Meet Your Surgery Center Customer
Edition: March 2002 - Vol 10 Number 03
Ambulatory surgery centers continue to present opportunities to distributors and, as it turns out, group purchasing organizations as well. Jennie Simmons, R.N., managed an office-based plastic surgery center prior to starting Surgery Center Consultants in Atlanta five years ago (www.surgcenter.com). The company offers consulting for surgery centers on such issues as accreditation, administration and management, and facility construction and design. In addition, Surgery Center Consultants operates a 900-member group purchasing organization. The company contracts with 40 vendors for a variety of goods and services for ambulatory surgery centers, including anesthesia supplies and pharmaceuticals, surgical attire and surgical disposables, instruments, linen services, biohazard waste products and services, and business services, such as service contracts. The average member operates from one to four OR suites and buys between $5,000 and $40,000 of supplies per month.
Repertoirespoke with Simmons recently about how sales reps can best serve the ambulatory surgery center market.
Repertoire: Is the ambulatory surgery center market continuing to grow?
Simmons: Statistic show that the industry has been growing at an average rate of about 8 percent every year for the last two to three years. The largest growth that I have seen is among physician-owned centers, due to physicians' desire to exercise control over their schedules and costs. What physicians have lost in their professional fees, they feel they can make up in providing surgical facility services. As more and more surgical procedures become 'outpatient' procedures, you will see a continued growth of ambulatory surgery centers.
Are surgery centers handling more or different kinds of procedures than they were two or three years ago?
There has been both an increase in new procedures and an improvement in existing ones. Areas such as GI, urology and orthopedics have been added to the growing list of specialties for outpatient surgeries. In addition to the emerging specialties, there has been an increase of reimbursable procedures. Specific types of reconstructive, orthopedic, urology, dermatology and eye procedures are now covered by Medicare and third party payers. Whereas a dermatologist would only be covered for a tray charge for a procedure performed in his or her office, he or she can capture more charges associated with the procedure if it is done in a full-service and licensed surgery center.
What are the reimbursement challenges facing ambulatory surgery centers today?
The primary challenge for every surgery center is to secure and maintain its accreditation and licensing to qualify for reimbursement. The second is to understand and correctly use CPT coding in order to maximize reimbursement. It is imperative that the surgery center staff not only be knowledgeable about the applicable CPT codes, but also about coding changes. For example, the 2002 reimbursement codes for all services furnished on or after Oct. 1 2001, were published in September 2001. If surgery centers are not familiar with these codes, they will most likely not be reimbursed at the current rates. Organizations such as the Federated Ambulatory Surgery Association [www.fasa.com] and various websites provide this very useful information.
What other challenges do surgery centers face today?
As in all the healthcare services, there is a critical shortage of RNs to support the surgery center industry. Physician-owned ambulatory surgery centers have a very difficult time employing full-time staff. They and other surgery centers may have to depend on contract nursing services. With this type of staffing, you get high turnover rates and potential gaps in standardized documentation. It takes an extra effort by the centers to maintain their regulatory issues and documentation while in-servicing new staff.
Another challenge facing ambulatory surgery centers is a lack of storage space, which requires them to maintain low reorder points, and to stock just enough disposable supplies to last from three days to two weeks. This puts demands on the centers, as well as on the distributors and manufacturers to fill orders and ship supplies on a timely basis. Backorders can affect the procedure schedule of a surgery center.
Regulatory issues are and will continue to be a major challenge to a surgery center. All healthcare services face the complex and often subjective interpretation of the regulatory agencies. It's true that state and Medicare guidelines are detailed and defined. But what isn't defined is how to implement these guidelines. This is where, as a consultant, I see an ambulatory surgery center benefiting from using outside resources to help them meet regulatory requirements.
Can you describe how surgery centers buy products and equipment today?
The word is Internet. In the last two years, our membership has increased their use of electronic purchasing and overall use of the Internet. All distributors offer the Surgery Center Consultants members a form of electronic purchasing. In addition to ordering supplies from their established distributors, surgery center business managers use the Internet to compare prices, order directly from manufacturers and order supplies from national Web-based supply houses.
Some changes are occurring in how surgery centers buy equipment. No longer is new equipment their only option. Last year, SCC brought on suppliers of refurbished and demo equipment. This is a cost-effective and quality option for surgery centers. Our refurbished equipment dealers provide manufacturers' warrantees and in-house service. We even have a scope company that can, in certain circumstances, provide an onsite or contract loaner so that the practice can maintain its caseload in the event of an equipment problem. This is quite different from the options available to surgery centers two or three years ago!
How can distributors enhance their value to ambulatory surgery centers?
