7 Steps for Spine Groups to Add an ASC

1. Conduct a market analysis. Spine groups interested in expanding to include an ASC must first consider whether their market can support a spine-focused center. Conduct a market analysis to assess whether there are enough surgeons in the area willing to bring in cases, or whether your group will be able to capture enough cases to make the venture worthwhile.

"The first step is to see if there are the patients and surgeons who have business to bring into the center," says Dr. Oh. "That's something that has to be done carefully because ASCs aren't cheap endeavors. Make sure there are enough patients out there to make it profitable, otherwise it doesn't make sense."

Talk to heavy-hitting surgeons in the community when you begin thinking about the outpatient center to calculate a realistic case volume for your outpatient center.

2. Examine your insurance market. Small ambulatory surgery centers sometimes have difficulty negotiating beneficial contracts with large insurance carriers. Understand your ASC's place in the local market and leverage whatever negotiating power you have.

"A lot of hospitals have in-house contracts with insurance companies," says Dr. Oh. 'They have negotiated the best rates with all companies who have a presence within a 10-mile radius of the medical campus. If you have an ASC in that area, it will be hard to negotiate a contract with that carrier."

Insurance companies reimburse ambulatory surgery centers at a lower rate than hospitals and hospital outpatient departments, so ASCs must maximize efficiency and cost savings. There is an opportunity to perform surgeries out-of-network, but in many places insurance companies are pushing more for in-network contracts.

"You have to know whether you can get the surgeries paid for," says Dr. Oh. "There might be a lot of patients who are candidates for the ASC, but the reality is these patients can't come to the ASC because their insurance companies have better contracts with the hospital."

3. Decide whether to bring on a partner. Spine surgeons and groups can choose to take on a hospital or corporate partner in their ASC. There are advantages and disadvantages to both partners, as well as remaining independent, so each group must do their research to figure out which model will be best for them.

"If you build a de novo center, you can bring on a corporate partner who has experience building surgery centers, or you can do it yourself," says Dr. Oh. "Partnering with a company can help you move the process along faster because they know how to get permits and comply with other vital regulations. However, they might want ownership control of the ASC and that can be burdensome."

Dr. Oh and his partners chose to stay financially independent because they wanted to maintain control over the center. But, BASIC Spine does work with practice management company Incubus, which has helped the group develop the new center.

4. Familiarize yourself with Medicare certification. Medicare does not currently reimburse for spine procedures in ambulatory surgery centers, but it's still crucial to achieve Medicare certification to contract with commercial payors.

"In order for the ASC to be successful, you need to be Medicare-certified," says Dr. Oh. "Commercial payors want to know you are Medicare-certified because if you aren't, they don't want their patients coming there. After building the surgery center, your first task is to really understand the certification process and what Medicare wants to see."

There are certain requirements — such as separate bathrooms for men and women — that must be addressed during the planning process. Be aware of these requirements so you aren't stuck with a facility that won't gain certification.

"If you overlook something like this in the beginning, you have to back track," says Dr. Oh. "Understand rules and regulations on the state and federal level; otherwise you won't be certified."

5. Seek financing. Financing for an ASC can be challenging because the project is expensive and banks are less willing to provide financing today than in the past. Even after you find someone willing to consider the project, every physician owner must undergo a background and credit check.

"It's a lot harder than getting a home mortgage because you have multiple surgeons with a lot of credit checks and asset verification," says Dr. Oh. "Even then, at the last moment, banks can change the terms of the agreement. It's been a struggle for us to finance the center because ASCs are so specialized. If you purchase the building and it's a generic office space, a new tenant can easily come in if there is a foreclosure. However, if the facility is a surgery center, there are only a limited amount of people who can purchase it afterwards."

6. Hire a contractor. Unless your group purchases an existing surgery center, you'll need to hire a contractor to build or revitalize existing space for the ASC. Your contractor should be familiar with the healthcare, and if possible the surgery center, industry.

"We hired someone who had experience putting up surgery centers in Southern California and we incentivized him to do the ASC as soon as possible," says Dr. Oh. "We released money incrementally if he met his goal."
Your contractor should also work with the general contractor to coordinate building permits and certification for the center.

"We didn't go with the first vendor we saw, we interviewed several vendors," says Dr. Oh. "Look for the best deal available and plan out the facility. We had to plan for today as well as projected growth. Consider what volumes there will be in the future so you can make strategic decisions about how to build the ASC."

7. Track patient outcomes for initial cases. It's always important to track patient outcomes, but it will be especially crucial to track the first several cases in the ASC. These outcomes will show whether there are any break-downs in the surgical process at the new center leading to complications or patient dissatisfaction.

"Before doing larger cases at the center, we want to do pain management procedures and other low-risk cases to look for infection and wound problems that might arise," says Dr. Oh. "One thing that is vital in medicine is outcomes; if they are bad outcomes we will have a problem."

Tracking will also demonstrate to payors you can achieve positive outcomes at the center for future contract negotiations. "The ASC has to focus on reducing cost and improving patient outcomes and satisfaction," says Dr. Oh. "That will determine whether the ASC is successful."

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