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.
Overview Today’s dynamic and complex heath care environment necessitates the urology practice 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 care service lines for patients and providing community-based treatment procedures continues a successful pathway. Simply, providing quality care and services will drive increasing patient demand, reduce patient out-migration, and assist with growing profitable market share. Future financial success dictates the practice grow to meet changing demands.
As you consider new technology in the practice, we encourage you to remember the urology practice is a complex ecosystem with many moving parts. Onboarding a new service line may initially appear an overall easy process. However, you will find it is more often not straight forward. Ensure you take a broad look at the practice impact in total. 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 we leave out 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? Will it lead to overall practice profits and good patient care or is the technology a break-even or even a loss? Implementing successful new practice service 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 services must offer quality and value, yet 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 leave their comfort zone and commit 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- SpaceOAR
For this article we will briefly review evaluating a new line of business. The SpaceOAR hydrogel procedure is an option for men who undergo external beam or seed implantation radiation treatment for prostate cancer. It is injected into place prior to the start of radiation treatment. Patients may be awake or asleep under general anesthesia for the procedure. SpaceOAR hydrogel is minimally invasive, remains stable during radiation therapy and then is gradually absorbed by the body after radiation therapy has been completed. For this analysis we are using practice data from a large national pool of Urology practices. We have used the data to develop the numbers and proforma 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 they apply to your practice. We have attempted to identify key assumptions. As a practice proceeds with a specific analysis, assumptions should be identified in the process of reviewing the technology. Once implemented, all assumptions should be monitored and verified going forward. This is not a static business and as you know healthcare is shifting rapidly and things will change. Plan accordingly and continue monitoring the data used and understand adapting to change is essential for long term success. Finally, we are using 2019 Medicare data (RBRVS and Conversion factors without Geographic adjustments).
Opportunity – Patients with Prostate Cancer scheduled for Radiation treatment external or brachytherapy.
ROI Assessment – Stable Medicare coverage, Existing Ultrasound Machine capable, existing staff, room time 50 minutes, 1 staff member plus physician
Technology – Ultrasound machine owned by practice was recently purchased and is meets recommended standards for procedure. Supplies from Vendor as procedure kit.
Note: Ultrasound required for performance of SpaceOAR will likely require equipment upgrade for the practice. When analyzing a new acquisition analysis one can distribute technology costs across all services provided using the equipment due to full practice benefit or can be tagged to procedure by looking at specific differential cost of replacement of existing technology relative to required technology for service.
Cost – $3,054 disposables, Partial Equipment depreciation and OH
Delivery Model – In-office
Data Dive – Patient – Patient with C61 estimated 8% Radiation Therapy, 12 months active 518 Patients with C61. Radiation projected 41 patients per year.
Target Market – Referral physicians, Prostate Cancer patients and Family for market share increase. Target growth 10% in Prostate and Elevated PSA referrals.
Competition – Two similar Urology groups, three smaller practices non-providing the service are present.
Financials and Production – Current OH % for practice 65%% excluding Drug costs. Production in two sites allows for additional patient services without change. 10% growth
Staff – Scheduling, Admin, and Collections. Procedure day, 1 staff member plus physician
Training – Provided by Vendor no additional costs
Template for Quick SpaceOAR Procedure ROI
Cost Initial: 0.00 Recurring $3,054
Reimbursement (MCA) Code 55874 at $3,554.90
Procedures $3,554.90 gross receipts per procedure
Analytics and Reviews
- ROI Assessment and Onboarding – Initial financial review indicates a positive margin. With existing practice space, no new equipment will be required to add the service mix. 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 model.
- Practice impact -Tactical and Strategic – Two specific MA’s in the procedure room location will be trained 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 collected at time of scheduling once estimated cost per patient is obtained.
- New business line or exchanging for existing services? The service will be initially targeted to existing patients with prostate cancer who are scheduled for radiation treatment external or brachytherapy.
As this is an alternative to current therapies offered by the practice it is considered an exchange for existing services.
- 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 2 months until first procedure pending site visit to other groups, training, packet development and scheduling.
- Marketing – Two months post initial implant 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 review and trends. Outcomes to be measured by patient survey, targeted to complications noted during active treatment period as well as 6 and 12 months post 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. New participants will be considered at 6-month intervals dependent upon data. New patient referrals will be tracked by front staff questionnaires with regard to complaint and “how did you hear about us” implemented for all services last year. Additional identification of new patient visits with a diagnosis of Prostate Cancer will be reviewed for change from the 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.
Conclusion: 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, for 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 assume the practice delivers quality care and has a choice in selecting new technology care 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 allows us to effectively partner with the practice team. For more information or to discuss your practice please contact us.