- Email: [email protected]
Managing and improving efficiency of an outpatient vascular laboratory
Managing and improving efficiency of an outpatient vascular laboratory Loren Masterson, MD, MBA,a,c Bhagwan Satiani, MD, MBA,a,c Julie Evans, BS, RVT,b and Patrick S. Vaccaro, MD, MBA,a,b,c Columbus, Ohio Noninvasive vascular diagnostic testing is efficient and costeffective, and it is an integral part of vascular surgery practice. Integration of the laboratory into the practice can add significant income to a practice as well as increase the quality of the patient’s experience. Maintaining a successful vascular laboratory is a key
component of the practice’s remaining competitive in an everchanging health care system. Attention must be paid to staffing, operations, financial performance, revenue cycle, and patient and referring physician satisfaction to grow the business. (J Vasc Surg: Venous and Lym Dis 2014;-:1-6.)
The outpatient in-office vascular laboratory (VL) has become an integral part of any vascular surgery practice. Noninvasive vascular studies have proved to be efficient, cost-effective adjuncts to physical examination and history and allow thorough and thoughtful planning of surgical and nonsurgical treatment of vascular diseases. In addition to diagnostic examinations, screening examinations are becoming a more vital part of primary medical care, such as screening examinations for abdominal aortic aneurysms. Likewise, the simple performance of ankle-brachial indices has been shown to be of prognostic value in the future care of the patient.1 Having access to a VL with qualified and experienced technologists can also add significant revenue to a vascular practice. The in-office ancillary services exception to the Stark law allows physicians to offer imaging services in the office.2 High-quality examinations and interpretation not only can increase revenue but also can significantly add to the quality of the patient’s experience by avoiding a repeated visit for testing and prompt reporting of results. Consistent with other vascular patient care services and procedures, reimbursement for technical and professional services related to noninvasive VL tests has also decreased considerably. Therefore, with rising overheads related to employee salaries and expensive ultrasound equipment, vascular surgeons who incorporate VL tests in their practice must pay close attention to managing the VL with maximal efficiency to be able to provide this critical service to their patients as well as to maintain profitability. This paper endeavors to provide information to vascular surgeons
starting their practice as well as tips for practitioners attempting to improve efficiency in existing VLs.
From the Peripheral Vascular Laboratory, Heart and Vascular Center,a Vascular Laboratory Vein Solutions,b and Division of Vascular Diseases and Surgery,c Department of Surgery, Wexner Medical Center at The Ohio State University. Author conflict of interest: none. Reprint requests: Loren Masterson, MD, MBA, 376 West 10th Ave, Prior Hall #701, Columbus, OH 42310 (e-mail: [email protected]). The editors and reviewers of this article have no relevant financial relationships to disclose per the Journal policy that requires reviewers to decline review of any manuscript for which they may have a conflict of interest. 2213-333X/$36.00 Copyright Ó 2014 by the Society for Vascular Surgery. http://dx.doi.org/10.1016/j.jvsv.2014.04.010
STAFF Hiring of technologists can be challenging and frustrating. Working with a human resource department to search both nationally and regionally for registered vascular technologists affords a broad search for screening of available candidates. For small practices, in addition to searching in the more traditional places, once a VL is set up, offering the VL as a clinical site for ultrasound students provides for a more intimate review of potential candidates who are essentially trained by current staff. Critical thinking skills along with a strong understanding of anatomy combined with excellent communication skills are imperative competences in searching for the best candidate. It is important to have a cohesive work team of technologists and staff; therefore, selection of a “best fit” technologist is critical. Certifications are necessary to maintain a reputable VL, and technologists performing the examinations should take the technology certifying examination through the American Registry of Diagnostic Medical Sonographers. Two examinations are necessary to become a registered vascular technologist. Physicians interpreting tests are encouraged to take the Registered Physician in Vascular Interpretation examination available through the same organization. This single examination, combining physics and interpretation, is now a required component of vascular surgery fellowship and residency training programs, but it is available to any physician who desires to become certified. The Intersocietal Accreditation Commission provides a peer-reviewed process through which VLs can become accredited. The accreditation is valid for 3 years, including one audit during this period. The application fee for accreditation varies by the size and volume of each laboratory, and the process can be expedited for an additional fee. Besides ensuring basic quality in testing, it provides credibility in marketing of the VL. Maintaining satisfaction for the staff members is important to retain qualified and efficient staff members. Our experience demonstrates that allowing a flexible schedule 1
2 Masterson et al
JOURNAL OF VASCULAR SURGERY: VENOUS AND LYMPHATIC DISORDERS --- 2014
