Article Date: 6/1/2009

Efficiency, Adaptability are Keys to Maintaining a Healthy Practice

Efficiency, Adaptability are Keys to Maintaining a Healthy Practice

Dr. Dugel: Our discussion thus far has yielded several important points regarding our current treatment model for neovascular AMD. The newest and most widely used treatments are the anti-VEGF agents. They are the most effective therapies we have ever had. At the same time, the frequency with which they must be given has brought major change to our practices. The number of patient visits to our offices has increased dramatically, and a great deal of physician and staff time is devoted to administering intravitreal injections as well as monitoring treatment effects, primarily with OCT.

It has been difficult to accurately determine the impact of these changes from a business management perspective. However, we have some new data, which has shed a great deal of light on this issue. The data is from Efficiency Studies conducted at three vitreoretinal practices using ABC methodology. This methodology focuses on the true cost of providing various services, which is the best way to determine which services are profitable for the practice and which are not. The results have shown us that while we are seeing more patients and collecting more revenue, overall practice profitability has decreased.

We also have discussed how the new AMD practice pattern is likely to figure into healthcare reform efforts and the future physician reimbursement scenario. As explained by Dr. Rich, we will probably see cuts in reimbursement for intravitreal injections and office-based testing, precisely the same areas where our patients are being driven.

The final part of our discussion will center on what we can do in our practices to meet these challenges and remain financially viable.

PRIVATE AND ACADEMIC PRACTICES FACE SIMILAR CHALLENGES

Dr. Dugel: Dr. Haller, as a physician who has practiced in the top private and academic vitreoretinal centers, you have a broad perspective on the issue of the new AMD treatment model and practice profitability. Does our discussion surprise you in any way? In your opinion, what are the implications for private and academic practices across the country?

Dr. Haller: While the current Practice Efficiency Studies represent a different way to analyze practice finances, the results are very similar to those from previously conducted studies in which I have been involved. For example, the American Society of Retina Specialists (ASRS) conducted a study using a slightly different metric, profit per retina specialist hour, or EBIT (Earnings Before Interest and Taxes, a standard accounting term) per retina specialist hour. This metric provided insights similar to the studies we are discussing here. As far as the profitability of different services, laser procedures were at the top of the list and were followed by intraocular injections and surgery. Office visits and diagnostic testing were at the bottom of the list.

The ASRS study focused on strategies for maximizing practice health and viability, with an eye toward meeting the challenges inherent in caring for the projected numbers of patients needing management by retina specialists in the years ahead. The study clearly indicated the importance of improving the efficiency of procedures, maximizing the use of the physician's time in particular.

One strategy that has been adopted to maximize time is batching tasks. For example, many practices now devote entire blocks of time to administering intravitreal injections and nothing else. The same approach can be used with surgery, so the doctor is not wasting time going back and forth between the office and the OR.

Other ways to maximize physician time are shifting the practice toward laser procedures and injections whenever possible, and using physician extenders for time-consuming tasks such as prepping patients and explaining follow-up schedules, which can be performed safely by nonphysicians, and are not the most efficient use of doctor time.

Also, consider reaching out to educate endocrinologists and diabetes specialists about the eye care their patients should be receiving. If a practice is trying to build up its financial health, those referral sources are particularly good because they bring us patients who may need the types of procedures that enhance practice viability.

In the academic setting, of course, many curve balls can come our way. A dean's tax, for instance, dramatically impacts practice profitability. So can other types of policies imposed from above over which individual doctors have little control. Across the board billing decisions and fees would be an example of that.

At the Wilmer Eye Institute at Johns Hopkins, we were able to order and manage our drug inventories through the hospital pharmacy. This was helpful, particularly at start up. Hospital pharmacies are allowed a mark-up on many of the drugs we use, which covered the costs for the hospital to supply us with some clinic personnel. So that was a win-win situation, but it is a situation that does not apply to the freestanding private practice model.

