By Stephen W. Earnhart, MS
Earnhart & Associates
This summer has been busier than most, perhaps because of the new political climate and the buzz of anticipated changes in the nation’s healthcare. Or, it could be just because it is so hot that many are staying in the cool of the surgery department longer than normal. Meanwhile, many readers have submitted questions. Here are some of the more interesting:
Reader Question: In August, you talked about setting up cardiac cath labs within a surgery center. That generated a lot of discussion at our facility. Our docs asked us to check into it, and we found out there is a lot of excitement from local cardiologists to do this. However, we want to do it in conjunction with our current surgery case load and not on separate days as you recommended. Why would we shut down the ASC just for those vascular cases?
Earnhart: As a Medicare Certified surgery center, one of the Conditions of Coverage for an ASC is that the surgery center cannot operate two businesses at the same time in the same space. Per CMS rules, a surgery center is only a surgery center, not a surgery center and a cardiac cath lab. I think you will find that most facilities can accommodate both by expanding hours, and even days, of operation.
Reader Question: We have been approached by a group of GI doctors to start using our surgery center for their cases. We are only performing surgery three days per week, and I am excited about it because it could take much of my staff from part time to full time. Before I approach my investor surgeons about it, I wanted to see if that made sense from a business standpoint.
Earnhart: The short answer is “yes.” The longer answer? It depends on several factors, the greatest of which is: How many cases are they talking about? Your typical GI procedure is a relatively low-reimbursed case. Depending on your payor, it can only be between $350-$550. Out of that, you must figure in the cost of equipment and supplies. Although the supply cost per case is relatively low, the equipment cost is not. It can be as high as $300,000 just to outfit one procedure room. Normally, a busy GI doc wants to “fast-track” these procedures by flipping between two procedure rooms, potentially doubling your equipment cost. This is good news for your staff, but you must figure in that staffing expense, too.
Before you approach your business-minded surgeon investors, find out how many cases per month the GI doctors are talking about. Anything less than 200 cases per month might not be in your best interest after you factor in all the above. On another note, the GI doctors probably will want to “invest” in your facility before they bring over a significant volume. This means that some of your current investor physicians would have to dilute or sell some of their ownership for the GI doctors to buy. That may very well be your greatest obstacle, since many investor surgeons in an ASC do not like giving up equity or ownership.
Reader Question: We are building a new surgery center, but the surgeons do not want the expense of classifying it as a Medicare-approved facility. Can they do that?
Earnhart: Yes, they will need to be state licensed, but Medicare certification is not always a requirement. A downside is that they will not be able to provide services to Medicare or federal patients at the facility. Depending on their payor mix, that might not make a difference to them. There are many payors that require Medicare certification or the Medicare Provider Number before they will contract with you, so you would need to check with those providers to see if they have a problem with it.
Of note: The cost of going the extra mile for becoming a Medicare-certified facility is not all that expensive after you have obtained your state license.
Earnhart & Associates is a consulting firm specializing in all aspects of outpatient surgery development and management. Earnhart & Associates can be reached at 5114 Balcones Woods Drive, Suite 307-203, Austin, TX 78759. Phone: (512) 297-7575. Fax: (512) 233-2979. Email: firstname.lastname@example.org Web: www.earnhart.com.