and part-time workers leads to increased staff satisfaction and retention. The ability to have “flextime” is increasingly attractive in today’s work force, which consists primarily of women. Access to continuing education and tuition reimbursement programs are also important factors in improving staff satisfaction and better retention. Continued learning is important for sonographers, and opportunities to learn new skills must be provided to keep them fresh and motivated. FINANCIAL VLs can be constructed in a number of sizes and formatsdfrom a small private office setting with a single duplex scanner and arterial Doppler equipment to the joint use of a hospital-based laboratory. There are several advantages in teaming with a hospital-based laboratory, such as large purchasing discounts for equipment and maintenance through the larger health care organization. Disadvantages include sharing of control with a bureaucratic structure, sharing of equipment and technologists between multiple departments, and delay in elective outpatient examinations because of urgent inpatient requests. The initial overhead capital costs of starting an outpatient laboratory can be daunting (Table I). For this reason, ultrasound and other equipment can be purchased or leased with associated maintenance contracts. Physicians are not generally involved in purchasing and inventory management, but basic knowledge can save significant amounts of money that can be used to expand services. Joining a group purchasing organization for purchasing of equipment and supplies takes advantage of the buying power of large organizations.3 If the vascular surgeon is employed or hired by a health system, it is almost certain that equipment is being bought through a group purchasing organization. If not, the vascular surgeon must make inquiries with local medical societies or health systems in locking in savings of at least 15% and up to 50% on special promotions. The hiring of qualified vascular technologists and software programs can add up to a significant portion of operating costs. For the purposes of this paper, we illustrate the financial picture of a single VL in a midsize office setting. When considering overhead costs, one must consider not only the initial cost of equipment but also the cost of frequently replaced supplies, such as ultrasound gel and maintenance costs. Our example, illustrated in Table II, includes the fixed cost of a maintenance contract used not only to perform routine checks on equipment but also to have available maintenance personnel “on call” to address immediate issues and to provide temporary replacement equipment when necessary. The cost of downtime of equipment in a single midsize office setting could lead to a significant financial loss. It is advisable to negotiate for replacement equipment, preferably within 24 hours, as part of the maintenance contract. Billing for diagnostic VL tests consists of two components, the technical and professional parts. The technical
Table I. Estimated direct capital expenses of starting a vascular laboratory (VL) Item High-end ultrasound unit Physiologic unit, lower extremity arterial machine Motorized treadmill Four Doppler pencil probes Software license Total
Cost $275,000.00 $35,000.00 $5000.00 $640.00 $1500.00 $317,140.00
Prices reflect our facility’s participation in a group purchasing (Novation) contract. Cost assumes purchase of new equipment. Vendors may offer used equipment at a discount.
component is considered billing for the equipment and the technician performing the test. This is identified by adding the modifier TC to the procedure code identified for the technical component charge. In our office, because we own the equipment, perform the examination, and do not have outside physicians perform the interpretations and do not pay rent, we cannot use the modifier. Our office would therefore use the global charge, which includes the technical and professional component of the service. The professional component is for the interpretation of the results of the test. When the professional component is reported separately, the service may be identified by adding the modifier 26. This would be represented when the ultrasound study is completed in the hospital setting and the interpretation is reported separately. In addition, reliable and stable software is needed to generate professional patient examination results and accurate reporting (Table III). An additional investment in conforming to various electronic medical records systems to allow transfer of information between physicians is also needed. In our example, we calculate the annual potential profit of our outpatient VL that performs approximately 1874 examinations per year. In this practice, which does a large number of elective venous procedures, venous studies account for approximately 45% of the total number of examinations, with the next most frequent examination being carotid duplex studies. Although it is not an exact science, it is important that the vascular surgeon be able to estimate the volume in the Table II. Estimate of direct annual expenses of the vascular laboratory (VL) Item Frequent suppliesa Salary Benefits Annual maintenance contract Accreditation cost Total a
Cost $15,630.20 $62,400.00 $20,592.00 $31,000.00 $850.00 $130,472.20
Frequent supplies include ultrasound gel, patient gowns, and general office supplies; if applicable, billing costs of approximately 5% to 7% of collections may be added to expenses.
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Table III. Popular vendors for vascular laboratory (VL) reporting Software company name Consensus Medical Systems Medstreaming Medical Office Datacheck PenVasc Digisonix In Record Time AS-Vascular Philips Agfa
Product
Website
VascuPro and VascuBase Same Same Vascular Information System (VIS) Digisonics Cardiovascular Information System (CVIS) Same Same Heartlab
http://www.consensusmed.com/ http://www.medstreaming.com/ http://datastarsystems.com http://www.penvasc.com/ http://www.digison.net/ http://www.inrectime.com/ http://as-software.com/vascular.html http://www.healthcare.philips.com/us_en/products/healthcare_ informatics/products/cardiology_informatics/xcelera/ http://www.agfahealthcare.com/usa/en/main/
This is not a comprehensive list of available vendors, and vendors’ offerings can vary greatly. In addition, some expenses, such as those related to a picture archiving and communication system (PACS), are not included in the example.
