When Irving M. Pike, MD, FACG, and his colleagues decided to break away from the hospital environment in 1986, they started their own office-based surgical service. Today, the endoscopists remain in an office setting because the certificate of need (CON) regulations in Virginia have prevented them from opening an ASC. Although controversial, office-based endoscopy is sometimes the only option for independent-minded physicians. Here's a look at the controversy as well as some key considerations for running a clinically and financially sound office-based endoscopy service.

Driving forces
"Procedures are moving outside the hospital, and the main reason is efficiency," says Michael L. Weinstein, MD, an endoscopic surgeon at the Endoscopy Center of Washing-ton, D.C., and co-author of the American Gastroenterological Association's (AGA's) Standards for Office-Based Gastrointes-tinal Endoscopy Services. "When we moved to our office-based center in 1985, we became 30 percent more efficient."

Nationwide demand for screening colonoscopy is soaring and, with the aging population, experts say no end is in sight. Medicare began paying for it in healthy people in 2001, fueling a 42 percent increase in screening colonoscopy for Medicare recipients between 2000 and 2002, according to the New York Times. Several forces are driving physicians to perform endoscopy - typically, diagnostic and therapeutic colonoscopy and esophagogastroduodenoscopy (EGD) - in the office instead of the ASC.

• Licensure restrictions. CON regulations can prevent ASC applications.
• Reimbursement. Medi-care's site-of-service reimbursement differential means the physician receives a higher professional fee for performing some endoscopic procedures in the office instead of the hospital or ASC. On average, a physician can get an extra $170 for a screening colonoscopy and $150 for an EGD in the office, explains Dr. Weinstein.
• Building economics. An office suite is less expensive to build than an ASC. Says Dr. Pike: "It would cost me 30 percent more to build an ASC with the same procedure capacity as my current office-based facility, mostly because of the physical requirements for ASC licensure." For example, Dr. Pike's facility doesn't have a separate men's/ladies' locker room, the procedure rooms are smaller than traditional OR suites and there is no central suction/gas system - all features typically required for ASC certification.

Why the concern?
The chief concern about office endoscopy is patient safety. Critics believe the site-of-service differential persuades some physicians to cut corners. The differential does increase the professional fee for some office-based endoscopy procedures, but there's no facility fee. So the differential actually reduces the global reimbursement compared to ASC or hospital rates. For screening colonoscopy, the average office-based global Medicare reimbursement is $272 less than the global ASC or hospital reimbursement, Dr. Weinstein says. "We want our members to have the freedom to practice the kind of medicine they think will benefit patients and work best for them, but we don't want someone to bypass ACLS training or operate with an insufficient staff or no crash cart," explains Robert D. Fanelli, MD, FACS, co-chair of the Society of American Gastrointestinal Endoscopic Surgeons (SAGES) Guidelines for Endoscopic Services and endoscopic surgeon with Surgical Specialists of Western New England in Pittsfield, Mass.

Another complicating factor is propofol, which is the darling of endoscopy anesthesia because it is faster-acting, produces deeper sedation (which can significantly hasten procedure time), and is associated with more rapid cognitive and functional recovery than a traditional benzodiazepine/narcotic regimen. However, the drug is classified as a general anesthetic, and it requires specialized skill to administer and monitor. "We do 17,000-plus procedures a year and use propofol exclusively. Patient satisfaction is much improved," says Bergein F. "Gene" Overholt, MD, FACP, MACG, founder of Gastrointestinal Associates in Knoxville, Tenn., an ASGE past-president, and a founder of the Tennessee Society for Gastrointestinal Endoscopy. "However, it requires more skill than Demerol or Versed and is significantly more expensive when administered by an anesthesia professional or even a trained nurse." (See "My Turn" on page 96.)

Primary considerations
If you're thinking about office-based endoscopy, there are two main considerations: patient safety and financial feasibility.

• Patient safety. "Physicians who want to do office endoscopy need to be able to say 'I am providing endoscopic services in my office that meet the standards of care developed in the hospitals and ASCs,'" advises Dr. Overholt. This means being fully prepared for complications. To do so, Dr. Overholt and others recommend adhering to the major GI societies' guidelines and seeking accreditation. Dr. Pike also notes he and his colleagues select patients very conservatively. Since they administer their own moderate sedation, usually with a base of fentanyl and Versed, they typically reserve ASA 3 and 4 patients for the hospital setting, where an anesthesiologist is present.
• Financial feasibility. "Even before Medicare reduced the professional component of office endoscopic procedures this year, the Medicare reimbursement for office endoscopy was essentially a losing proposition if the facility met the standard of care," says Dr. Overholt. The keys to achieving financial feasibility in the office are private-insurer negotiation and operational efficiency.
• Private-insurer negotiation. "The economics of office endoscopy would tell me that I'd need commercial patients as well as an adequate tray fee to support the cost of meeting the standards of care we recognize," says Dr. Overholt. The negotiable tray fee - which analysts say must be $250 to $400 to make office endoscopy profitable, depending on volume and expenses - is a reimbursement for supplies that is coded differently than an ASC or hospital facility charge. Even with his tray fee, Dr. Pike says he cut insurers' costs by more than 50 percent over what they were paying hospitals for the same procedure - a strong leverage point. Dr. Pike also recommends negotiating long-term contracts that include expected supply-cost increases across the term of the agreement. "Physicians are used to getting one-year fee schedules from insurance companies, but if you're at risk due to a capital investment and you build a three- or five-year business case, make sure your contracts run the length of this case," he says. "I've seen fee schedules decrease 20 percent in year two." Finally, he advises, get outside help before constructing your facility or you might overlook things like separation of clean and dirty equipment, extra air conditioning to adequately cool the endoscopy room, soundproofing (important in smaller offices) and backup for power outages.
• Efficiency. Dr. Pike says adequate space is an important part of efficiency. For him, this means three prep and recovery beds for each endoscopy room. "We concentrate on having adequate prep and recovery beds so we are never stalled by patients who recover slowly," he says. Efficiency, he adds, also means having adequate equipment to avoid processing delays (three functioning colonoscopes and two EGD scopes per room), a well-trained staff, and a culture of cost containment that includes competitive bidding. "Having a cross-trained and dedicated staff is our biggest key," says Dr. Pike. "Our schedulers ensure there are no holes. We flex our staff so they work in the office when they're not in the endoscopy unit." You should also maintain the office endoscopy suite and office as separate business units. "If revenue gets buried in your practice's financial statement or you don't know the cost of your procedures, you will lose efficiency," he says.

ASC preferred?
If Dr. Pike could perform endoscopy in an ASC, he would. He and his colleagues could then serve Medicare patients they now treat in the hospital. This increased volume and higher global fee would also make operations more efficient, more profitable and less costly to patients, he says. But given the circumstance, he and his colleagues have made the office environment work well for the patients they do serve. "I have a concern that people feel endoscopy should be a lesser procedure when done in the office," he says. "It's important to make the point that the endoscopy suite happens to be at the office. For all other purposes, it should be considered an endoscopy suite."