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Maintaining the Profitability of Cataract Surgery
With financial pressures mounting, HOPDs and ASCs are on a mission to keep cataract extractions profitable.
Dianne Taylor
Publish Date: October 10, 2007   |  Tags:   Ophthalmology

For outpatient facilities that perform cataract extractions, adversity has proved fruitful in many ways. Declining or stagnating reimbursements have, in part, fueled new surgical approaches that have hastened the procedure, reduced morbidity and improved overall efficiency. Yet, as financial pressures continue to mount, many worry that the breaking point is drawing uncomfortably near. According to an Outpatient Surgery survey of 97 readers, two-thirds are "very concerned" and another one-fourth are "somewhat concerned" about maintaining the profitability of cataract surgery in the coming five years.

This widespread concern stems from a host of factors, including the continued squeeze on facility reimbursements, rising RN payrolls, local competition and pressure to adopt expensive new technologies - particularly the pricier new IOLs. ASCs saw no increase in the Medicare facility fee for cataract extraction this year, and MedPAC is expected to recommend a freeze on the payment through 2009, according to the Outpatient Ophthalmic Surgery Society (OOSS). Hospitals received about a 22 percent increase during the past two years, but they're still reeling from deep cuts during prior years- including an 18 percent reduction between 2001 and 2002 alone, according to OOSS.

One nonprofit hospital's surgical services director, who is faced with the unique challenge of reducing her surgical load because she's running over capacity, says cataract surgery is her No. 1 target because it's not profitable. Her ophthalmic surgeons will be subject to economic credentialing. "If they can't help reduce costs and at least break even," she says, "they'll lose their blocks and compete for unblocked time. We have the same expectation for all services. It's the only way the hospital can survive."

Still, the majority of our responders from all outpatient settings say they're managing to hang in - at least for now. A full 59 percent report cataract extractions are "somewhat" or "very" profitable compared with other procedures. The reason, they say, is aggressive cost-cutting, achieved by shortening the patient stay/OR time, negotiating firmly with vendors, avoiding supply waste, and ensuring staff proficiency. The majority do 2.5 to 3 procedures per OR per hour, with some doing as many as five, using standardized supplies. Our readers' experiences suggest that most, if not all, of these factors need to be in play simultaneously. One hospital reader noted, for example, that he has not achieved profitability despite an hourly volume of 5 to 6 cases per OR because physicians won't standardize.

Facilities Crack Down on Cataract Costs

When compared with other procedures you do at your facility, how profitable are cataract extractions?

Very profitable

10%

Somewhat profitable

49%

Not too profitable

25%

Not al all profitable

12%

Don"t know

4%

How concerned are you about maintaining the profitability of cataract surgery for your facility over the next five years?

Very concerned

65%

Somewhat concerned

25%

Not too concerned

7%

Not at all concerned

3%

Actions responders are taking to improve profitability:

Reduce supply costs

68%

Increase volume

49%

Streamline patient throughput

37%

Reduce capital equipment costs

25%

Reduce staff costs

18%

Primary reasons cited for current profitability:

• Low-risk/fast procedure
• Aggressive supply cost negotiation with vendors
• Standardization of supplies, drugs and/or equipment
• Proficient/efficient staff

Primary reasons cited for poor or lack of profitabilty:

• Low reimbursement (Medicare/indigent populations served)
• High supply costs
• Low colume and/or slow surgeons

SOURCE: Outpatient Surgery Reader Survey, February 2004 (n=97)

How readers maintain profitability
Responders working to improve cataract surgery profitability point to three key target areas: Supply costs, volume and patient throughput.

  • Reducing supply costs. Among the 68 percent of responders trying to reduce supply costs, many have found customized packs helpful. Explains Paula Russo, RN, director of the St. Petersburg, Fla.-based Bayfront Same Day Surgery Center: "We don't open a pack of 10 Weck sponges and throw eight away. We have two in the pack." Some have taken a stronger step: Standardizing packs. Says Margaret Acker, CEO of the physician-owned Blake Woods Medical Park Surgery Center in Jackson, Mich., "We got rid of things surgeons weren't using and they agreed to use the same supplies."