VL and thereby not only have an idea about revenue but be able to create a budget as well and do a basic cost-volumeprofit analysis.4 Cost-volume-profit analysis is helpful in figuring a break-even volume for a new laboratory and how many tests are needed to generate a profit, given reimbursement for each category of testing. In Table IV, we illustrate Medicare, Medicaid, private insurance, and selfpay volume and reimbursements in a typical VL. Note that actual reimbursement may vary by the geographic location of the VL. The relative value units of each component (physician work, practice expense, and malpractice) are modified by a geographic practice cost index. The adjusted relative value units are then further multiplied by a national conversion factor to come up with actual reimbursement. The blended weighted average is given in Table V. In Table IV, the blended weighted average of each test includes self-pay patients, but this accounts for a discounted rate available to those patients who are paying out of pocket. Medicare will reduce the technical component of VL studies performed in an office environment where you own the equipment for patients who receive multiple examinations on the same day. A 25% reduction
is applied to the second test (technical component reimbursement only), then added back in the allowed amount for the professional component. In considering the amount of revenue needed to break even, it is key to note the monthly or annual overhead costs as well as the cost for performing the examinations themselves. We have included those costs in Table II, which shows technologist salary and benefits as well as the cost of frequent supplies. By noting the blended weighted average of each test, discounting the overhead costs, a break-even point can be determined by this example (Table VI). MANAGING THE REVENUE CYCLE The next step to a financially successful VL is a good understanding of a complete revenue cycle, which is an important part of maintaining a profitable practice. The revenue cycle truly begins not just with the patient’s visit to the office but during payer contracting. It is important to start negotiating these contracts as early as possible because payer credentialing can take up to 6 to 9 months to complete. The revenue cycle for each individual patient begins at the time that the patient’s first appointment is
Table IV. Reimbursement and volume of vascular laboratory (VL) tests
CPT 93970 93971 93922 93923 93924 93925 93926 93880 93978
Examination name Bilateral vein Unilateral vein Ankle-brachial index Lower extremity arterial multiple levels Lower extremity arterial exercise Duplex scan of arteries bilateral graft Duplex scan of arteries unilateral graft Carotid duplex bilateral Aorta duplex scan
Reimbursement
Annual procedure volume
Commercial
388 485 220 52
$328.29 $212.35 $196.44 $302.96
70 78 26 39
$177.95 $110.15 $88.20 $137.27
18 13 50 37
$142.52 $94.52 $67.32 $103.54
8 6 15 14
$262.00 $160.00 $128.00 $198.00
4 4 8 6
53
$369.34
32
$171.77
44
$124.03
8
$248.00
10
22
$369.25
30
$182.30
56
$128.06
9
$348.00
4
94
$235.96
33
$116.79
45
$85.53
17
$200.00
2
490 70
$337.57 $312.08
18.90 19
$172.34 $175.62
74.90 72
$332.00 $322.00
1.80 1
Commercial, %
Medicare
Medicare, %
Medicaid
$128.08 $126.66
Medicaid, %
3.70 7
Self-pay
Self-pay, %
CPT, Current Procedural Terminology code. Reimbursement is defined by global fees, including technical and professional fees. All numbers are derived from our laboratory and reflect one calendar year.
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Table V. Blended weighted average reimbursement CPT 93970 93971 93922 93923 93924 93925 93926 93880 93978
Examination name Bilateral vein Unilateral vein Ankle-brachial index Lower extremity arterial multiple levels Lower extremity arterial exercise Duplex scan of arteries bilateral graft Duplex scan of arteries unilateral graft Carotid duplex bilateral Aorta duplex scan Blended weighted average per examination Total annual reimbursement
Blended weighted average, $ 283.72 190.06 116.68 203.46 243.07 238.31 151.57 194.82 202.35 202.89 380,221.30
CPT, Current Procedural Terminology code. Reimbursement is defined by global fees, including technical and professional fees.
scheduled. It is at that time that preapproval with some insurance providers should be addressed. Patients may also preregister for appointments by phone, by mail, or online to establish address and contacts and to verify insurance copays. Registration either before or on the day of the appointment should involve the patient’s completing a brief medical history and consent to treatment forms if needed, and copies of any identification and insurance cards are obtained. In addition, any copays or deductibles should be collected at the time of the visit. The next step of the revenue cycle is where most physicians can be intimately involveddcharge capturing and coding. It is of vital importance that physicians and physician extenders capture accurately and completely all services performed at that visit. A billing staff that is familiar with the details of your practice can be an invaluable asset. Incomplete physician documentation has been shown to account for 30% of missed revenue.5 After documentation, the insurance billing should be ready to go out. It is important to pay close attention to the details of each payer’s contract so that vital information necessary for appropriate payment is met. If a claim is properly completed, accounts receivable should receive payment without incident. Unfortunately, this is not always the case as payers may deny a claim, and some patients who are selfpay may have large unpaid balances. Having an efficient system set up to prioritize denials and to investigate their causes can reduce the time lost in collections. Table VII demonstrates many of the important benchmarks of the revenue cycle. Table VI. Calculation of number of tests to break even Total annual examinations Annual cost Cost per examination Margin per examination Number of examinations needed to break even
1874 $130,472.20 $69.62 133.27 979
PATIENT SATISFACTION/GROWING, KEEPING THE BUSINESS Maintaining both patient and referring physician satisfaction is important for preserving a consistent revenue flow. Physician satisfaction can be tied to the quality and timeliness of the examinations. High-quality examinations performed on a regular basis as well as appropriate reporting of results to referring physicians can be improved with open communication between staff members. Our institution has developed guidelines for reporting of critical results to physicians.6 Of note, whereas only 3.49% of all VL tests performed resulted in “critical” alerts, the majority of those patients were symptomatic at the time of the examination. Symptomatic patients should alert physicians and VL staff to minimize response time so that critical results can be reported quickly. An important component of referring physician and patient satisfaction is prompt reporting of final results. We perform regular audits of the time it takes between test completion and physician interpretation. Our most recent audit showed the interpretation turnaround time to be 2.17 hours. No-shows, or absenteeism, can greatly decrease the efficiency in any office setting, but especially those appointments that are procedure based. If a technologist has blocked off 30 minutes to complete a study of a patient who does not arrive for the appointment, there is frequently no way to fill that appointment for that day. Absenteeism can be addressed by either attempting to decrease the no-show rate itself or by learning an effective way to overbook patients to account for missed appointments. Overbooking can be a complicated process that may lead to decreased patient satisfaction if appointments run consistently late. One study of a VL showed a noshow rate of approximately 12%, with an average of 7.6 missed appointments per week.7 