Owners and managers of ambulatory surgery centers have seen lucrative procedures pop up only to then see Medicare and the follow-the-leader insurers slash out most of the lucre. Take cataracts and tonsillectomy and adenoidectomy, for example. Between 1990 and 2005, Medicare cut reimbursement for cataracts from $1,500 to about $684. Medicare also moved T&A from Group 5 ($717) to Group 3 ($510), a shift of two columns and nearly $200.

Managers have coped by taking these and other procedures, such as GI and pain management, and running them with relentless efficiency, continuing to perform them profitably even after the reimbursements have dropped. The experts we consulted say the key to profitability is negotiating reasonable contracts and - regardless of specialty - doing a sufficient volume of cases with low overhead, minimal staff and no wasted supplies.

"At a surgery center, you're going to be efficient or you're going to die," says ophthalmologist John Wood, MD, of the Roanoke Valley Center for Sight in Roanoke, Va.

Here follows a list of procedures, very profitable, very efficient or both, drawn from a number of interviews and a brief online survey.

1 Shock wave lithotripsy
One of the few procedures that has nearly zero overhead is extracorporeal shock wave lithotripsies, the non-invasive treatment of kidney stones (urinary calculosis) and biliary calculi (stones in the gallbladder or in the liver). Since this is a closed procedure, there are no supplies in the OR except what you use for general anesthesia, says Diana Procuniar, RN, BA, CNOR, the operations director at Alliance Surgery, Inc.

"The cost to the facility is based on how well it negotiates the terms for rent for the lithotripter machine," says Ms. Procuniar. "Volume will give you the best ROI if you can negotiate a day rate for the rental and can push several procedures through the day." A desirable day rate: between $5,000 and $6,000, says Ms. Procuniar.

Done efficiently, you can do one case every 45 minutes. Let's say you do eight procedures in a day and you've negotiated a $2,800 carve out with a payer. That's $22,400 in revenue per day.

2 Carpal tunnel
Carpal tunnel is one of the most common surgeries done in the United States, with more than 200,000 performed each year. What really made carpal tunnel a profitable procedure were techniques developed around five years ago that took carpal tunnel from an open-wrist operation to one that uses a simple puncture. "The guy I have here is zip, clip, zip and you're done," says David Kelso, RN, PHD, director of St. James Healthcare, an acute-care hospital.

At a recent conference, Brent Lambert, MD, the president of Ambulatory Surgical Centers of America, hailed carpal tunnel surgery as a profitable procedure to a roomful of surgeons and administrators who were about to build surgical centers. "You can do two or three hands an hour in a procedure room while your ORs are buzzing," says Dr. Lambert.

Word can get around if you have a surgeon good at carpal tunnel procedures, says Dr. Kelso. At one Tennessee surgery center he worked in, patients flocked to a particular surgeon. The surgeon worked two rooms simultaneously and did between 15 and 20 carpal tunnel procedures per half-day.

Faris Zureikat, CST, MBA, CASC, administrator of North Texas Surgery Center in Dallas, tells us he's reimbursed 50 percent to 65 percent of the $6,000 he bills private insurers for carpal tunnel cases.

3 Colonoscopy
Colonoscopies became popular in 2001, when Medicare started paying for the procedure for everyone as a screening process, starting at age 60 and then once a decade after that. Insurance companies then felt compelled to follow suit, says Mary Ann Kelly, RN, clinical director of Madison Surgery Center in Madison, Ala. The local Blue Cross/Blue Shield started offering colonoscopies starting at age 50.

GI procedures will give you a great return on investment, says Ms. Procuniar. "Medicare reimbursement is minimal ($446 as a Group 2 procedure), but if you're a multispecialty facility and nearly half of your procedures are GI, you can make money from them. If you're a single-specialty GI center, then you can make a great deal of money," says Ms. Procuniar.