A specific area of concern is IOL cost. At Garrett County Memorial Hospital in Oakland, Md., where surgeons do 20 cases per month, Nurse Manager JoAnn Forno consolidated to lower costs. "We use one IOL and other products from the same vendor," she says. The Ocala (Fla.) Eye Surgery Center, where surgeons do up to 350 cataract extractions per month, is using the opposite strategy, moving away from single-sourcing and inviting additional vendors in to stir up competition. Some other facilities are specifically avoiding high-priced IOLs. One recently 'downgraded' its IOL model, and another manager says her surgeons "don't always use the newest technology lenses." Still others, like Ms. Acker, where cataracts remain "very profitable," are finding ways (like standardization) to offset rising IOL costs because they feel the new implants are in the patient's best interest.

  • Increasing case volume. Nearly 50 percent of responders are trying to increase case volume. Most are holding out incentives to potential surgeons like convenience, efficiencies, good patient satisfaction scores, financial interest and even new capital equipment. "We tried to make pre-admit requirements more convenient," notes Anna Segner, director of the Sewickley Valley Hospital Surgical Center in Moon Township, Pa. "We will be surveying physicians, asking them what will make them want to bring more cases here."

Several other responders point to new phaco machines as recruitment incentives. At the Hinsdale (Ill.) Surgical Center, Executive Director Shirley Zemansky believes her brand new phaco machines will aid her recruitment effort. Another hospital reader says the speed of his new phaco machine, in and of itself, translates into more cases per day.

  • Expediting patient throughput. Thirty-seven percent of responders are streamlining patient flow. At the Blake Woods facility, Ms. Acker says she targeted the entire process with "many simple steps" and decreased pre-op time by five minutes, OR time by four minutes and her previously "dismal" 35-minute post-op time by 15 minutes while maintaining 97 percent patient satisfaction. Some of those steps included dilating patients right after signing the consent, creating separate rooms for right and left eyes, performing post-op education while hooking the patient up to monitors/IV and assigning one RN as patient expediter. "One RN takes the patient in and preps her, then goes directly to the next room to take another patient out," explains Ms. Acker. At DeGraff Memorial Hospital, Periopera-tive Services Director Cheryl Reimer similarly assigned an OR-pre-op liaison to ensure patient readiness and let everyone know when the OR is ready for a new patient.

Many are reducing the time needed to administer eye drops by moving to all-in-one dilating preparations or sponges, or by better organizing multi-dose regimens. "We streamline the process by having a Ziploc bag with the assortment of pre-op drops each surgeon uses," says Ms. Brunswick.

Responders from all settings keep patients in street clothes and on the same gurney throughout the experience. "We finally followed the example of the ASCs and no longer require our patients to completely disrobe," says Kathy Simmons, RN, MS, perioperative supervisor with Clearfield Hospital in Clearfield, Pa., where cataract patients bypass pre-op holding and phase one PACU. Some hospital-based readers, like Jayne Byrd, director of surgical services with Raleigh, N.C.-based Rex Hospital, are considering moving out of the OR altogether into a procedure-room environment.

Finally, to stay in the game, several small hospitals have invited companies in who supply all the capital equipment, supplies and personnel for cataract surgery. "They furnish all equipment in total plus a tech," says a Minnesota OR director. "As a small hospital, we could not keep up with the technology." Cyndy Harting, of Audrain Medical Center, in Mexico, Mo., says she is also considering such a service.

Challenging future ahead
Despite these successes, the enthusiasm of our responders is tinged with concern. At the Blake Woods facility, where ophthalmology is 75 percent of her business, Ms. Acker said her healthcare benefit rose 17 percent last year, payroll for existing employees rose 5 percent and IOL costs rose $15 per case. Simply put, she concludes: "I am very concerned."

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