Studies have demonstrated that in outpatient primary care settings, reminder telephone calls, either automated or from office staff, have decreased the no-show rate and cancellations.7 However, this has not carried over to procedure-based appointments. Vascular patients can be unique because they frequently have decreased mobility or ability to transport themselves to appointments. Lack of reliable transportation is a significant factor in this patient population. In addition, patients who have a previous history of no-show visits have an increased likelihood of future missed appointments. Finally, efficiency of the patient flow can significantly improve staff and physician satisfaction. We performed a comprehensive operational analysis of our off-campus office and the VL, applying Six Sigma and Lean Management principles. This resulted in several pertinent observations that can help the vascular surgeon to ensure seamless functioning of the VL. We noted an error rate in scheduling of the correct examination as well as of the correct amount of time allotted to perform the examination that was eight times higher on the arterial side. We performed a gemba walk-through (Japanese term connoting visiting a
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Table VII. Suggested benchmarks to achieve as part of the revenue cycle Parameter Patient access
Billing
Cash management Accounts receivable/collection Expenses
Metric Percentage of patients with complete preregistration Compliance with physician authorization requirements Charge lag time Clean claims submitted Overturn of denials Paper remittances Months revenue in accounts receivable Gross collection ratio Net collection ratio Posting of cash and contractual allowance Average payment period Average collection period Accounts receivable Cost to collect Bad debt expense Overhead, %
workplace to review the process) on both sides to identify the source of error, assisted by one of our employees who is a certified Six Sigma Black Belt, and mapped the flow processes that went into obtaining the test. On average, the VL staff was spending approximately 10 minutes per error to correct these problems. The time it takes to investigate the ordering and scheduling issues costs money (reduces income, increases expenses,) decreases efficiency, decreases productivity, and reduces employee satisfaction, physician satisfaction, and patient satisfaction. We offered reeducation of identified staff and applied Lean principles to facilitate flow and to eliminate non-value-added processes and were able to reduce the sources of error. Front-office personnel (mainly schedulers) need to have a clear path of communication to back-office personnel (nurses, technicians, managers, and physician) to make sure that the appropriate tests are allotted adequate time so that there are not delays. It is important that the VL have written standardized work processes to reduce the chance of errors and also to make it easier to train new employees. It is also necessary to manage daily work schedules so that staffing matches demand. A heavy work schedule on a day with reduced technicians is a recipe for dissatisfaction and creates a bad image for the VL. Communication is the key to get buy-in from all personnel and create the kind of culture that breeds success. All things considered, high patient satisfaction will assist in high referral physician satisfaction. MARKETING THE VL Physician referrals account for the majority of new patients seen at a vascular surgeon’s office. Targeted marketing to local primary care physicians, wound care centers, and podiatrists can increase visibility in the community. It is important in approaching other physicians to stress the
Formula
Benchmark for surgical practices
Complete preregistration/total registrations
96%-98%
Average number of days from date of service Percentage of clean claims
<7 days >95%
Paper remittances/all charges Cash received from payers/gross fees Case received from payers/net fees Current liabilities/(total expenses depreciation) Net patient accounts receivable/patient service revenue >90 days Total cost of all business-related functions total collections 88% of gross or net revenue Total nonphysician expenses as % of total/case collections or net revenue
95% Median, 41% Median, 94% Median, 47.1 days Median, 22% <5%
benefits to their patients of timely and accurate VL testing, the quality of examinations, and the prompt reporting of critical results. One should make it a point to personally visit referring physician offices to acquaint them with testing that is available and appropriate indications. Electronic and paper VL testing request forms can be sent to referring sites. It is important to emphasize the professionalism, efficiency, and supportive nature of your VL and at the same time provide contact information including that for after-hours service, if any. FUTURE CHALLENGES FOR THE VL The Affordable Care Act may present VLs with challenges related to the payer mix. Putting a plan together that offers the most appropriate mix of Medicaid- and Medicare-covered patients with those covered by private insurers will be a challenge. This will only be further complicated by the proposals for bundled payment and price transparency. Monitoring governmental and congressional changes in rules and reimbursement through the Society for Vascular Surgery is essential. For instance, the multiple procedure reduction in the technical component of imaging services in 2010 alerted the vascular community and dictated a change in the policy of multiple testing within VLs. There is also constant pressure from the Medicare Payment Advisory Commission, a congressional agency, to remove vascular imaging from the in-office ancillary services exception to the Stark law. With all the changes and financial fluctuations through government regulations, pushing to develop increased cooperation and patient coordination of care among providers is vital. Accountable care organizations could offer this framework by supporting a relationship between quality indicators and appropriate costs. If practicing vascular surgeons decide to seek full employment within a health system, there is a
6 Masterson et al
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choice to keep the VL as a separate entity or to roll it over into the hospital’s VL, with the pros and cons as previously discussed. Moving VL services out of the hospital settings into outpatient clinics does improve efficiency and increases revenue because of the technical fees collected by the practice. However, maintaining an efficient VL requires constant attention to all aspects discussed in this paper. The relationship between the volume of examinations and the space available to handle the examinations should be carefully planned. There are cultural differences between caring for hospital-based patients and caring for those patients in an outpatient setting that need to be carefully evaluated. Monitoring patient satisfaction through simple surveys is essential because unlike in a hospital, barring exclusion based on insurance, patients do have a choice as to where they go for their VL tests. CONCLUSIONS As our health system continues to evolve and stresses the importance of management of chronic disease, noninvasive vascular testing continues to grow as a cost-effective, safe technique to evaluate patients. A VL is an integral part of every vascular surgeon’s practice. Competition from other specialties and continued pressure on reimbursements will require the utmost efficiency in managing expenses and appropriate marketing. Paying attention to creating a realistic budget based on anticipated volume and performing a basic cost-volume-profit analysis are useful to project revenue and to control expenses. Having qualified sonographers and a well- functioning accredited VL within an efficient outpatient office is paramount in a competitive market.