Medicare has caught up with colonoscopy profits, says Carol Mitchell, RN, clinical director of DeKalb Endoscopy Center in Decatur, Ga. Reimbursement used to be $800 to $900, but because managed care has a strong grip in Atlanta, the payback has fallen to around $300. Even Medicare reimbursements are tied to local situations, says Ms. Mitchell. "Fifty miles outside Atlanta, the reimbursement would be $700," she says.

With the equipment in place and the right physician connections, DeKalb can still make money doing colonoscopies, but chiefly because it's doing at least 20 a day. (The center averages 30 to 35 a day.) It would be tougher if the facility were just starting out. "[Colonoscopies] would not be profitable if we were trying to open a center right now," says Ms. Mitchell.

Ms. Mitchell's most profitable procedure is a related procedure, colon with snare polypectomy. She bills Blue Cross/Blue Shield $1,028 and collects $446.

Colonoscopies can pay better in some places, says Annamarie Carey-York, a consultant based in Aurora, Ill. One of her clients, Kendall Pointe Surgery Center in Oswego, Ill., makes $1,222 in profit (it collects $1,550 and spends $328 in labor and supply costs, says Ms. Carey-York) on the procedure and the related upper-throat procedure, EGD.

4 Pain management
With few material expenses, you can perform certain pain procedures 10 times an hour, says Ann S. Deters, MBA, CPA, the CEO and owner of SevenD & Associates in Effingham, Ill. An epidural injection (whether cervical, thoracic, lumbar or caudal) costs $332 in labor and material, and gets reimbursed at $1,464, says Ms. Carey-York. That represents a profit of $1,132.

Most pain procedures fall under Medicare Payment Group 1, which currently yields an average national allowance of $333, says Amy Mowles, a pain management expert and owner of Mowles Medical Practice Management in Edgewater, Md. "As only a short recovery time is needed for most pain procedures, it's possible to perform three to four procedures an hour, thus maximizing the productivity of both the facility and staff," she says.

Many involve bilateral injections and/or multiple levels, meaning each procedure can yield two to three facility fees, adds Ms. Mowles. Medicare currently pays 100 percent of the highest payment for multiple procedures in a single session and 50 percent for each additional procedure.

In states such as California, however, pain management is no longer the darling it once was for ASCs, notes Joni M. Steinman, the managing principal of AUSMS Healthcare Consultants in San Diego. That's because of changes in how workers' compensation reimburses for pain management - payments are capped at 120 percent of the Medicare HOPD rate.

5 Lumbar laminectomy
It takes an especially talented surgeon to do a lumbar laminectomy in an ASC, says Ms. Carey-York, but the spine surgery offers Kendall Pointe a profit of $2,000. She collects almost $2,900 in reimbursements and has $896 in supply and labor costs.

Laminectomy, most often performed to treat leg pain related to herniated discs, spinal stenosis and other related conditions, is an example of a procedure with a reimbursement that varies widely from state to state. The surgery is a workers' compensation case 90 percent of the time, and each state has different rules about workers comp. In Illinois, the state hasn't capped fees for workers' comp cases.

Be nimble, be quick
Have Medicare and third-party payers conspired to squeeze the profit out of procedures performed in ASCs? To a large extent, it appears that they have, slashing reimbursements, freezing rates, whittling covered cases and denying carveouts, among other things. But if you look closely and listen to those in the know, you'll see that a few profitable procedures remain, either because they can be done ultra-efficiently in an ASC (cataracts and colonoscopy, for example) or because payers have yet to cut reimbursement rates (carpal tunnel repair, for example). And help is on the way, in the form of a new ASC payment system that will eliminate the ASC procedures list, rebase ASC facility fees and match ASC reimbursement rates to those paid to hospital outpatient departments for the same surgical procedures. All this is expected to occur in 2008. (See "Could It Get Even Better?")

Sometimes outpatient surgery resembles a bewildering video game where the prizes appear briefly, disappear abruptly and pop up inexplicably on another part of the screen. To make it in this business, you have to jump on profit opportunities before they disappear. And you always have to be ready for the next one to appear.