Key Points: Physician practices must offer new services targeting quality treatment procedures and care delivery models. Evaluating and implementing new, successful business services is critical for sustainable profits.
In today’s dynamic and complex heath care environment the urology practice must adapt and change to prosper. Offering access to state-of-the art quality care and treatment models offers dual rewards – Ensuring the practice remains competitive and financially sustainable. Evaluating and implementing new service lines for patients and providing community-based treatment procedures continues a successful pathway. Simply, providing quality care and services will drive patient demand, reduce patient out-migration and assist with growing profitable market share. Future financial success dictates the practice grow and prosper.
As you consider new technology in the practice, we encourage you to remember a urology practice is a complex ecosystem with many moving parts. Onboarding a new service line may initially appear easy, others may not be so straight forward. As you consider new technology and procedures for your practice, we encourage a broad look at the practice impact. First and foremost, as a urology care giver you need to consider the clinical aspects of the technology. Support of the new technology from a clinical prospective will drive utilization. PRS is approaching this article from a financial prospective to provide you with an informational example of how to apply data to consideration of new technology. The article assumes the practice providers believe in the clinical relevance of the technology.
Once you are able to determine clinical relevance and support for the new technology. The analysis you provide will require you to consider a number of different factors. The length of this article will require that we leave some questions that each practice will need to consider in addition to the financial data you obtain. For example, will this be an additional service line for the practice? Will this increase patient demand or substitute or exchange treatment but not necessarily demand? Is it profitable or is the technology a break-even or loss that will lead to overall practice profits and good patient care? Implementing successful new practice services lines requires skilled leadership, a culture committed to change, staff capable of navigating the complexities of quality healthcare delivery and effective patient payments. All of the above factors are required.
Each practice situation is different. Successful business models are best customized to meet individual practice core needs, culture and care delivery infrastructure. Evaluating new service lines and technology requires effective due diligence and business case analysis. Accurate practice data can make a convincing argument and promote financial incentives for new business ventures.
I. Brief Action Plan Summary
Step 1. Define where the practice is today and where you need to be downstream.
Step 2. Align core practice data with robust analytics.
Step 3. Define actionable data and plans
Step 4. Develop effective top-down communications to support practice team buy-in.
This is arguably the most difficult. Successful communication is often more art than science.
Step 5. Align practice assets for future profitability.
Step 6. Re-engineer the practice to meet targeted goals and supporting objectives.
Step 7. Implementation.
Step 8. Review, monitor and adjust delivery model as needed. This is not a static business.
II. Evaluating New Lines of Business
Evaluating and implementing new lines of business is not easy. In today’s environment new practice business services must offer quality, value and be profitable. Yes, doing the math and extensive homework really does matter. Effective due diligence is required for defining value and overall impact on the practice. Also, remember, you are asking people to change and leave their comfort zone and committing operating capital.
Evaluating New Lines of Business
The above shows key points necessary for evaluating new lines of business. These represent a complicated set of relationships both tactical and strategic, so clearly show need, value and upside.
Business Case Analysis Blue Light Cystoscopy with Cysview
For this article we will briefly review evaluating a new line of business. Cysview is an optical imaging drug used to assist in detection of carcinoma in the bladder. The drug is instilled in the bladder and retained by the patient for a recommended 60 minutes. Once the drug is emptied a Blue Light capable cystoscope is used to identify suspicious cells. The suspicious areas are typically, biopsied and/or resected. The drug can be used for surveillance Cystoscopy for patients with a history of Bladder cancer.
For this analysis we are using practice data from a large pool of Urology practices. We have used the data to develop the numbers for a Urology group of 8 Urologists and 2 APPs. We are using Medicare reimbursement rates without Geographic adjustment. Coverage and coding are discussed and based on experience with a majority of payers and Medicare carriers.