AUTHOR CONTRIBUTIONS Conception and design: BS, LM Analysis and interpretation: BS, LM, PV, JE Data collection: BS, JE Writing the article: LM, BS Critical revision of the article: BS, PV, LM, JE Final approval of the article: BS, PV, LM, JE Statistical analysis: LM, JE Obtained funding: Not applicable Overall responsibility: LM REFERENCES 1. Morillas P, Corder A, Bertomeu V, Gonzalez-Juanatey JR, Quiles J, Soria F, et al. Prognostic value of low ankle-brachial index in patients with hypertension and acute coronary syndromes. J Hypertens 2009;27: 341-7. 2. Satiani B. Exceptions to the Stark law: practical considerations for Surgeons. Plast Reconstr Surg 2006;117:1012-22. 3. Freeman G. How group purchasing can boost practice revenue. Available at: http://www.healthleadersmedia.com/page-1/FIN-288408/ How-Group-Purchasing-Can-Boost-Practice-Revenue##. Accessed December 15, 2013. 4. Satiani B. Measuring profit and loss: the roles of cost and volume measurements. In: Satiani B, editor. The smarter physician, vol. 2. Conquering your practice’s billing and reimbursement. Medical Group Management Association: Englewood, Colorado; 2007. 5. Waters J, Blount L. Mastering the reimbursement process (billing and compliance). 3rd ed. AMA Press: Chicago; 2001. 6. Satiani B, Kiser D. Timeliness in notification of critical vascular laboratory test results is part of quality assurance. J Vasc Ultrasound 2010;34: 189-91. 7. Satiani B, Miller S, Patel D. No-show rates in the vascular laboratory: analysis and possible solutions. J Vasc Interv Radiol 2009;20:87-91.
Submitted Dec 17, 2013; accepted Apr 27, 2014.
component of the practice’s remaining competitive in an everchanging health care system. Attention must be paid to staffing, operations, financial performance, revenue cycle, and patient and referring physician satisfaction to grow the business. (J Vasc Surg: Venous and Lym Dis 2014;-:1-6.)
The outpatient in-office vascular laboratory (VL) has become an integral part of any vascular surgery practice. Noninvasive vascular studies have proved to be efficient, cost-effective adjuncts to physical examination and history and allow thorough and thoughtful planning of surgical and nonsurgical treatment of vascular diseases. In addition to diagnostic examinations, screening examinations are becoming a more vital part of primary medical care, such as screening examinations for abdominal aortic aneurysms. Likewise, the simple performance of ankle-brachial indices has been shown to be of prognostic value in the future care of the patient.1 Having access to a VL with qualified and experienced technologists can also add significant revenue to a vascular practice. The in-office ancillary services exception to the Stark law allows physicians to offer imaging services in the office.2 High-quality examinations and interpretation not only can increase revenue but also can significantly add to the quality of the patient’s experience by avoiding a repeated visit for testing and prompt reporting of results. Consistent with other vascular patient care services and procedures, reimbursement for technical and professional services related to noninvasive VL tests has also decreased considerably. Therefore, with rising overheads related to employee salaries and expensive ultrasound equipment, vascular surgeons who incorporate VL tests in their practice must pay close attention to managing the VL with maximal efficiency to be able to provide this critical service to their patients as well as to maintain profitability. This paper endeavors to provide information to vascular surgeons
starting their practice as well as tips for practitioners attempting to improve efficiency in existing VLs.
