There’s no question that 2017 will hold some big changes and challenges for the ASC sector. But alongside these hurdles, there are also considerable opportunities for well-prepared ASCs to not only cement their basic financial stability, but to boost their revenue and profitability as well. A recent article in Becker’s ASC Review describes the following six key focus areas as important priorities for ASCs looking to make 2017 a highly profitable year.
1. High-acuity cases.
In recent years, ASCs have seen significant progress in the number and type of high-acuity procedures performed, and that trend is only going to grow as Medicare continues to add codes for high-acuity outpatient cases. After a long period where such cases were performed almost exclusively in hospital settings, ASCs are welcoming the opportunity to demonstrate their ability to effectively, efficiently, and safely handle procedures like complex spine and total joint replacement (TJR) cases.
TJR cases in particular represent a major opportunity for ASCs. More codes have been approved, more payors are willing to reimburse for such procedures in an ASC setting, and new techniques and pain management solutions are further improving outcomes and discharge times. In light of these developments, the TJR market is a prime target for ASC investment and is expected to deliver impressive returns over the coming year.
2. Implant pricing.
In an inpatient setting, prosthetic implants are typically the single largest expense for joint replacement procedures. Traditionally, under the increasingly outdated fee-for-service model, physicians and surgeons usually insisted on their own preferences for supplies and devices like implants with little regard for the cost of those devices. However, now that the bundled payment model is becoming more commonplace—under a bundled payment system, providers receive a set price for an entire episode of care, including costs like surgeon’s fees, facility fees, and implant costs—more and more hospitals and inpatient facilities are attempting to reduce their procedure costs by putting a ceiling on the price they’re willing to pay for implants.
This is good news for ASCs because it is resulting in overall downward pressure on implant prices. Consequently, ASCs can use hospitals’ upper price limits to leverage their own price discounts and cost efficiencies when it comes to sourcing implants.
Improving cybersecurity may not seem at first to be an obvious way to boost profitability, but the growing number of ASCs who have been hit with ransomware attacks would disagree. As ASCs become more widely used, their appeal as a target for hackers grows. This past July, for example, an ASC in Pennsylvania was the subject of an attack in which hacker-installed ransomware prevented the ASC from accessing the confidential files of nearly 13,000 patients until a ransom was paid.
Consequently, many industry insiders recommend proper investments in cybersecurity as an important step to indirectly increase profitability by decreasing the potential for loss through ransom attacks. In addition, better cybersecurity helps avoid the time and money costs required to address data breaches of any kind, and it also prevents damage to an ASC’s brand and reputation.
4. Revenue cycle management.
Many ASCs focus so closely on providing excellent care that they sometimes fall short when it comes to the practical, administrative aspects of ASC operation, like contracts, billing, and collections. These are all equally important aspects of the ASC profitability equation. ASCs that work to improve their revenue cycle management practices (by applying these key metrics, for example) can often be surprised by a value increase of anywhere between 5% and 30%.
Another administrative element that can greatly boost ASC profitability when properly handled is staffing. ASCs should be careful not to let their current staffing practices go unexamined, as overstaffing tends to be a chronic issue in the ASC industry. To reduce unnecessary spending and keep profits optimized, ASCs and physician partners must be willing to support an appropriate staffing model that includes schedule compression: in other words, not keeping all four operating rooms in a four-OR ASC fully staffed when the current case load only requires two. ASCs should also examine their current staffing practices against industry benchmarks to ensure that all staff are being paid fair market value, with no instances of over- or under-paying.
6. Reporting regulations.
Some ASCs may regard reporting as a difficult administrative burden, but it’s important to keep in mind that reporting regulations are intended to bring about net positives for the industry as a whole. More reporting requirements can be challenging for ASCs to deal with effectively, but the increase in data-sharing supports better surgical outcomes and an improved quality of care, which in turn helps bring about greater ASC profitability. As ASCs are measured by an increasing number of criteria, lagging ASCs have no choice but to raise their capabilities, and consequently, the industry overall provides better value and sees better returns.