The majority of distributors have recognized the growth and sales potential of surgery centers. In the last three years that SCC has maintained our GPO, all the major healthcare distributors have created sales forces specifically for surgery centers. These distributors offer all surgery centers access to group purchasing contracts (through SCC), a breadth of product lines, product knowledge, opportunities for competitive pricing, and knowledge of surgery center products and requirements. A good distributor rep can be one of the only supply resources which a growing surgery center needs.
Please describe the top three or four things a sales rep can do to truly help a surgery center?
First and foremost, the rep must gain a good working knowledge of their surgical product lines. They need to understand the specific issues and requirements of the surgery center industry. A rep can miss the opportunity to be the surgery center's primary supplier by failing to work with the staff on developing fill rates, minimizing stock quantities, reviewing product usage for cost reductions, etc. These are the services that surgery center owners and operators need from their distributors. Customers look for distributors who provide these 'value-added' services.
Can you answer the same question as it applies to distribution companies (not just the reps)?
Distribution companies can do four things:
Train their sales reps in their product lines as it applies to the surgery center industry.
Continue to expand their product line to meet the needs of cost containment, packaging and medical supplies requirements.
Provide educational opportunities to surgery center staffs. Distributors should consider what educational opportunities they could provide the industry.
Stock surgery center product lines in all their warehouses. With the 'Just In Time' requirements of these centers, inventory needs to be as close to the regional purchasing areas as possible. Many centers order and require delivery of product within one to three days. If the distributor cannot provide this turnaround time, they may not be the distributor of choice.
FAQs About Ambulatory Surgery Centers
The Federated Ambulatory Surgery Association in Alexandria, VA, (www.fasa.org) is a nonprofit association representing the interests of ambulatory surgery centers throughout the country. It represents all aspects of the industry including physicians, nurses, administrative staff and owners to the media, Congress, state legislatures and regulatory bodies. These frequently asked questions and answers were prepared by FASA.
What are ambulatory surgery centers?
Ambulatory surgery centers (ASCs) are facilities where surgeries that do not require hospital admission are performed. Particular ASCs may perform surgeries in a variety of specialties or dedicate their services to one specialty, such as eye care. Patients who elect to have surgery in an ASC arrive on the day of the procedure, have the surgery in an operating room, and recover under the care of the nursing staff, all without a hospital admission.
Are ambulatory surgery centers also known as rural health clinics, urgent care centers, or any other ambulatory care centers that provide diagnostic or primary health care?
No. ASCs treat only patients who have already seen a health care provider and selected surgery as an appropriate treatment. Physician offices are not ASCs. All ASCs must have at least one dedicated operating room and the equipment needed to safely perform surgery and ensure quality patient care.
How long have outpatient surgery centers been in existence?
The first ASC opened in 1970. Today almost 7 million surgeries are performed each year in the more than 3,300 surgery centers across the United States.
Does the federal government sanction outpatient surgery centers?
Yes. Since 1982, when Medicare agreed to pay for surgeries performed in ASCs, the program has saved a significant amount of money. ASCs that receive Medicare payments must meet the program's certification criteria and receive payments only for those procedures that have been approved by Medicare. Today, more than 2,000 ASC procedures have been granted that approval. The Office of Inspector General commented in their 1999 final rule regarding safe harbor provisions that ASCs can significantly reduce costs for Federal health care programs, while simultaneously benefiting patients. The Centers for Medicare and Medicaid Services has promoted the use of ASCs as cost-effective alternatives to higher cost settings, such as hospital inpatient surgery.
Are outpatient surgery centers subject to regulation?
Yes. ASCs are some of the most highly regulated health care providers in the country. Medicare has certified 85 percent of the centers, and 43 states require ASCs to be licensed. These states also specify the criteria that ASCs must meet for licensure. Both states and Medicare survey ASCs regularly to verify that the established standards are being met.
In addition to state and federal inspections, many surgery centers choose to go through a voluntary accreditation process conducted by their peers. ASCs that want to demonstrate a commitment to quality can seek accreditation from one of three accrediting bodies. All three are recognized by Medicare for their rigorous adherence to the highest standards of quality care. All accredited ASCs must meet specific standards that are evaluated during on-site inspections.
What types of surgery are typically performed in outpatient surgery centers?
Small staffs and a commitment to flexibility enable most ASCs to adjust quickly to their patients' changing needs. Rapid advancements in medical and surgical technology have led to significant changes in the patient profiles of the nation's ASCs. n
For more information about FASA, call (703) 549-0976 or e-mail the organization at email@example.com
Top Surgery Center Purchases
According to Jennie Simmons, Surgery Center Consultants, the following are the most-frequently-purchased medical goods by surgery centers:
Anesthesia Supplies: IV fluids, circuits, endotracheal tubes, IV catheters.
Gloves (ranging from inexpensive/generic to expensive/brand).
Staplers (ranging from generics @ $5.85 to brand-name @ $24).
Sterilizers, anesthesia machines.
Vital signs monitors.