Originally published by Becker’s ASC Review.
ASCs deliver tremendous value to patients and payers alike. Operating profitably, however, in this era of thinning margins can be a challenge. In October, at Becker’s ASC Review 26th Annual Meeting in Chicago, Regent Surgical Health hosted a workshop to explore how ASCs can increase their revenues in 2020.
A panel of experts from Regent Surgical Health and Sycamore, Ill.-based Midwest Orthopaedic Institute discussed how to optimize case revenue by 10-15 percent, serve more patients by launching a total joint replacement program and successfully negotiate managed care contracts.
Improving ASC cash flow
Regent Surgical Health tracks three revenue cycle key performance indicators at all its centers to guide increased cash flow. The first KPI is accounts receivable follow-up. Best practice processes include identifying and measuring workload, benchmarking performance and conducting quality audits.
Erin Petrie, vice president of Regent Revenue Cycle Management, noted, “The key is to make it more strategic. Look at the full scope of all the claims you touch in a month. Prioritize based on payer, age, dollar amount or some combination.”
The second KPI to consider is the percentage of accounts receivable over 90 days. Ideally, organizations should be paid between zero and 60 days. Once an account hits 90 days, the potential for it being written off grows. Ms. Petrie’s group increased the average monthly collection at a center in Florida by $125,000 by consistently working accounts over 90 days.
The third objective is to reduce denials to less than 5 percent. Organizations often use a manual process to track denials, but it is not followed consistently. This results in delayed cash flow.
Growing revenues through total joint replacements
SG2 Research projects that by 2026, 51 percent of primary hip and knee joint replacements will be performed in an outpatient setting. To profit from this trend, ASCs must often engage in a programmatic shift. Ten years ago, Midwest Orthopaedic Institute was a typical orthopedic group. Its average hospital stay for a hip or knee replacement was 4.5 days and 95 percent of patients recovered in a skilled nursing facility. Over a six-year period, the organization evolved its pathways where 94 percent of patients go home on day one and only 6 percent go to a skilled nursing facility.
Steven G. Glasgow, MD, FAAOS, a surgeon at Midwest Orthopaedic Institute, observed, “Every time we made a change in our clinical pathway, we followed our metrics meticulously. Our results got better. Being patient centric drove improved clinical outcomes.”
Dr. Glasgow attributed the success of his organization’s whole joint replacement offering to several factors. The ASC has a care coordinator that sees every patient and caregiver. In addition, the surgeons carefully select patients. Individuals must be ASA I or II, have a BMI less than 35 and have no presence of comorbidities like uncontrolled insulin-dependent diabetes, a history of cardiac problems or sleep apnea. Physical therapy begins before surgery and every process is standardized.
Avoiding pitfalls when negotiating managed care contracts
Effective negotiation of managed care contracts requires a heavy analytical component. Knowing the rates in specific markets is valuable information. If an ASC understands the hospital rates for total joint replacements in its market, it can approach payers and offer a discount to shift cases to the ASC. Outsourcing the negotiation can be valuable.
Understanding your target rates and leveraging physician champions are also best practices. Chris Bishop, CEO of Regent Surgical Health, said, “It’s okay to say no. You may start the negotiation and then feel that you’ve reached an impasse. At that point, bringing in the physician champions can have a huge impact. It’s harder for payers to say ‘no’ to a doctor than to a business person.”
A blended approach to improving revenues and reducing costs can be an effective way for ASCs to prosper in today’s market. Savvy ASCs are outsourcing tasks such as accounts receivable collections and negotiating managed care contracts. By following these best practices and entering new markets like total joint replacements, ASCs have the potential to increase revenue in 2020.