KEEPING UP WITH BRISK SCIENTIFIC AND LEGISLATIVE CHANGES

Dr. Haller: Something for all retina practices to consider is the likely possibility of changes from the scientific standpoint. Dr. Rich talked about the way things may change politically, but the emergence of new technologies can have a major impact as well. We do not want to be changing our practices based on performing monthly injections for all of our AMD patients for the indefinite future only to have some other modality, such as an implantable extended delivery device requiring only an annual injection, surprise us and leave our waiting rooms empty and our staff unused. We need to be aware of research advances, plan strategically and monitor where the situation is going if we want to survive amid the changes ahead.

Dr. Rich talked about the way things may change politically, but the emergence of new technologies can have a major impact as well. We do not want to be changing our practices based on performing monthly injections for all of our AMD patients for the indefinite future only to have some other modality, such as an implantable extended delivery device requiring only an annual injection, surprise us and leave our waiting rooms empty and our staff unused. We need to be aware of research advances, plan strategically and monitor where the situation is going if we want to survive amid the changes ahead.

Julia A. Haller, MD

Dr. Dugel: That brings up an interesting point. We have seen with ranibizumab and bevacizumab how quickly things change. They could change again just as quickly, if not quicker, if an implant or a microsphere or other more durable AMD treatment becomes available. How rapidly would we be able to change and adapt in our practices? How confident are all of you that we, and our colleagues in academics or private practice, would be able to adapt rapidly to avoid losing money?

Dr. Rich: If we think about historic patterns of delivery of care, I think we would agree that doctors are pretty intuitive. They adapt rapidly. Nonetheless, Dr. Haller's point is a good one. The potential impact of changes in technology always needs to be considered. In fact, the demand in services in the past 20 years has been technology based. We cannot really predict what our offices and surgicenters will look like in 5 years, but we need to recognize the trends in our practices, whether they are academic or private. We have to look at the trends, look at our bottom line and learn to adjust quickly.

Dr. Dugel: Because many of us are involved in emerging technologies and we attend professional society meetings regularly, we are in a position to understand where technology is headed. What about legislative changes? How quickly might the next round of changes occur in that area? When they do occur, how quickly will they affect our practices?

Dr. Rich: Because President Obama favors fee-for-service Medicare, physicians are going to benefit. The $347 billion debt owed, which is related to the Sustainable Growth Rate mechanism for setting Medicare's physician payment rates, is going to be off the books. We will be starting from scratch. Drugs will no longer count against our budget under the new administration.

Therefore, I think the huge overhanging debt that has been pounding down our fees and threatening our long-term viability is going to disappear. That is the good news. However, we may have some bad news related to healthcare reform, because about 46 million people, who are uninsured, may be coming into the system. That will increase the demand for our services, drive up costs and ratchet down fees. However, I think reimbursement for major procedures will increase, but we will see greater demands placed on our practices, thus affecting our ability to operate efficiently.

POSITIVE CHANGES FROM A SURGICAL PERSPECTIVE

Dr. Dugel: Mr. Romansky, you have been involved with the Outpatient Ophthalmic Surgery Society (OOSS) for a long time. Your insights would be helpful. We tend to divide the services we provide into two broad treatment models, medical and surgical. So far in this discussion, we have discussed medical treatment models. However, changes related to surgery also have been occurring, vis-à-vis ASCs and physician reimbursement. Can you give us some background on what has happened in the past 5 years and where you see the situation going as far as doctor and facility fees for surgery?

If we think about historic patterns of delivery of care, I think we would agree that doctors are pretty intuitive. They adapt rapidly … The potential impact of changes in technology always needs to be considered … We cannot really predict what our offices and surgicenters will look like in 5 years, but we need to recognize the trends in our practices, whether they are academic or private. We have to look at the trends, look at our bottom line and learn to adjust quickly.

William L. Rich III, MD, FACS

Michael A. Romansky, JD: I am very intrigued by this discussion of a migration from a medical to a surgical model for anti-VEGF treatments for AMD. Assuming we reach a point where the surgical modality is a viable treatment option, the vitreoretinal surgeon can take advantage of surgery sites that include the ASC, as well as the hospital and office.

For the most part, vitreoretinal doctors have been performing surgeries in hospital outpatient departments (HOPD). ASCs have not been much of a factor because, historically, ASC payment rates under the Medicare program have been inadequate to enable facilities to recoup the costs of performing surgery.

