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.
Bill Prentice: 0:37
Hi, 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 costs 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 site 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 that good fight to convince CMS to take full advantage of the savings that ASCs 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.
Gavin Fabian: 2:19
Bill Prentice: 2:20
So, 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. That percentage of the device costs relative to the procedure cost at which a surgery center receives additional reimbursements for the cost of 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 cost 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 them when we would want. So, Gavin, are there methods for ASCs to overcome this profitability question at current reimbursement rates?
Gavin Fabian: 3:10
Yeah, 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 realized 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 payer and then what are your costs? And to get that, we use a combination of like historical data to come up with the revenue estimate 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.
Bill Prentice: 4:18
And let me follow up on that. So the focus of these solutions is to help centers better assess upfront 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 the facility’s profitability?
Gavin Fabian: 4:48
Yeah, 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 a 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, you know, 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.
Bill Prentice: 6:46
That'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 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 commercial payers 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 it has to continue to be challenged with throughout the years, 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?
Gavin Fabian: 7:39
Yeah, inflation is 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 still 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.
Bill Prentice: 8:33
That'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?
Gavin Fabian: 9:05
Yeah, 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 changes 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 implants cheaper but it takes me 30 minutes longer to do the procedure. 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 helped me with XY 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.
Bill Prentice: 10:58
It always comes back to data, doesn't it?
Gavin Fabian: 11:01
It does, yeah.
Bill Prentice: 11:02
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?
Gavin Fabian: 11:13
Well, you asked a question earlier on, you know, with inflation and rising costs, like how do you handle cost forecasting, and really the biggest cost that centers in current it's a rising cost is staff, and staff shortages, and we're finding that centers are increasingly relying on agencies that oftentimes have like 2 to 3x, 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 that the other facilities can pick it up. And the savings on a solution like that, for centers are massive in the 2 to $300,000 a year for the average center. And also just I think there can be cultural improvements at the 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 other centers.
Bill Prentice: 12:32
Well, 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 ASACA affiliate. So, thank you, Gavin.
Gavin Fabian: 13:00
Thank you, and maybe we can do this again next year and talk about staffing.
Bill Prentice: 13:04
I’d love to do that. So, this will conclude our podcasts for today, however, and as always, we invite your feedback regarding this or any other podcasts 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.