From the Peripheral Vascular Laboratory, Heart and Vascular Center,a Vascular Laboratory Vein Solutions,b and Division of Vascular Diseases and Surgery,c Department of Surgery, Wexner Medical Center at The Ohio State University. Author conflict of interest: none. Reprint requests: Loren Masterson, MD, MBA, 376 West 10th Ave, Prior Hall #701, Columbus, OH 42310 (e-mail: [email protected]). The editors and reviewers of this article have no relevant financial relationships to disclose per the Journal policy that requires reviewers to decline review of any manuscript for which they may have a conflict of interest. 2213-333X/$36.00 Copyright Ó 2014 by the Society for Vascular Surgery. http://dx.doi.org/10.1016/j.jvsv.2014.04.010
STAFF Hiring of technologists can be challenging and frustrating. Working with a human resource department to search both nationally and regionally for registered vascular technologists affords a broad search for screening of available candidates. For small practices, in addition to searching in the more traditional places, once a VL is set up, offering the VL as a clinical site for ultrasound students provides for a more intimate review of potential candidates who are essentially trained by current staff. Critical thinking skills along with a strong understanding of anatomy combined with excellent communication skills are imperative competences in searching for the best candidate. It is important to have a cohesive work team of technologists and staff; therefore, selection of a “best fit” technologist is critical. Certifications are necessary to maintain a reputable VL, and technologists performing the examinations should take the technology certifying examination through the American Registry of Diagnostic Medical Sonographers. Two examinations are necessary to become a registered vascular technologist. Physicians interpreting tests are encouraged to take the Registered Physician in Vascular Interpretation examination available through the same organization. This single examination, combining physics and interpretation, is now a required component of vascular surgery fellowship and residency training programs, but it is available to any physician who desires to become certified. The Intersocietal Accreditation Commission provides a peer-reviewed process through which VLs can become accredited. The accreditation is valid for 3 years, including one audit during this period. The application fee for accreditation varies by the size and volume of each laboratory, and the process can be expedited for an additional fee. Besides ensuring basic quality in testing, it provides credibility in marketing of the VL. Maintaining satisfaction for the staff members is important to retain qualified and efficient staff members. Our experience demonstrates that allowing a flexible schedule 1
2 Masterson et al
JOURNAL OF VASCULAR SURGERY: VENOUS AND LYMPHATIC DISORDERS --- 2014
and part-time workers leads to increased staff satisfaction and retention. The ability to have “flextime” is increasingly attractive in today’s work force, which consists primarily of women. Access to continuing education and tuition reimbursement programs are also important factors in improving staff satisfaction and better retention. Continued learning is important for sonographers, and opportunities to learn new skills must be provided to keep them fresh and motivated. FINANCIAL VLs can be constructed in a number of sizes and formatsdfrom a small private office setting with a single duplex scanner and arterial Doppler equipment to the joint use of a hospital-based laboratory. There are several advantages in teaming with a hospital-based laboratory, such as large purchasing discounts for equipment and maintenance through the larger health care organization. Disadvantages include sharing of control with a bureaucratic structure, sharing of equipment and technologists between multiple departments, and delay in elective outpatient examinations because of urgent inpatient requests. The initial overhead capital costs of starting an outpatient laboratory can be daunting (Table I). For this reason, ultrasound and other equipment can be purchased or leased with associated maintenance contracts. Physicians are not generally involved in purchasing and inventory management, but basic knowledge can save significant amounts of money that can be used to expand services. Joining a group purchasing organization for purchasing of equipment and supplies takes advantage of the buying power of large organizations.3 If the vascular surgeon is employed or hired by a health system, it is almost certain that equipment is being bought through a group purchasing organization. If not, the vascular surgeon must make inquiries with local medical societies or health systems in locking in savings of at least 15% and up to 50% on special promotions. The hiring of qualified vascular technologists and software programs can add up to a significant portion of operating costs. For the purposes of this paper, we illustrate the financial picture of a single VL in a midsize office setting. When considering overhead costs, one must consider not only the initial cost of equipment but also the cost of frequently replaced supplies, such as ultrasound gel and maintenance costs. Our example, illustrated in Table II, includes the fixed cost of a maintenance contract used not only to perform routine checks on equipment but also to have available maintenance personnel “on call” to address immediate issues and to provide temporary replacement equipment when necessary. The cost of downtime of equipment in a single midsize office setting could lead to a significant financial loss. It is advisable to negotiate for replacement equipment, preferably within 24 hours, as part of the maintenance contract. Billing for diagnostic VL tests consists of two components, the technical and professional parts. The technical
Table I. Estimated direct capital expenses of starting a vascular laboratory (VL) Item High-end ultrasound unit Physiologic unit, lower extremity arterial machine Motorized treadmill Four Doppler pencil probes Software license Total
Cost $275,000.00 $35,000.00 $5000.00 $640.00 $1500.00 $317,140.00
Prices reflect our facility’s participation in a group purchasing (Novation) contract. Cost assumes purchase of new equipment. Vendors may offer used equipment at a discount.
component is considered billing for the equipment and the technician performing the test. This is identified by adding the modifier TC to the procedure code identified for the technical component charge. In our office, because we own the equipment, perform the examination, and do not have outside physicians perform the interpretations and do not pay rent, we cannot use the modifier. Our office would therefore use the global charge, which includes the technical and professional component of the service. The professional component is for the interpretation of the results of the test. When the professional component is reported separately, the service may be identified by adding the modifier 26. This would be represented when the ultrasound study is completed in the hospital setting and the interpretation is reported separately. In addition, reliable and stable software is needed to generate professional patient examination results and accurate reporting (Table III). An additional investment in conforming to various electronic medical records systems to allow transfer of information between physicians is also needed. In our example, we calculate the annual potential profit of our outpatient VL that performs approximately 1874 examinations per year. In this practice, which does a large number of elective venous procedures, venous studies account for approximately 45% of the total number of examinations, with the next most frequent examination being carotid duplex studies. Although it is not an exact science, it is important that the vascular surgeon be able to estimate the volume in the Table II. Estimate of direct annual expenses of the vascular laboratory (VL) Item Frequent suppliesa Salary Benefits Annual maintenance contract Accreditation cost Total a
Cost $15,630.20 $62,400.00 $20,592.00 $31,000.00 $850.00 $130,472.20
Frequent supplies include ultrasound gel, patient gowns, and general office supplies; if applicable, billing costs of approximately 5% to 7% of collections may be added to expenses.
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Table III. Popular vendors for vascular laboratory (VL) reporting Software company name Consensus Medical Systems Medstreaming Medical Office Datacheck PenVasc Digisonix In Record Time AS-Vascular Philips Agfa
Product
Website
VascuPro and VascuBase Same Same Vascular Information System (VIS) Digisonics Cardiovascular Information System (CVIS) Same Same Heartlab
http://www.consensusmed.com/ http://www.medstreaming.com/ http://datastarsystems.com http://www.penvasc.com/ http://www.digison.net/ http://www.inrectime.com/ http://as-software.com/vascular.html http://www.healthcare.philips.com/us_en/products/healthcare_ informatics/products/cardiology_informatics/xcelera/ http://www.agfahealthcare.com/usa/en/main/
This is not a comprehensive list of available vendors, and vendors’ offerings can vary greatly. In addition, some expenses, such as those related to a picture archiving and communication system (PACS), are not included in the example.