As you apply these types of analyses to your practice you will have to determine and apply local payment rates and coverage as the apply to your practice. We have attempted to identify key assumptions, as a practice proceeds with a specific analysis, assumptions should be identified and in the process of reviewing the technology. Once implemented all assumptions should be monitored and verified going forward. This not a static business and as you know healthcare is shifting rapidly and things will change. So, plan accordingly and continue monitoring the data used and understand adapting to change is essential for long term success. And finally, we are using 2019 Medicare data.
Opportunity – Patients with Bladder Cancer, suspicion of Bladder cancer or History of Bladder Cancer on Active Surveillance
ROI Assumptions – Relatively recent approval for Office use with new code for Drug (Cysview) in 2019, Stable Patient market with coverage in other settings, Average 90 minutes (15 minutes patient prep and drug instillation, 40- 60 minutes retention in exam room, waiting room etc. and 30 minutes Procedure room), existing Cysto room, Training supplied by vendor.
Technology – New Equipment required more expensive than previous Cysto technology but usable for all Cystoscopies. Disposables for each procedure – Drug (Cysview) and Suction valve
Cost – In market for new Cystoscopy cost differential $50K to add Service, Single use suction valve $250, Drug cost $1075 per procedure.
Note: $50K additional cost investment was based on general assumption that new Cystoscopy equipment package without Blue light capability would cost approximately $50K, new equipment list with Blue light capability is approximately $100K. As noted above the practice is in the market for new equipment as this time and equipment is capable of both blue and white light Cystoscopy, thus purchase of one unit will meet needs of the existing case load.
Delivery Model – In-office. Instillation in Exam Room, with retention/wait time either in room or in reception area and move to Cysto/procedure room for procedure 30 minutes.
Data Dive – Patients with Bladder CA C67.0-C67.9 – 458 New Pt. 22, R33.9 – 452 New Pt. 68. 52000 990 estimated for CA suspect and surveillance 52204 – 22, 52214 – 7 , 52224 – 34 (out of office 52204 – 6 52214 – 18 , 52224 – 35) Projected 50% Cysto conversion – 495, Other – 93
Note: As this drug can be used in conjunction with multiple CPT codes (52000, 52204 – 52240) we elected to use a representative reimbursement in our analysis. First codes 52234-52240 do not have Non-facility practice expense values developed for provision of these services in the office setting, therefore the number of times these services have been provided were excluded from the data analysis. The remaining codes 52000, 52204, 52214 and 52224 were noted to have been provided in the office, ASC and the Hospital Outpatient Department (HOPD). We projected a conversion of 50% of Cystoscopies provided in the office setting to patients with a Dx of Ca of Bladder (C67.0-C67.9) or History of Ca of Bladder (Z85.51) to the Blue light procedure. For Bladder Biopsy (52204), Fulguration (52214) and TURBT minor Tumor (52224) we projected an 100% conversion of in-office procedures to Blue light Cystoscopy. We assumed out of office procedures were provided out of office for a variety of medical necessary reasons, therefore, we projected a 50% conversion of out of office procedures to in-office service provision.
Target Market – Patients with Bladder cancer, on surveillance, or suspected with gross Hematuria
Competition – Two other smaller area Urology groups, neither using this technology
Financials and Production – Current OH % for practice 65% excluding Drug costs. Production in two rooms allow for service without change. 10% Growth.
Staff – Scheduling, Admin, Collections Day. 1 staff member plus physician in-office
Training – Provided by Vendor no additional costs
Infrastructure – 1 Procedure Room available, with adjacent exam room. Will take time from existing patient load.
Scheduling – Specific to 2 room availability and equipment. Patient volume will increase with marketing.
Referrals – Primarily in house with expected increase from outside sources.
Bad Debt – 2%
ROI – Calculate weighted average = Total Reimbursement
[∑ # of 52000 * MCA ( 495 *$194.25) , # of 52204 * MCA – (25 *$389.58), # of 52214 * MCA – (16 * $720.78), # of 52224 * MCA – (52 * $753.22)) ] / Total # of Procedures ( 495+93).
