Advancing Surgical Care Podcast
Essential news and information for ambulatory surgery centers (ASCs)
Advancing Surgical Care Podcast
Effectively Managing Device and Implant Procedures in the Outpatient Setting
Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.
In this episode of the Advancing Surgical Care Podcast, ASCA Chief Executive Officer Bill Prentice talks with HST Pathways Chief Innovation Officer Gavin Fabian about the challenges, and potential solutions, for surgery centers that perform procedures that require the use of medical devices or surgical implants. As ASCA continues its efforts to add additional codes to the outpatient procedure list and secure appropriate reimbursement for all procedures, including those involving medical devices and surgical implants, this discussion focuses on strategies surgery centers can employ to better manage the financial aspects of these types of procedures. HST Pathways is a leading provider of surgery center management and software solutions and an ASCA affiliate.
Welcome to the Advancing Surgical Care Podcast, brought to you by ASCA, the Ambulatory Surgery Center Association. ASCA represents the interests of outpatient surgery centers of every specialty and provides advocacy and resources to assist them in delivering safe, high-quality, cost-effective patient care. As with all of ASCA's communications, please check to make sure you are listening to or viewing our most up-to-date podcasts and announcements.
SPEAKER_02Hi, and welcome to the Advancing Surgical Care Podcast. My name is Bill Prentice. I'm the CEO of ASCA and the host of this episode. I'm being joined today by Gavin Fabian, the Chief Innovation Officer at HST Pathways, a leading provider of ASC management and software solutions. HST Pathways is also a member of the ASCA affiliate program. So prior to joining HST, Gavin was the founder and chief executive of CaseTabs, an ASC-focused software developer that provided a hub for sharing information and updates between surgical teams, the office, clinical, and vendor personnel, and was used by more than 800 ASCs nationwide. And I've invited Gavin onto the podcast to talk about some of the challenges and solutions for surgery centers that specialize in procedures that require the use of medical devices or implants. As many in the surgery center community know, we have been in a multi-year tug of war with the Centers for Medicare and Medicaid Services, or CMS, to improve ASC reimbursement for device-intensive codes. And the great irony is that an improvement in our reimbursement would actually lower overall cost for Medicare since it would allow more cases to migrate from a more expensive setting. That's because surgery centers are the more efficient and cost-effective set of care in comparison to hospitals. And it's an issue we deal with at CMS across a number of procedures, but it's particularly problematic with those involving devices and implants. And while ASCA continues the good fight to convince CMS to take full advantage of the savings that ASEs offer, we will also continue to explore and share facility-based solutions such as those provided by our guest and his products and services. So, with that brief introduction, Gavin, welcome to the podcast.
SPEAKER_01Thank you.
SPEAKER_02So a moment ago, I said we had been long advocating with CMS over the issue of medical devices and implants. And we've had some good successes, such as adding additional device and implant codes to the ASC approved procedures list over the years and lowering the device intensive threshold, the percentage of the device cost relative to the procedure cost at which a surgery center receives additional reimbursements for the cost of the device. We lowered that from 50% to 30% over a few year period. The problem, however, is that too many centers are still unable to cover their actual costs at current reimbursement rates. And as a result, we're not seeing the migration of these procedures out of the hospital setting at a rate that we would expect and we would want. So, Gavin, are there methods for ASEs to overcome this profitability question at current reimbursement rates?
SPEAKER_01Yeah. So you mentioned that better reimbursement is driving cases that once were only done in a hospital to the ASC environment, or at least they can be done in the ASC environment. But I think what we hear from our customers is that they don't have the confidence that some of these newer cases can be done profitably. And they've unfortunately had some surprises where after the fact they realize that a case that they took on was quite unprofitable and they get gun shy. And so I think that the focus of our team is building products that help drive that confidence and that transparency to what are your revenues going to be for that combination of CPT codes and that pair? And then what are your costs? And to get that, we use a combination of like historical data to come up with a revenue estimate. And on the cost side, you really got to rely on your implant reps to be a partner with the surgery center and provide estimates ahead of time on what those cases are going to cost and then drive accountability that they're accurate with their estimates over time. Let me follow up on that.
SPEAKER_02So the focus of these solutions is to help centers better assess up front the cost of performing certain device intensive procedures so that there's no sticker shock on the back end of that when they realize where the reimbursement actually is. So can you take us inside the black box and explain, at least generally, how you make those evaluations? And can you also tell us the impact your approach has been in green lighting more procedures and improving a facility's profitability?
SPEAKER_01Yeah, yeah. Our goal is to, like you said, build a red light, yellow light, green light solution where you can look at any case before you take it and understand is this case going to be profitable or not, or somewhere in between, and you should look into it further. And so to do that, we need to be able to get a really clear and reliable estimate on the revenue side and the cost side. So the revenue side, what we do is we use historical data from the actual center that is viewing these estimates on what they've been reimbursed for this payer and code combination. And on the cost side, we actually engage the implant rep to better understand what the costs are going to be for that case. Because oftentimes there are nuances that you uncover after the case, but the rep had an idea of what was going to happen prior to the case because they just know that doctor exceptionally well and how they treat different pathologies. Once we gather the revenue side and the cost side, then we try to present that in a really easy way to interpret. Like you don't have to be a CFO to be able to identify if a case is going to be profitable or not. And we need to make this consumable for the schedulers who are the front door for these cases coming in. We need to make it consumable for the insurance verification people, the materials managers, so that they can be the eyes and ears for the center administrator. Because one thing that we hear a lot is center administrators say, well, we can kind of come up with a profit estimate, but it takes us a lot of time. Like we have to go in and deal with a ton of manual inputs. We're building this Excel spreadsheet out. And what we're trying to do is say, like, just log into this application and get your red light, yellow light, green light, and the red lights, like go have a conversation with the rep and let's try to bring some of those implant costs down or find another solution. And for the orange lights, let's do a deeper dive.
