Value-Based Care Pathway to Success for Independently Owned ASCs

As an invited expert panelist on Value-based Care in ASCs at the upcoming Becker's Healthcare conference in October (Oct 30-Nov 2, 2024) in Chicago, I thought I would publish an article related to what I’ll be sharing - if they give me adequate time and the moderator asks the right questions.

Panel discussions are usually not my thing because there’s rarely adequate time to “go deep” and deliver what people came to learn. But it's not my program to design. They do their events their way. That's their right. Therefore, consider this part of the resource treasure trove of additional valuable resources I’ll share so that people can access it if they so desire. No sales pitches here or on the podium - ever. That's also not my way.

The tips I share here come from the trenches. From building value-based, bundled price surgery programs for independent, non-health system-owned ASCs in the USA and abroad. I've been working as a Director of Business Development in several ASCs around the country over the past 6 years to launch their programs from the ground up into multi-million dollar value-based care programs. It takes know how: not just pricing.

Financial Viability and Sustainability

Implement incremental cost-saving measures.

Streamline supplies, thin out instrument trays to minimum necessary on the Mayo stand and back table, and update preference cards. Create a new list of what’s to be made available on the counter for the circulating nurse to toss to the scrub tech if needed, but otherwise not opened if not required.

Sort out supply, hardware and implant costs. Catalog each case by the supplies, hardware, and implant preferences by surgeon, by CPT code. Find other less expensive vendors if possible.

Negotiate supply chain contracts on higher volume items so that prices are stabilized for a longer period of time.

Record or research average times by surgeon, by CPT, after you’ve eliminated wasted time on counting unnecessary items on the field and Mayo and back table. (Goal: reduced case costs; faster case throughput)

Record cut times, door swing times, and anesthesia times. (Goal: business intelligence on time per case x running cost per minute)

Determine incremental costs per case of capital equipment use on a per case basis.

Determine incremental cost per case of personnel from admission to pre-op through discharge in cost per minute.

Determine cost per case on drugs and supplies - don’t leave anything out.

Develop a cost tracking system in case a preference card changes. Don’t let people update cards without updating costs or your entire system will blow up.

NOTE: I have a former ASC executive, an MBA on my team that is now semi-retired who can assist you with each of these steps. He has more time and availability than me to travel to you and work with you to get this started. It's his passion. If you'd like that, call me. 800-727-4160. Without these first steps, your program won't have the infrastructure for pricing integrity and you'll soon be paralyzed and constrained from growth.

Develop bundled payment packages.

1. Don't try to eat the cow in one bite! Start with 15 of your “lowest hanging fruit” where you can build bundles that are appealing to employers and uninsured/under-insured people. Every few months, add 15 more if you are multi-specialty ASC.

2. Determine what is included in the bundle and what is excluded.

3. Compare case costs by CPT, by Surgeon and choose which surgeons to include. Meanwhile counsel the outliers that if they would like to be included that they must remedy their shortcomings to be able to participate. You will find that some don’t care and won’t change. Leave them behind. THEY. DON’T. CARE. You can’t pay humans to care. Surgeons are humans.

4. Add your desired profit margins to your case prices. Find an average price across all participating surgeons that you can live with and stabilize prices you can publish and sustain contractually for at least 1 year. Consider this: no matter how you package it, you will be

5. Use Bundlr?, the only software on the market that helps you build bundled pricing with integrity once you’ve completed the steps in the Section 1 above. But you can’t use Bundlr? without the business intelligence data from the previous pathway steps above. Ask me about Bundlr? if you'd like a demo. I know the developer very well...

6. Trim out cost to bill, cost to collect, cost of prior authorization activities, cost of non-payment risk, costs as time value of money as you wait for payment because all of these costs are eliminated when you negotiate prepayment prior to surgery.

Partner with local employers for direct contracting.

Determine which employers are self-insured (municipalities, school boards, etc,) and which are Self-funded under ERISA (Fortune 1000s, Unions) as they have the flexibility to contract with providers outside their PPO purchased access agreements. Determine which local health sharing ministries operate in your local service area.

Develop a medical travel patient coordinator and provide training for them. They don’t need any superfluous training certification. Don’t fall for sales pitches for medical tourism certifications. Develop a relationship with your local hotel(s) that are appropriate for the cases you’ll attract. Don’t forget to account for the time for this. Allocate some incremental cost to this activity and bundle it in. Nobody works for free. Hire this role as a W-2 employee, perhaps part-time only, at first; not an outsider - once the volume dictates necessity. Have this new hire develop a manual for the job knowledge that a successor will need if they leave.

Pitch selected employers and focus on cost per case savings with them, inclusive of any travel and subsistence costs to access your program.

To determine which ones to select, data mine CPT codes by employer so you can see what was their unique spend with you by specialty and procedure type. Research what you were paid by their plans in the past to see if you can build an argument around significant savings on cases.

Develop a few referenceable accounts.

Develop “Patient Redirection” contracts that require pre-payment, discount confidentiality, and that insurance plans won’t be billed for any of the bundled price inclusions.

Monitor competitors.

You will have copycats. If they simply copy you on the surface and try to beat your pricing without doing the bottom of the iceberg work and price integrity due diligence, smile like a Cheshire cat.

Tweak pricing if necessary, but don’t abandon the system you created. They won’t survive if they just copy you because they won’t know their case costs and preferred surgeons or your margins. Eventually, they will collapse and scratch their heads wondering what you did differently that made you bulletproof and sustainable. Many will abandon the bundled price approach if they cannot sustain. The magic is in the preparation and due diligence, not the sale price.