Template for Quick Cysview Procedure ROI
Costs – Initial $50,000 Recurring $ 1,325.00
Reimbursement (MCA) Weighted Avg. $266.32 (52000, 52204-52224)
A9589 $1,086.50 (ASP +6%) Drug (Cysview)
A4649 $275 (invoice plus 10%)
Procedures $ 1,627.82 per procedure
Analytics and Reviews
- ROI Assessment and Onboarding – Initial financial review indicates a positive margin on a per procedure basis. Training for providers and staff will be required and will need to be scheduled prior to offering the service. Clinical training is available. Recommend site visit to clinic currently offering the service to observe office flow and treatment. New equipment acquisition will need to be counted as additional expense. Acquisition differential of $50K is used in this analysis and assigned to the Blue light procedure, moving breakeven point to 3.2 months based on Proc ROI above.
- Practice impact -Tactical and Strategic – Provider assigned MAs in the procedure room location will be trained initially to assist 3 of the 8 physicians initially. Patients will be identified and scheduled for services in one location. All office personnel will need to be notified that the service will require patients to travel to the selected office site for the procedure. Co-pays, prior authorization and co-insurance will be explained to the patient and a procedure deposit will be collected at time of scheduling once estimated cost per patient is obtained. Billing staff will be alerted to track payments for A4649 and report as processed.
- New business line or exchanging for existing services? – The service will be initially targeted to existing patients with Bladder Ca and history of Bladder Ca. As this is an alternative to current therapies offered by the office it is primarily considered an exchange for existing services. However, it is noted that BCAN patient network is active in support of technology and once marketed growth in Ca of Bladder patients is expected to larger than number used in conservative ROI projection. Note: that patient value for a bladder cancer patient is $15k with current technology.
- Staffing support, delivery model, scheduling and team education requirements.- A patient information sheet will be developed to include options, explanation of procedure as well as pre- and post-operative care instructions. This informational packet will be provided to patients by the MA assisting the physician recommending the service. Pre-operative visit discussion will be provided by the physician to answer questions and review education and instructions.
- Startup time frame – Estimated 4 months until first procedure pending site visit to other groups, training, Equipment acquisition and set-up, packet development and scheduling. Continue use of Cysview in Hospital prn until office set up is available.
- Marketing – Two months post initial service and patient follow-up for outcomes of initial patients marketing of procedure will begin with website announcement and patient testimonials. Additional marketing if successful will be considered for outreach with primary care, radio and other advertising within 12 months of startup pending results and reevaluation of service provision.
- Utilization, outcomes reviews and trends – Outcomes to be measured by AUA tumor reoccurrence at 6, 12, 18 and 24 months following BLC resection/Rx. Additional measurements will include tumor size resection for patients on surveillance follow-up after treatment. Based on outcomes candidate qualifications will be refined and disseminated to practice. Other physicians will be provided with outcome results and consideration of expanded offering and new participants will be considered at 6 month intervals dependent upon data. New patient referrals will be tracked by front staff questionnaire with regard to complaint and “how did you hear about us” implemented for all services last year. Additional identification of new patient visits with CA of Bladder will be reviewed for change from past.
On-going Review and Strategies for performance improvement – time for service and personnel required will be reviewed monthly to determine if staffing is accurate for service provision. Time in service will be measured and monitored for comparative improvement assessment and plan adjustment. Collections will be monitored and payer updates provided to staff as available.
Building an effective practice infrastructure and implementing new services requires leadership and a skilled team. For this business case analysis, we focused on the core financials with limited clinical issues. When considering new business services and committing practice capital in-depth due diligence is required including both financial and clinical key points. Understand that while the numbers may appear positive it only works if the procedure can be efficiently provided and accurate payment collected. We assumed the practice delivers quality care and has a choice in selecting new technology models. In closing, we understand the challenges and critical pressure points confronting today’s successful practice. We understand the stress and time constraints of evaluating and onboarding successful new business services. Our experience allow us to partner with the practice team. For more information or to discuss your practice please contact us.