SPEAKER_02That's really interesting. And you're right. I mean, to spend a lot of time to find out that you can't afford to do the case is not a good use of a facility staff time. So I think uh being able to kind of cut to the end of that process is probably really, really important for a lot of facilities. So one of the things that we know is that our reimbursement rates are generally updated only once a year, certainly for Medicare and certainly with commercial pairs is probably not much different. Yet through the pandemic and continuing today, there are persistent inflationary pressures that we're all feeling, particularly as it relates for our members with labor, rent, medical supply cost that they're now contending with and have to continue to be challenged with throughout the year as those fluctuate. Does that make our cost estimations a moving target? Or do you have a method to account for those increases that occur throughout a year that impact the facility's ability to take a case?
SPEAKER_01Yeah, inflation's a doozy because it slowly eats at you and creeps up. So from a technology vendor side, we really rely on cost inputs from the center. So there's the old kind of garbage in, garbage out concept. So we really prescribe a quarterly update to the cost assumptions in our products so that they, you know, especially nowadays, stay within line. So it's no longer kind of an annual update being sufficient, I think, as you're alluding to. But also, I think the biggest cost that can be addressed is OR time that's not being filled. You're still paying rent, you're still paying your business office, but you have ORs that are empty. And so I think, especially in inflationary times, being aggressive on strategies to increase your OR utilization is really key and something that we see a lot of our customers putting more focus on.
SPEAKER_02That's very interesting. And I also know that one of the more common challenges that surgery center administrators talk about, other than obviously trying to fill all those ORs all day long, is the difficulty they have in controlling costs when they have several surgeons who perform the same procedures but require, or at least ask for, devices, implants, and surgical supplies from different manufacturers. Do you have any advice for how they could build more consensus around the materials that are used in the facility and make it easier to negotiate and control those costs?
SPEAKER_01Yeah. This is kind of a topic near and dear to my heart because my life before being an ASC software was designing implants for spine surgeons. And I know how close the physicians can get to a particular product. And it's not just the implant, but the way the instruments feel in their hands and the way they help them do the surgery, and just switching things because someone wants to push a sole source contract is a really difficult task. So, from my experience, doctors are scientists and they love data. And I think going to physicians with an opportunity to improve the financial performance of the center by making some change is always a better conversation when you have data to support it. And that data needs to be holistic. Because one thing you'll hear a lot from doctors is, well, the implant's cheaper, but it takes me 30 minutes longer to do the procedure. And how are you factoring in the cost of the OR time? And do you even know if Dr. Joe's patients do better? Because my patients do pretty well. So I think being able to go in with the full picture and be armed to answer those questions is really key. In this profit forecasting tool that we're building for cases with implants, one of the things that we facilitate is the ability for the center to send a snapshot of the profitability profile to the physician. So if there's a case that's going to be unprofitable, there's a clear picture as to why. And the doctor can share that with the implant rep and say, look, like I want to keep using your products because they help me with X, Y, and Z. You got to help the center out and be a partner here because you know I'm getting a lot of pressure. And look at this picture. So I really think being data-centric, which is not a muscle that I think the average kind of ASC operator uses to the extent they're going to need to in the future. And I think just building those skill sets is going to be important.
SPEAKER_02It always comes back to data, doesn't it? It does, yeah. Well, before I let you leave, and as we head into 2023, Gavin, are there any other surgery center solutions that your team is working on that you'd like to share with us?
SPEAKER_01Well, you asked a question earlier on, you know, with inflation and rising costs, like how do you handle kind of cost forecasting? And really the biggest cost that centers incur, and it's a rising cost, is staff and or staff shortages. And we're finding that centers are increasingly relying on agencies that oftentimes have like two to three X what their employees would cost. So a product that we're investigating and kind of in the discovery phase on, but have a high commitment to delivering a solution on, is a solution that allows center networks to share staff between facilities. And so if you find that you need three nurses on Thursday, but you only have two, and you'd normally call a contractor, what if you could post that shift to a trusted network that likely shares the same payroll and HR systems? And those staff members at the other facilities could pick it up. And the savings on a solution like that for centers are massive in the two, $300,000 a year for the average center. And also just I think there can be cultural improvements at a center when you're not pulling in agency staff consistently. So that's an area I'm super excited about and one that I think there's a big need for with centers.
SPEAKER_02Well, I all I hear about right now is staffing shortages and obviously staff costs from the membership. So that's a very intriguing concept and be really interested to learn more about it as you develop it. Well, listen, you provided a lot of good advice today, and I'm sure it'll be much appreciated and well received by our members. So I want to thank you for coming on the podcast and sharing your thoughts and insights. I also want to thank HST for being a valued ASCA affiliate. So thank you, Gavin. Thank you. And maybe maybe we can do this again next year and uh and talk about staffing. Love to do that. So this will conclude our podcast for today, however. And as always, we invite your feedback regarding this or any other podcast and communications. And now before signing off, I'd like to take this opportunity to wish everyone listening a happy, healthy, and safe holiday season as we close out 2022. And we look forward to being back with you in the new year.