Chris Bishop, senior vice president of acquisitions and development for Blue Chip Surgical Center Partners, discusses three opportunities for ASC investment and growth over the next few years.
1. Adding spine to an orthopedic-focused ASC. According to Mr. Bishop, spine procedures are the "new sports medicine" — just as many sports medicine procedures gradually transitioned from a three-day hospital stay to an overnight hospital stay to an outpatient procedure, the majority of spine surgeries will soon be done in ASCs. He credits this move to technological improvements that allow surgeons to make smaller incisions and provide better post-operative pain control and care. "It's also about 30-60 percent less expensive to do [spine surgery] in an ambulatory center," he says.
Mr. Bishop says ASCs that already focus on orthopedic procedures are in a good position to add spine. "You already have the nursing staff that's comfortable with musculoskeletal surgical procedures, and you probably already have a lot of the technology," he says. In addition, a center that performs orthopedic procedures likely also performs pain procedures, and pain surgeons tend to cross-refer with spine surgeons. If pain physicians are already sending cases to spine surgeons and vice versa, your center could likely add spine without having to generate referrals from scratch.
"If you're thinking about adding spine and you're already performing orthopedics, you're halfway to doing spine," he says. Mr. Bishop estimates that an orthopedic-driven ASC can add spine at an equipment cost of around $200,000 spread out over five years.
2. Adding bariatrics to a general surgery-focused ASC. Adding bariatric procedures to a general surgery-focused ASC is similar to adding spine to an orthopedics-focused ASC, Mr. Bishop says. While only a certain segment of the patient population will be appropriate for outpatient laparoscopic banding procedures, those properly selected patients can be treated in an outpatient setting at a relatively low cost in an ASC already set up for general surgery.
Mr. Bishop says one of the biggest challenges to adding bariatric procedures to an ASC is the presence of co-morbidities in many bariatric patients. "There can be heart conditions and airway challenges, so before you add the specialty to your center, you have to make sure your anesthesia provider is on board and comfortable with the concept," he says.
If you're an in-network ASC planning to add either spine or bariatric procedures, Mr. Bishop says you should examine your payor contracts to see if payors have already assigned reimbursement to these specialties' procedure CPT codes. "Sometimes the payor will just slide the codes in, and the ASC won't notice because they weren't thinking about spine or bariatrics when the contracts were negotiated," he says. "A well-managed surgery center can go back to the payor and negotiate a better reimbursement with a great story about the cost-effectiveness." It may not be possible to improve your reimbursement, but it's worth looking at your contracts and speaking to the payor to make sure you're getting the best deal possible.
3. Bringing in younger physicians to invest in new and underperforming ASCs. Younger physicians, who are often paying off medical school debt and amassing savings, may not have the money to invest $300,000 for a small percent ownership of an existing ASC. Instead, they might choose to invest $50,000 for a larger percentage of ownership of a new or underperforming ASC, where their case volume will have a substantial affect on financial performance. Mr. Bishop says younger physician investors can benefit an ASC because they're eager to work hard and they have over 20 years of service ahead of them.
Mr. Bishop says young physicians should look to partner with a group of physicians or a development company to invest in an underperforming center when the fair market value is very low. "Although it's an existing business, [the younger physicians] are entering it with a much higher case volume, particularly if they can align themselves with three or four other young physicians," he says.
He says physicians should enter the relationship with a clear idea of the expected return on their investment. "If a development company is managing the surgery center, the physicians should check references for the company's other surgery centers where younger physicians invested," he says. "Look at what the real result was compared to what they had originally discussed with the development company."
Learn more about Blue Chip Surgical Center Partners.
1. Adding spine to an orthopedic-focused ASC. According to Mr. Bishop, spine procedures are the "new sports medicine" — just as many sports medicine procedures gradually transitioned from a three-day hospital stay to an overnight hospital stay to an outpatient procedure, the majority of spine surgeries will soon be done in ASCs. He credits this move to technological improvements that allow surgeons to make smaller incisions and provide better post-operative pain control and care. "It's also about 30-60 percent less expensive to do [spine surgery] in an ambulatory center," he says.
Mr. Bishop says ASCs that already focus on orthopedic procedures are in a good position to add spine. "You already have the nursing staff that's comfortable with musculoskeletal surgical procedures, and you probably already have a lot of the technology," he says. In addition, a center that performs orthopedic procedures likely also performs pain procedures, and pain surgeons tend to cross-refer with spine surgeons. If pain physicians are already sending cases to spine surgeons and vice versa, your center could likely add spine without having to generate referrals from scratch.
"If you're thinking about adding spine and you're already performing orthopedics, you're halfway to doing spine," he says. Mr. Bishop estimates that an orthopedic-driven ASC can add spine at an equipment cost of around $200,000 spread out over five years.
2. Adding bariatrics to a general surgery-focused ASC. Adding bariatric procedures to a general surgery-focused ASC is similar to adding spine to an orthopedics-focused ASC, Mr. Bishop says. While only a certain segment of the patient population will be appropriate for outpatient laparoscopic banding procedures, those properly selected patients can be treated in an outpatient setting at a relatively low cost in an ASC already set up for general surgery.
Mr. Bishop says one of the biggest challenges to adding bariatric procedures to an ASC is the presence of co-morbidities in many bariatric patients. "There can be heart conditions and airway challenges, so before you add the specialty to your center, you have to make sure your anesthesia provider is on board and comfortable with the concept," he says.
If you're an in-network ASC planning to add either spine or bariatric procedures, Mr. Bishop says you should examine your payor contracts to see if payors have already assigned reimbursement to these specialties' procedure CPT codes. "Sometimes the payor will just slide the codes in, and the ASC won't notice because they weren't thinking about spine or bariatrics when the contracts were negotiated," he says. "A well-managed surgery center can go back to the payor and negotiate a better reimbursement with a great story about the cost-effectiveness." It may not be possible to improve your reimbursement, but it's worth looking at your contracts and speaking to the payor to make sure you're getting the best deal possible.
3. Bringing in younger physicians to invest in new and underperforming ASCs. Younger physicians, who are often paying off medical school debt and amassing savings, may not have the money to invest $300,000 for a small percent ownership of an existing ASC. Instead, they might choose to invest $50,000 for a larger percentage of ownership of a new or underperforming ASC, where their case volume will have a substantial affect on financial performance. Mr. Bishop says younger physician investors can benefit an ASC because they're eager to work hard and they have over 20 years of service ahead of them.
Mr. Bishop says young physicians should look to partner with a group of physicians or a development company to invest in an underperforming center when the fair market value is very low. "Although it's an existing business, [the younger physicians] are entering it with a much higher case volume, particularly if they can align themselves with three or four other young physicians," he says.
He says physicians should enter the relationship with a clear idea of the expected return on their investment. "If a development company is managing the surgery center, the physicians should check references for the company's other surgery centers where younger physicians invested," he says. "Look at what the real result was compared to what they had originally discussed with the development company."
Learn more about Blue Chip Surgical Center Partners.