Staking Your Claim in the Ortho Space

Insider tips to help your facility perform some of today’s most popular and profitable procedures in a booming service line.

Whether you’re simply looking to add smaller cases like hand surgeries or aiming for a higher stakes total joints program, the orthopedics industry presents well-positioned, top-performing surgery centers everywhere with a pathway for long-term financial success.

But the process is anything but easy. Fortunately, ASCs looking to start or expand an ortho line have plenty of options. Gregory DeConciliis, PA-C, CASC, administrator of Boston Out-Patient Surgical Suites in Waltham, Mass., and David Uba, CEO of Excelsior Orthopedics in Buffalo, N.Y., are two veteran ASC leaders from prominent multispecialty ASCs with solid orthopedic programs. Here’s what they believe facility leaders should know about entering this ever-evolving service line.

A bright future

Understanding the future potential of orthopedics in the ASC space is crucial for leaders. “As Medicare has added orthopedic procedures to their fee schedule, and we are experiencing an aging population, orthopedics will remain extremely viable in the near future,” says Mr. DeConciliis. That sentiment was echoed by Mr. Uba, who cites three major reasons many ASC owners (or potential owners) love the orthopedics space. First, orthopedic patients are otherwise healthy (and looking to be healthier with a new hip or knee), which makes for good outcomes. Second, orthopedic surgeries, especially total joints cases, are fairly predictable, boosting the overall high efficiency and low risk. The third and most important factor is cost, which is much lower for certain procedures (e.g., total joints) in the outpatient setting, according to Mr. Uba. This can give ASCs significant negotiating power to secure profitable reimbursement from payors across the board.

The saturation issue

But there is one catch that could make or break your success in this space: local market share. “At the end of the day, it comes down to where cases will come from,” says Mr. Uba. Depending on how saturated your local market is with hospitals or larger ASC companies that own a vast majority of orthopedic surgeons, you could be facing an uphill battle to secure reimbursement rates good enough to make your leap profitable, not to mention dealing with too much competition to secure enough volume. On the flip side, if your local market has room and opportunity to secure orthopedic surgeons and the patients they can bring, then you could be sitting on a veritable goldmine if you launch an ortho service line. That’s why Mr. Uba recommends a meticulous analysis of your local market for orthopedic surgeons who can bring in a steady volume of cases.

As Medicare has added orthopedic procedures to their fee schedule and we are experiencing an aging population, orthopedics will remain extremely viable in the near future.
Gregory DeConciliis, PA-C, CASC

Do your homework

Market research comes in the form of understanding exactly who is doing ortho in your area, both in hospitals and ASCs, Mr. DeConciliis says, urging leaders to go further. “Take the next step and talk to these surgeons to understand what they are experiencing in terms of volume and reimbursement, as well as community need for ortho,” he says.

Equally important is relationship-building. “You must know your payors and develop relationships with them if you are going to negotiate profitable reimbursement rates,” says Mr. Uba. In this respect, specific procedures could differ significantly. For example, right now total joints procedures are most profitable because the case cost is so much lower for ASCs compared to hospitals. “This is not generally the case for carpal tunnel procedures that typically secure lower reimbursements yet have the potential for higher volume,” he says, adding you may be able to negotiate with your payors to secure a high enough reimbursement rate for less costly ortho procedures to make it profitable. No matter which ortho procedures you choose to perform, payor negotiation still comes down to the volume you can command in your market.

EXPERT OPINION Reach out to facilities that have recently added or expanded their ortho service line for advice on what to expect.

• Negotiate smart capital purchases. If your research shows a solid place to launch an orthopedic service line, you’ve achieved half the battle. Now you need to set up your practice. Mr. Uba and Mr. DeConciliis point out that there is a lot of help out there to leverage, starting with vendors.

If you find a good industry partner, all the big implant companies recognize the opportunity to get into ASCs, so they have developed roadmaps and resources, bundled packaging, rebate programs and financing opportunities to get you started, Mr. Uba says. “Be prepared going into negotiations with vendors to not only discuss the cost of something like implants, but potentially a bundle of equipment and supply needs to set up your ortho program,” he adds, pointing out that ASCs may even find an industry partner horizontally integrated to sell equipment and disposables for multiple ortho procedures such as total joints, sports medicine and trauma. Then you can partner with them and bundle things together to negotiate competitive rates and discounts because the vendor knows they will make their money back on volume. Just make sure to shop multiple vendors to secure the best savings, and remember, “the market is ripe for negotiating competitive pricing.”

When considering what ortho procedures to take on, don’t be discouraged by capital costs. “Starting arthroscopy may seem like a daunting task, but orthopedic vendors are often willing to work with an ASC to place equipment in a creative arrangement that works for all,” says Mr. DeConcillis. Beyond shopping vendors, he suggest being open to working with consultants to help you think about your facility’s short- and long-term goals.

• Measure operational efficiencies. Once you have secured physicians and volume, and built the physical environment to launch your orthopedic service line, there is another critical step to take — setting your metrics to measure efficiencies. “You need to have really good KPIs [key performance indicators] and robust case costing,” says Mr. Uba. “We’re not going to get the same reimbursement rate as hospitals, so ASCs have to be more efficient strategically and operationally.” He suggests a careful analysis of the following KPIs to start:

• block time utilization rates
• percentage of first case starts
• end times for cases
• supply costs per case, and
• cancellation rates.

“It can be beneficial to analyze these metrics regularly as a team to look for low-hanging fruit you can improve,” he says. For example, if a surgeon is only using 60% of a block, you may need to make tough decisions about block usage.

Also look to clinical metrics such as infection rates, presurgical planning and sterilization activities. “Beyond profit, you have a responsibility to ensure patient safety and good outcomes,” says Mr. Uba. OSM