Require your staff to sign NDAs about methods and closely held business information on your program. That way they can’t hire away the talent and system you’ve developed so easily without you having the basis of a claim against them for violation of a confidentiality agreement.

Integration and Coordination of Care

Standardize cash pay case protocols across providers.

Quality Measurement and Reporting

Identify and track key performance indicators (KPIs).

Regularly audit clinical outcomes and processes. Watch for cases with complications and track what the complications were. Focus on trends; not anecdotes.

Engage patients in feedback surveys.

Engage employers, unions, and TPAs in feedback surveys.

Report quality metrics transparently to stakeholders. (Infection rates, average savings per case, times from first call to surgery date)

Align marketing expenses with program returns

Which marketing strategies produced cases?

What was the ROMI (return on marketing investment)?

What didn’t produce. Be ruthless; not hopeful. Throwing more money at a wrong strategy won’t change anything except your bank balance.

Patient Engagement and Satisfaction

Develop comprehensive patient education programs for cash pay individuals

Develop comprehensive payor education programs for contracted employers and other payors

Ensure clear and compassionate communication.

Conduct patient satisfaction surveys to guide improvements.

Develop loyalty programs for employer adherence

Offer transparent pricing information to build trust.

Utilize patient feedback to continuously improve services.

Contracting and Reimbursement

Negotiate contracts based on quality and outcomes.

Build strong relationships with redirection payers. Don’t bother with the BUCAHs, they are not ready for this and are not interested. They are not yet capable of adjudicating bundled claims.

Demonstrate value through data and case studies. Publish the case studies and share these case studies with benefits consultants who have large books of business with self-funded clients. Insurance sales agents won’t care and won’t be interested. They will actually see you as a threat - to their sales commissions.

Don’t allow third-party administrators to increase your prices without your express written consent. Otherwise, they will eliminate and undermine your value proposition through greed. When they add on a profit for themselves on the backs of your savings, they reduce your value proposition significantly.

Regularly review and renegotiate contracts

Build your own set of payment policies and requirements. This is your program; not theirs. You dictate the rules. The first is pre-payment. Don’t try to adapt to some TPA’s requests for payment in arrears at a higher rate. It’s too hard to manage different programs and prices, and you’ll never have a smooth and efficient program. Let them shop elsewhere if they cannot or will not follow your policies. No FOMO allowed.

Leverage patient and employer/TPA testimonials in negotiations - if you can get them. Testimonials are actually harder to obtain than people often believe. This isn’t McDonald’s and it's not about the cold French fries in the bag.

Regulatory and Compliance Issues

Stay updated on federal and state value-based care regulations. Most BPCI regs won’t apply to this type of bundled price program in an independent, non-hospital-owned ASC setting. Hospital-owned ASCs are a different breed of cat.

Community and Market Dynamics

Develop marketing strategies to highlight your unique offering for value-based care options.

Engage with local organizations to build community awareness where you control the narrative.

Offer community health education events to educate the public about your cash pay discount options.

Leverage social media to reach and engage the community.

Develop culturally competent care programs. Focus on languages and cultures present in your service area.

Utilize patient testimonials to build trust and credibility.

Choose cases and procedures that meet specific local health challenges.

Participate in community health initiatives and coalitions. Be present.

Offer transparent pricing on your website to foster community trust.

Outcome-based Incentives

Develop clear criteria for outcome-based value propositions

Use data to identify high-performing practices and replicate them elsewhere.

Establish case inclusions and exclusions for unforeseen risks and losses. Be compassionate but don’t just give away care. In the long run, patients won’t appreciate “free”. They’ll often surprise you with an attitude of entitlement if you do.

Develop clear communication plans for all stakeholders. Create monthly reports for shareholder and participating physicians on how the program did, what new procedures were identified by request, profitability, losses, mistakes and after action reports (AARs)

Regularly review and adjust incentive structures for program participating physicians based on performance. Some docs will appreciate more block time rather than an theater tickets and dinner gift certificates. More block time means more income opportunity if they fill it.

Workers Comp and Personal Injury Cases

Workers compensation cases in each state have a regulated fee schedule. Ask a knowledgeable attorney if you can sell discounted bundled case rates on cases that have not been rejected (controverted) by carriers.

For admitted liability cases, you may not be able to change how they pay or your relationship with the insurers. If the employer is self-insured for work comp or self-funded under ERISA ask the attorney for guidance. Otherwise, you'll be wasting precious resources (time, for one) trying to market this to the wrong type of customer. The problem may be that the employer cannot "redirect" or steer to a value-based provider no matter how much you can save them.

For personal injury cases, there's too much to go into for this article. Stay away from personal injury bundled case rates for the first few years if the case has not settled. If someone approaches you, call me first for a few tips to protect yourself. If the case has already been settled and payouts made, treat the case like any other cash pay, bundled, value-based procedure and collect up front. Remember that if the accident victim tries to use their regular HMO/PPO/Marketplace/Medicare/Advantage, VA or Medicaid health insurance - you'll always have to deal with subrogation issues that get very messy.

Questions?

Get in touch. 800-727-4160. I'm available Mountain time from 9-5.

Use the same number if you want a demo of Bundler?. It's an amazing tool! Accessible by subscription as a SAAS product.