Medicare's new ASC payment system will likely create incentives to steer patients needing GI services from freestanding outpatient centers into the hospital setting. The American Gastroenterological Association paints a bleak picture, forecasting that the new payment system could "shift as much as 20 percent of revenue away from ASCs." Here's why: Reimbursement for colonoscopies (CPT 45378) performed in ASCs would drop from $446 to $356.54, 30 percent less than the $509.34 HOPDs receive, if Medicare sets ASC payments at 62 percent of the HOPD rates. Here's how to prepare for what looks like an inevitable loss of revenue.

Building blocks
Faced with diminished reimbursements, well-performing facilities will maintain their success through a renewed focus on efficient patient flow, room turnovers that would make a NASCAR team proud and a diligent eye on controlling supply expenses. While those are already the marks of most centers, the coming Medicare cuts re-emphasize these traits.

"We will decrease our doubles - multiple procedures on the same day - change our GPO and streamline scheduling to go with fewer procedure rooms for longer periods," says Robert McDavitt, RN, BA, CASC, the administrator of River Oaks Endoscopy in Conroe, Texas.

Mr. McDavitt asked his docs to give up a portion of their morning blocks and shift those cases to the afternoon in hopes of eliminating a schedule that was heavily front-loaded. His goal: reduce the number of rooms running on any given day. His facility ran four rooms, three days a week and three rooms on one day. Instead, Mr. McDavitt wanted to open three rooms, four days a week and two rooms on one day.

Run rooms vertically instead of horizontally. "Block 'em and stack 'em," says Chris Fromme, the administrator for Heritage Park Surgery Center in Sherman, Texas. "We want to do 12 procedures in one room instead of six in one and six in another," he says. The vertical scheduling model calls for opening procedure rooms in the early morning and running them into the afternoon, a time that physicians and patients typically try to avoid. Physicians are accustomed to morning blocks and patients prefer to have procedures performed early - especially after fasting and downing 64 ounces of the unpleasant bowel prep liquid - to allow for a day's recovery.

Shifting morning cases to the afternoon is part the responsibility of the administrator, who must balance staff schedules, and part the responsibility of the physicians, who must steer patients to the available times and space within a facility that are not being used, says Mr. Fromme.

When working with set-in-their-ways physicians, perception is sometimes more important than reality. Michael Roub, MBA, the administrator at Specialty Surgical Center of Encino in California, appeases physicians clamoring for morning blocks by starting four-hour blocks by 7 a.m. each morning. As the first blocks end at 11 a.m., Mr. Roub opens more rooms, allowing for more morning cases, even though the facility and staff work well into the afternoon. The second block's case start times were before noon, and sometimes that's all a stubborn physician needs to hear. To further encourage afternoon utilization, Mr. Roub requires his docs to add two afternoon blocks for every single morning block they request.

Docs who fail to fully utilize their blocks shouldn't receive scheduling priority, says Cyndi Muren, RN, nurse manager for the endoscopy center at Memorial Hospital in Belleville, Ill. Her department's leadership agreed to take blocks away from docs whose utilization is below 60 percent over a 90-day period.

Inform staff if pre-operative IV antibiotics are needed in advance of patients' arrivals so you can administer them as soon as they arrive, says Wanda Moratelli, CASC, business administrator of the Ambulatory Care Center in Vineland, N.J. This keeps the patient flow moving and prevents a delay in OR times, she says.

Increasing numbers of facilities are also switching to part-time staffing models to coincide with efforts to compress daily schedules. Ms. Muren's department is approved for 928 RN FTE hours and 640 tech FTEs every two weeks. She only hires adaptable individuals and ensures each clinical employee is trained to work in the pre-op, procedure and recovery areas. Flexibility, in both staff and scheduling, is key to dealing with decreases in reimbursements, as colonoscopy is a volume-based business and revenue increases when more cases can be added.

Casing costs
Administration and staff at Gulf South Surgery Center in Gulfport, Miss., are focusing on supply costs, thanks to the recommendations of Leah Ethridge, the facility's management consultant. She says each physician received comparative reports of his highest volume codes and how much each uses in direct supply costs. They are working together to analyze their current supply expenditures and looking for ways to reduce supplies by specialty and individual.

The problem, says Ms. Ethridge, is that the physicians find that they're already cost conscious and effective at controlling supply expenses. Even if they save $2 to $5 per case - a figure Ms. Ethridge believes is a realistic goal - the effects of the Medi-care cuts will still mpact the facility's bottom line, especially when it loses around $200 from the $440 to $775 in reimbursements the facility currently receives for colonoscopy cases. "Will focusing on physicians' preference cards be enough to improve our per-case supply costs? Yes. Will it be effective when the cuts are enacted? No. We're still going to feel the effects," she says.

Mr. Fromme is a stickler for reviewing supply costs. He scans the previous day's case reports over his morning cup of coffee, looking for anomalies that jump off the page. He recently discovered that one of his new, young physicians included an expensive vascular clip on his preference card. The clip was a supply that made sense at the research hospital where the doc has previously worked, but it was a profit-eating expense at Mr. Fromme's lean and mean ASC. At a cost of $60, the clip inflated the per-case costs at the Heritage Park Surgery Center, especially when procedure expenses typically averaged a total of $40. After a quick meeting, the clip was removed from the supply rotation.

Some facilities look to how they reprocess to lower per-case expenses. Ms. Moratelli contracted with an FDA-approved company that reprocesses disposable items, such as bipolar electrocautery catheters, biopsy forceps and retrieval nets. "We have found we can get at least two uses from these items when reprocessed and have seen a significant savings on disposable items," she says.

Making do
The GI industry is holding its collective breath and hoping Medicare payments to ASCs in 2008 end up higher than the proposed 62 percent, says Mr. McDavitt. He says his center will be viable either way, but adds, "The proposed payments raise challenges with respect to us affording the latest in medical devices. Who suffers? The patients."

Regardless of the methodology used by CMS, the cuts are coming. You will be asked to improve case efficiency and reduce supply costs in a specialty already known for excelling in those two categories. Dealing with the colonoscopy cuts may come down to making do with what you've got. "I have to figure out how to manage around the revenue we have versus the revenue we wish we had," says Mr. McDavitt.