Development deal really a process

The success of an ophthalmic ambulatory surgery center (ASC) doesn't hinge on square footage or the number of operating rooms, according to John A. Marasco, AIA, NCARB. Many factors-including effective utilization-contribute to making a new ASC successful.

The success of an ophthalmic ambulatory surgery center (ASC) doesn't hinge on square footage or the number of operating rooms, according to John A. Marasco, AIA, NCARB. Many factors-including effective utilization-contribute to making a new ASC successful.

Marasco, president of Marasco & Associates, a Denver-based health-care architecture and consulting firm, recently presented "How to Develop a Successful Ophthalmic ASC."

He said the starting point in the ASC development process is, at the very least, a thumbnail feasibility study to determine factors such as what to build, how much it will cost, and what revenue levels might be.

"There are a lot of reasons people do these things," he said. "Low on that list is money. Profit is great, but most clients want a place that's easy for their physicians to do surgery, provides excellent satisfaction and an excellent experience for patients, and the flexibility for doctors to do what they want, when they want-as opposed to going to another surgery center or hospital."

Tracking revenue levels

Examining revenue levels is an essential part of the feasibility study. Marasco suggested doing a historical procedure study by tracking practice Current Procedural Terminology, or CPT, codes for a 12-month period. That helps a practice recognize who pays the bills.

Marasco explained that Medicare organizes codes in nine groups, or nine levels of payment. Revenue levels are affected by the wage index modifier, which makes adjustments based on locality. Adjusted payments can be found in the Federal Register or on the Foundation for Ambulatory Surgery in America (FASA) Web site ( http://www.fasa.org/).

As an example, he cited that when using modifiers 50 and 51, if two or more procedures occur in a single case, payment level will be only 50% for the second, third, and fourth procedures.

Medicare payments vary when procedures are performed at a hospital on an outpatient basis. These procedures are classified by more than 120 ambulatory patient categories (APCs).

"It doesn't make a lot of sense for Medicare to pay that environment under a different set of rules," said Marasco. "So, the government is pulling for one system-APCs. This could be good and bad. Surgery centers still won't get paid 100% of what hospitals get; hospitals are a more expensive environment. They've been talking about 75% of the hospital outpatient department."

He also pointed out that hospitals saw a 4.2% increase in their rates in 2006 while surgery centers got zero. "If you're under the same system, your enemy becomes your friend," Marasco said. "It might be good to be in the same system as hospitals, with their annual increases and significant Washington lobbying.

Third-party payers are not a key factor of the ophthalmology revenue stream, according to Marasco. "Generally, they pay in excess of Medicare rates-115% to 160% of Medicare," he said. "But it varies widely, so do some local research."

Revenue and expenses

After determining the average number of cases per Medicare group and the average payment for those cases, Marasco advised estimating future revenue.

He said that while some ASCs see a 25% jump in patient load when they go into a freestanding building, it's better to make a conservative estimate when calculating projected revenue. Marasco pointed out that Medicare reimbursement rates are frozen until 2009. "We don't know what will happen in coming years," he said.