surgical centers.

The results of these reviews have revealed that, typically, approximately 60 to 75 posterior segment cases per month are necessary to yield an acceptable economic return in a dedicated, one-operating-room center built for retina only.

More commonly, retina cases are able to provide a profitable adjunct to existing surgery centers already performing anterior segment cases. This works out particularly well when the ASCs have readily available excess capacity that they're seeking to utilize. Analysis of a number of these opportunities indicates that the addition of retina to the existing case mix can be justified at much lower monthly case volumes, usually 10 to 15 cases per month.

And while the number of procedures performed is a primary consideration in deciding whether to use an ASC, the financial performance of a surgery center retina program will also be heavily influenced by many other factors, including the equipment, instruments and supplies, and the efficiency of the surgeon.

DEVELOPING AN "ASC MENTALITY"

The most important factors determining the success of a retina program in a surgery center are the aptitude and attitude of the surgeons. They need to have what I often call an "ASC mentality."

In an ASC, surgeon efficiency is a critically important variable that allows retina cases to be performed safely and profitably, and that enables the ASC managers to commit adequate and predictable block time to the surgeon.

As an initial benchmark, surgeons should routinely complete a straightforward vitrectomy with epiretinal membrane stripping in 45 to 60 minutes, macular hole repair and scleral buckles in approximately an hour, and a buckle with vitrectomy (and, possibly, a panretinal photocoagulation) in less than 90 minutes.

A smooth transition to the ASC environment can often be facilitated by choosing less complex cases to be performed at the facility. These could include vitreous hemorrhages, macular holes, membrane removals and simple retina detachments.

Avoid cases that need to be performed under general anesthesia, those that require silicone oil -- which isn't reimbursed in the ASC -- and extremely sick patients with significant comorbidities. Additionally, most ambulatory surgery centers aren't staffed or equipped to handle off-hours, emergency care. Make plans to take those patients to the hospital outpatient center.

Retina surgeons whose case times regularly approach or exceed 2 hours aren't likely to be successful in a surgical center. I hope it's clear that I'm not implying that surgical case times correlate directly to the quality of patient care delivered; but rather that long or complex cases are more appropriately performed in hospital outpatient settings.

ADAPTING TO THE ASC

The ASC mentality is evidenced in a surgeon's willingness to simplify his or her approach and processes in moving from the hospital to the ASC.

In the absence of very high case volumes, surgery centers can't afford to spend the approximately $250,000 to equip the center for posterior segment surgery. As alternatives, consider these possibilities:

► Flexible surgeons often can utilize the existing OR ophthalmic microscope.

► It may be possible to retrofit an argon laser to perform indirect panretinal and endophotocoagulation. Alternatively, it may be possible to acquire a refurbished unit

► By limiting the case mix to their most commonly performed procedures, most surgeons can also simplify their surgical tray and add only 4 or 5 specialty instruments not already included on the basic anterior segment tray.

► In lieu of a separate vitrectomy machine, some of the phacoemulsifiers currently on the market can be expanded to perform vitrectomies and/or endolaser procedures.

Carefully review the costs and benefits of equipment and instrument purchases and avoid costly items that will only be used for a handful of cases each year.

In a similar vein, you'll want to take a close look at the quantity and cost of surgical supplies and disposables used in each case. My "best practices" clients exhibit case costs from under $200 for a scleral buckle without vitrectomy to just under $500 for a detachment repair with vitrectomy and endolaser photocoagulation. These figures reflect supplies and disposables only and exclude labor costs.

Current ASC Medicare reimbursement rates range from approximately $640 for a stand-alone pars plana vitrectomy to a little more than $1,000 for the complex combined procedures. Note that these are global fees and that high-cost supplies, e.g., silicone oil, are not separately reimbursed.

Patients covered by commercial insurance plans usually pay facility fees somewhat higher than those allowed by Medicare and other governmental programs.

STAFFING IS KEY

Retina surgery requires the focus, expertise and training of every member of the team. Because the surgical cases tend to be more complex than most cataract and cornea procedures, concentrate the training and actual surgical cases on a core group of nurses and technicians. While cross-training is a worthy goal, for these cases less is usually more.

That said, one of the joys of ASC practice is being able to work smoothly and efficiently with the same highly trained and motivated staff members each surgical day. Many surgeon concerns are eliminated by an environment totally dedicated to eye surgery and quality patient care.

From a cost-of-care perspective, the impact of staff labor costs is often overestimated in evaluating the feasibility of certain procedures. In projecting profitability by case, only the truly variable costs, i.e., staff that would otherwise be told to clock out and go home, should be included. Only rarely do these labor costs exceed $100 per hour per operating room.

All things considered, posterior segment cases can, and should, produce adequate operating margins that support their inclusion in the ASC case mix.

LOOKING AHEAD

While I doubt that my crystal ball is much better than yours, two important trends make me conclude that, like anterior segment surgery, the future will see an increasing movement of retina cases into ambulatory surgical centers.

First, technology and techniques will continue to improve and provide enhancements that are less invasive and more efficient and cost-effective than those employed today. A good example is the recent emergence of 25-gauge instrumentation for many common procedures.

Secondly, the Medicare reimbursement structure is scheduled for a substantial overhaul in the not-too-distant future -- most likely around 2008. Currently, hospital outpatient departments are paid much more than ASCs for many of the common retina procedures. Many observers anticipate that the future rate rebasing will eliminate some of these disparities to the benefit of ASC reimbursement levels for this group of cases. If this occurs, it may substantially improve the operating margins that ASCs enjoy from posterior segment cases.

SEEING IS BELIEVING

I believe that in the next few years a substantial percentage of retina cases will migrate to ambulatory surgical centers. If you haven't done so yet, arrange to visit a colleague who uses an ASC and observe a few cases. I'll bet you'll be impressed.

Stephen C. Sheppard, CPA, COE, is a managing principal with Medical Consulting Group, LLC, an ophthalmic consulting firm with offices in Springfield, Mo., and Fayetteville, Ark.

 


Retinal Physician, Issue: October 2004