Business Case Analysis Pro-Nox™
Caveats: 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 due diligence and business case analysis. Accurate practice data can make a convincing argument and promote financial incentives for new business ventures.
The diagram 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 financial upside.
Business Case Analysis – Situation Overview
- Established community-based Urology practice
- 5 Urologists and 3 Apps
- Growing community, good demographics and regional referral services.
- 70-% urology market primacy.
- Good relationship with community hospitals.
Business Case – Pro-Nox
Opportunity: Anxious patients seeking better experience at the urology practice. Applicable for all in-office procedures. Provides anxiolysis, analgesia, and possible amnesia.
ROI Assumptions – Stable market, continued vendor support, existing space is available, staff training from vendor, patient payment collections required at time of service.
- New market for urology
- Uses existing space/footprint
- Extra room time is minimal (1-2 minutes)
- No additional staff needed and training is minimal
Technology: Pro-Nox
- Cost: $6,000 (one-time) + <$20 per disposable (recurring). Nitrous oxide and oxygen tanks.
- Storage of required delivery tanks in the office.
- Delivery Model: Patient-administered NOx.
- Data Dive:
Men undergoing in-office cystoscopy (2883),
Prostate biopsy (448)
Vasectomy (261) = 3,592 Assuming:10% adoption by patient (likely higher aligned with practice core criteria growth). 359 Projected patient utilization first 12 months.
- Target Market: Mostly anxious men undergoing in-office procedures.
- Competition: No other market area urology practices using this technology.
- Financials and Production: Assume 10% adoption for Vasectomy, PNBx and Cysto with 20% growth in Year 2. Ongoing 10%-20% demand growth of new patient core criteria.
- Staff: No additional staff. Cash based business. No insurance billing needed. Effective in office patient collection protocols required.
- Training: Provided by vendor /sales representative. No additional cost.
- Infrastructure: Support staff and delivery tank/Pro-Nox storage space available,
- Delivery time per procedure/patient encounter, 1-2 minutes additional staff time per procedure.
- Scheduling: Need to clearly identify which patient is receiving Pro-Nox and which are not in the PM calendar. Collect CASH Payments for Pro-Nox pre-service.
- Referrals: Primarily in-house after initial referral and identification of suitable candidates.
Pro-Nox Return on Investment Review (ROI) Review
Proforma (Initial Phase)
- Initial cost: $6,000
- Recurring cost: $20 (including high shipping charges) + minimal for gases
- Procedure Charge: $59-$149. Assume $75 per procedure
- $75 gross payment per procedure
- Bad Debt: Assumes minimal patient no shows and collection issues with proper staff training and successful patient pre service discussions.
1 month 12 months 24months
Volume 30 359 790
Patient Payments $2,250 $26,925 $59,250
Gas Cost $600 $7,150 $15,800
Projected ROI $1,650 $19,745 $43,450
ROI Summary
- ROI positive. Impact value depends on patient volume.
- Practice Impact: Tactical and strategic
- Billing and collections, staff training, care delivery, scheduling, patient pre discussions for financial and procedure benefits
- Ramp up service levels to full production aligned with demand
- Marketing
- Patient Utilization, satisfaction, trends and adjustments
- Ongoing internal practice review & procedure growth strategies
Coverage
- According to guidelines published by the American Society of Anesthesiology Nitrous Oxide that is not administered in a manner that is continuous or intermittent is considered to be minimal sedation or Analgesic.
“Examples of minimal sedation include peripheral nerve blocks, local or topical anesthesia, and either (1) less than 50% nitrous oxide (N2O) in oxygen with no other sedative or analgesic medications by any route, or (2) a single, oral sedative or analgesic medication administered in doses appropriate for the unsupervised treatment of insomnia, anxiety, or pain.” https://anesthesiology.pubs.asahq.org/article.aspx?articleid=1944958
- Nitrous Oxide is not site specific. It is not considered to be either a topical or local anesthetic, services that are considered bundled into the global of surgical services. Nitrous Oxide is not directed to a specific nerve and is therefore not considered a nerve block, which is covered under most healthcare plans under specific coverage criteria.
- The vast majority of insurance programs including Medicare consider Analgesia or minimal sedation not classified as regional or local anesthetic as a service provided for patient comfort. By definition, services and supplies provided for patient comfort are considered Non-covered or not paid for by Medicare. Non-covered services and supplies can be provided to a patient but are the liability of the patient and do not require an Advanced Beneficiary Notice (ABN). These charges are not regulated by Medicare fee schedules. The majority of private payers follow Medicare policies with regard to non-covered services, however, we would encourage any practice providing a non-covered service to check payer contracts for specific rules related to non-covered services.
- Based on the definitions from the ASA and coverage rules for Medicare, the Pro-Nox™ system is a non-covered service. As a non-covered service, a practice considering offering Nitrous to patients undergoing a procedure is able to provide the service without an ABN with the patient responsible for payment when it is chosen. As with any service offered for which the patient is required to pay, the practice will need to explain the price, the options, risks and benefits of the service and have the patient agree to pay.
Conclusion
Building an effective practice infrastructure and implementing new services requires leadership and a skilled practice team. For this business case analysis, we focused on the core financials with limited clinical issues. We assume the practice delivers quality care and has a choice in selecting and delivering new technology models. 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 payments collected.
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 successfully onboarding new business services. Our experience and unique position in the national urology marketplace allows us to effectively partner with the practice team. For more information or to discuss your practice please contact us at: [email protected]