Let us consider CPT code 67036 for pars plana vitrectomy. In 2007, the ASC facility payment for the procedure was $630 and in 2008, $857. At these rates, it has been difficult, except perhaps for the most efficient surgeons, to operate in an ASC. Most physicians simply could not afford to do it. However, significant legislative and regulatory changes are affecting the way ASCs are paid. ASC rates are being tied loosely to hospital payment rates. Over the course of the next few years, ASC rates for vitreoretinal services will increase dramatically. Again, 67036 is illustrative, with payments increasing to $1,077 in 2009 and to more than $1,500 by 2011.

I am not certain that I agree with Dr. Dugel that the government's plan is to force the migration of services from the HOPD into the ASC, but it is not difficult to speculate that the procedures will follow the money.

Let us examine the cataract surgery model. Twenty years ago, perhaps 15% of these procedures were performed in ASCs. With augmented payments — and changes in technology and technique that have enhanced surgeons' ability to use ASCs — the percentage of cataract cases performed in ASCs is approaching 70%. If the reimbursement for vitreoretinal services doubles, some procedures will shift to the ASC environment. My guess is that we will see an increasing number of vitreoretinal surgeons partnering in existing ASCs and developing their own facilities. Many predominantly cataract-oriented ASCs are becoming interested in recruiting vitreoretinal specialists.

Dr. Rich: Mr. Romansky and OOSS and the American Academy of Ophthalmology have been frustrated from a regulatory and financial standpoint by retina surgeons being excluded from the efficiencies of ASCs. They have worked very hard for the past 10 years to change this. They want to see retina procedures performed in ASCs at a reasonable price. But will the vendors price retina out of the market? I have been discouraged by their initial responses, but the hope is that some competition will emerge among the equipment manufacturers.

Mr. Romansky: When we look at the hundreds and hundreds of procedures that were affected by the recent rulings, there is no question that, among the specialties and subspecialties that use ASCs, vitreoretinal procedures are among the big winners.

SOLID DATA ENABLES SMARTER ALLOCATION OF RESOURCES

Dr. Dugel: Do the panel members have any final comments?

Dr. Tornambe: We have 3 kinds of people in the world: those who make it happen, those who watch it happen and those who ask what happened. We want to be in 1 of the first 2 groups. If we have learned anything over the past decade about AMD, it is that it is a very rapidly evolving and changing area.

In the future, we may have at our disposal some kind of assay to determine which of the available treatments is best for each patient. If so, we will have to change our practice patterns accordingly. Most of the time, the scenario does not change overnight, so we should be able to see changes coming. We just need to be open-minded about them and be prepared to adapt along with the trend, as every other business does.

Dr. Murray: The ABC methodology we have examined in this discussion is a unique way to evaluate our practices. It allows us to understand what opportunities we have within our practices, and it helps us make better choices about the allocation of resources. Both are paramount in the current AMD treatment environment, which is expected to continue to change dramatically. It is a unique time for our profession. It is exciting as well as scary. We have been focusing on intravitreal injections for wet AMD and have not even touched on what the implications would be if treatment options for dry AMD enter the picture.

If the reimbursement for vitreoretinal services doubles, some procedures will shift to the ASC environment. My guess is that we will see an increasing number of vitreoretinal surgeons partnering in existing ASCs and developing their own facilities.

Michael A. Romansky, JD

Either way, the recurring theme is the importance of making our practices more efficient. Then, beyond maximizing efficiency, we also face the critical global issues that the practice evaluations revealed. Certainly, the studies yielded some surprising results. When we have presented our findings at meetings, they have been a show stopper. We have a much better understanding of how important this information is to the future of our practices and how it may impact the way we manage our patients.

Dr. Dugel: At the end of the day, it boils down to the sustainability of our current treatment model and the adaptability of our practice to rapid change. We all agree that the current treatment model is not sustainable at various levels: macro and microeconomics, patient logistics, quality of life, and so on. A new treatment model will be adopted either due to a better drug or device, or due to legislative changes. History has proven that this will happen rapidly and will have enormous financial implications for all practices — private and academic. The financial health of our practices may depend on how well we understand our current situation and how efficiently we adapt to a new treatment model. RP



Retinal Physician, Issue: June 2009