VL and thereby not only have an idea about revenue but be able to create a budget as well and do a basic cost-volumeprofit analysis.4 Cost-volume-profit analysis is helpful in figuring a break-even volume for a new laboratory and how many tests are needed to generate a profit, given reimbursement for each category of testing. In Table IV, we illustrate Medicare, Medicaid, private insurance, and selfpay volume and reimbursements in a typical VL. Note that actual reimbursement may vary by the geographic location of the VL. The relative value units of each component (physician work, practice expense, and malpractice) are modified by a geographic practice cost index. The adjusted relative value units are then further multiplied by a national conversion factor to come up with actual reimbursement. The blended weighted average is given in Table V. In Table IV, the blended weighted average of each test includes self-pay patients, but this accounts for a discounted rate available to those patients who are paying out of pocket. Medicare will reduce the technical component of VL studies performed in an office environment where you own the equipment for patients who receive multiple examinations on the same day. A 25% reduction
is applied to the second test (technical component reimbursement only), then added back in the allowed amount for the professional component. In considering the amount of revenue needed to break even, it is key to note the monthly or annual overhead costs as well as the cost for performing the examinations themselves. We have included those costs in Table II, which shows technologist salary and benefits as well as the cost of frequent supplies. By noting the blended weighted average of each test, discounting the overhead costs, a break-even point can be determined by this example (Table VI). MANAGING THE REVENUE CYCLE The next step to a financially successful VL is a good understanding of a complete revenue cycle, which is an important part of maintaining a profitable practice. The revenue cycle truly begins not just with the patient’s visit to the office but during payer contracting. It is important to start negotiating these contracts as early as possible because payer credentialing can take up to 6 to 9 months to complete. The revenue cycle for each individual patient begins at the time that the patient’s first appointment is
Table IV. Reimbursement and volume of vascular laboratory (VL) tests
CPT 93970 93971 93922 93923 93924 93925 93926 93880 93978
Examination name Bilateral vein Unilateral vein Ankle-brachial index Lower extremity arterial multiple levels Lower extremity arterial exercise Duplex scan of arteries bilateral graft Duplex scan of arteries unilateral graft Carotid duplex bilateral Aorta duplex scan
Reimbursement
Annual procedure volume
Commercial
388 485 220 52
$328.29 $212.35 $196.44 $302.96
70 78 26 39
$177.95 $110.15 $88.20 $137.27
18 13 50 37
$142.52 $94.52 $67.32 $103.54
8 6 15 14
$262.00 $160.00 $128.00 $198.00
4 4 8 6
53
$369.34
32
$171.77
44
$124.03
8
$248.00
10
22
$369.25
30
$182.30
56
$128.06
9
$348.00
4
94
$235.96
33
$116.79
45
$85.53
17
$200.00
2
490 70
$337.57 $312.08
18.90 19
$172.34 $175.62
74.90 72
$332.00 $322.00
1.80 1
Commercial, %
Medicare
Medicare, %
Medicaid
$128.08 $126.66
Medicaid, %
3.70 7
Self-pay
Self-pay, %
CPT, Current Procedural Terminology code. Reimbursement is defined by global fees, including technical and professional fees. All numbers are derived from our laboratory and reflect one calendar year.
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Table V. Blended weighted average reimbursement CPT 93970 93971 93922 93923 93924 93925 93926 93880 93978
Examination name Bilateral vein Unilateral vein Ankle-brachial index Lower extremity arterial multiple levels Lower extremity arterial exercise Duplex scan of arteries bilateral graft Duplex scan of arteries unilateral graft Carotid duplex bilateral Aorta duplex scan Blended weighted average per examination Total annual reimbursement
Blended weighted average, $ 283.72 190.06 116.68 203.46 243.07 238.31 151.57 194.82 202.35 202.89 380,221.30
CPT, Current Procedural Terminology code. Reimbursement is defined by global fees, including technical and professional fees.
