At a session at the 10th Annual Orthopedic, Spine and Pain Management-Driven ASC Conference, Chris Bishop, senior vice president, acquisitions and development, Blue Chip Surgical Center Partners, discussed how underperforming surgery centers can add spine to improve their profitability.
Mr. Bishop began by discussing the overall spine market. More than 65 million Americans will experience low back pain each year, and many of these people will see a physician for treatment. With the aging of Baby Boomers, the number of cases is expected to continue to grow, but the number of spine surgeons isn't growing accordingly. At the same time, spine procedures are slowly moving to the outpatient setting, due largely to advances in minimally invasive tools. Inpatient spine procedures have dropped approximately 30 percent since 2005, while outpatient procedure volume has grown significantly.
The most common spine procedures performed in the outpatient setting include laminectomy, discectomy and fusions, particularly ACDFs, levels I and II. While outpatient centers can't perform all spine procedures, they have a key advantage compared to hospitals in performing the ones that can be safely preformed outpatient: cost. For example, the hospital cost of a laminectomy generally ranges from $7,000 to $24,000, while ASC cost typically ranges from $2,500 to $11,500.
"With the pressures of healthcare reform, managed care is concerned what reform holds for them. Managed care has become much more aggressive in seeking out those cost effective solutions," said Mr. Bishop. "They are aggressively pushing spine out the of hospital setting."
Mr. Bishop then shared five key steps for integrating spine into a surgery center.
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Mr. Bishop began by discussing the overall spine market. More than 65 million Americans will experience low back pain each year, and many of these people will see a physician for treatment. With the aging of Baby Boomers, the number of cases is expected to continue to grow, but the number of spine surgeons isn't growing accordingly. At the same time, spine procedures are slowly moving to the outpatient setting, due largely to advances in minimally invasive tools. Inpatient spine procedures have dropped approximately 30 percent since 2005, while outpatient procedure volume has grown significantly.
The most common spine procedures performed in the outpatient setting include laminectomy, discectomy and fusions, particularly ACDFs, levels I and II. While outpatient centers can't perform all spine procedures, they have a key advantage compared to hospitals in performing the ones that can be safely preformed outpatient: cost. For example, the hospital cost of a laminectomy generally ranges from $7,000 to $24,000, while ASC cost typically ranges from $2,500 to $11,500.
"With the pressures of healthcare reform, managed care is concerned what reform holds for them. Managed care has become much more aggressive in seeking out those cost effective solutions," said Mr. Bishop. "They are aggressively pushing spine out the of hospital setting."
Mr. Bishop then shared five key steps for integrating spine into a surgery center.
- Complete a financial assessment and return on investment in adding a spine program. This includes a close examination of the market and the surgeons available and should include a projection of volume, costs and returns for the potential spine program. Mr. Bishop added that on average a spine surgeon that performs at an ASC will perform around 75-100 cases annually. That is, these are the general number of cases a spine surgeon will find appropriate for this setting, out of his or her total case volume.
- Review clinical practices. Here, identify cases appropriate for the ASC setting and determine if potential surgeons are utilizing the outpatient setting. If not, determine if they would consider the setting if it were an option and work to recruit them to the center.
- Consider payor and benefit plan mix. A close review of potential contracts should be performed. Mr. Bishop advises having data on hospital costs to show the payors the savings the ASC offers. He also recommends highlighting that ASCs have lower infection rates and shorter stays than hospitals. Mr. Bishop also said centers may want to consider bundling payments.
- Capital start-up costs. Mr. Bishops said that while the equipment needed for outpatient spine cases is often quoted as $400,000, centers with orthopedics that already have a C-arm may be able to bring capital costs down to around $200,000.
- Case costing. Finally, Mr. Bishop recommends that once the spine program is up and running, case costing should be completed for ever spine case. This will identify any variations in cost and help the center pinpoint the cause for these variations.
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