scheduled. It is at that time that preapproval with some insurance providers should be addressed. Patients may also preregister for appointments by phone, by mail, or online to establish address and contacts and to verify insurance copays. Registration either before or on the day of the appointment should involve the patient’s completing a brief medical history and consent to treatment forms if needed, and copies of any identification and insurance cards are obtained. In addition, any copays or deductibles should be collected at the time of the visit. The next step of the revenue cycle is where most physicians can be intimately involveddcharge capturing and coding. It is of vital importance that physicians and physician extenders capture accurately and completely all services performed at that visit. A billing staff that is familiar with the details of your practice can be an invaluable asset. Incomplete physician documentation has been shown to account for 30% of missed revenue.5 After documentation, the insurance billing should be ready to go out. It is important to pay close attention to the details of each payer’s contract so that vital information necessary for appropriate payment is met. If a claim is properly completed, accounts receivable should receive payment without incident. Unfortunately, this is not always the case as payers may deny a claim, and some patients who are selfpay may have large unpaid balances. Having an efficient system set up to prioritize denials and to investigate their causes can reduce the time lost in collections. Table VII demonstrates many of the important benchmarks of the revenue cycle. Table VI. Calculation of number of tests to break even Total annual examinations Annual cost Cost per examination Margin per examination Number of examinations needed to break even
1874 $130,472.20 $69.62 133.27 979
PATIENT SATISFACTION/GROWING, KEEPING THE BUSINESS Maintaining both patient and referring physician satisfaction is important for preserving a consistent revenue flow. Physician satisfaction can be tied to the quality and timeliness of the examinations. High-quality examinations performed on a regular basis as well as appropriate reporting of results to referring physicians can be improved with open communication between staff members. Our institution has developed guidelines for reporting of critical results to physicians.6 Of note, whereas only 3.49% of all VL tests performed resulted in “critical” alerts, the majority of those patients were symptomatic at the time of the examination. Symptomatic patients should alert physicians and VL staff to minimize response time so that critical results can be reported quickly. An important component of referring physician and patient satisfaction is prompt reporting of final results. We perform regular audits of the time it takes between test completion and physician interpretation. Our most recent audit showed the interpretation turnaround time to be 2.17 hours. No-shows, or absenteeism, can greatly decrease the efficiency in any office setting, but especially those appointments that are procedure based. If a technologist has blocked off 30 minutes to complete a study of a patient who does not arrive for the appointment, there is frequently no way to fill that appointment for that day. Absenteeism can be addressed by either attempting to decrease the no-show rate itself or by learning an effective way to overbook patients to account for missed appointments. Overbooking can be a complicated process that may lead to decreased patient satisfaction if appointments run consistently late. One study of a VL showed a noshow rate of approximately 12%, with an average of 7.6 missed appointments per week.7 Studies have demonstrated that in outpatient primary care settings, reminder telephone calls, either automated or from office staff, have decreased the no-show rate and cancellations.7 However, this has not carried over to procedure-based appointments. Vascular patients can be unique because they frequently have decreased mobility or ability to transport themselves to appointments. Lack of reliable transportation is a significant factor in this patient population. In addition, patients who have a previous history of no-show visits have an increased likelihood of future missed appointments. Finally, efficiency of the patient flow can significantly improve staff and physician satisfaction. We performed a comprehensive operational analysis of our off-campus office and the VL, applying Six Sigma and Lean Management principles. This resulted in several pertinent observations that can help the vascular surgeon to ensure seamless functioning of the VL. We noted an error rate in scheduling of the correct examination as well as of the correct amount of time allotted to perform the examination that was eight times higher on the arterial side. We performed a gemba walk-through (Japanese term connoting visiting a
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Table VII. Suggested benchmarks to achieve as part of the revenue cycle Parameter Patient access
Billing
Cash management Accounts receivable/collection Expenses
Metric Percentage of patients with complete preregistration Compliance with physician authorization requirements Charge lag time Clean claims submitted Overturn of denials Paper remittances Months revenue in accounts receivable Gross collection ratio Net collection ratio Posting of cash and contractual allowance Average payment period Average collection period Accounts receivable Cost to collect Bad debt expense Overhead, %
workplace to review the process) on both sides to identify the source of error, assisted by one of our employees who is a certified Six Sigma Black Belt, and mapped the flow processes that went into obtaining the test. On average, the VL staff was spending approximately 10 minutes per error to correct these problems. The time it takes to investigate the ordering and scheduling issues costs money (reduces income, increases expenses,) decreases efficiency, decreases productivity, and reduces employee satisfaction, physician satisfaction, and patient satisfaction. We offered reeducation of identified staff and applied Lean principles to facilitate flow and to eliminate non-value-added processes and were able to reduce the sources of error. Front-office personnel (mainly schedulers) need to have a clear path of communication to back-office personnel (nurses, technicians, managers, and physician) to make sure that the appropriate tests are allotted adequate time so that there are not delays. It is important that the VL have written standardized work processes to reduce the chance of errors and also to make it easier to train new employees. It is also necessary to manage daily work schedules so that staffing matches demand. A heavy work schedule on a day with reduced technicians is a recipe for dissatisfaction and creates a bad image for the VL. Communication is the key to get buy-in from all personnel and create the kind of culture that breeds success. All things considered, high patient satisfaction will assist in high referral physician satisfaction. MARKETING THE VL Physician referrals account for the majority of new patients seen at a vascular surgeon’s office. Targeted marketing to local primary care physicians, wound care centers, and podiatrists can increase visibility in the community. It is important in approaching other physicians to stress the
Formula
Benchmark for surgical practices
Complete preregistration/total registrations
96%-98%
Average number of days from date of service Percentage of clean claims
<7 days >95%
Paper remittances/all charges Cash received from payers/gross fees Case received from payers/net fees Current liabilities/(total expenses depreciation) Net patient accounts receivable/patient service revenue >90 days Total cost of all business-related functions total collections 88% of gross or net revenue Total nonphysician expenses as % of total/case collections or net revenue
95% Median, 41% Median, 94% Median, 47.1 days Median, 22% <5%
benefits to their patients of timely and accurate VL testing, the quality of examinations, and the prompt reporting of critical results. One should make it a point to personally visit referring physician offices to acquaint them with testing that is available and appropriate indications. Electronic and paper VL testing request forms can be sent to referring sites. It is important to emphasize the professionalism, efficiency, and supportive nature of your VL and at the same time provide contact information including that for after-hours service, if any. FUTURE CHALLENGES FOR THE VL The Affordable Care Act may present VLs with challenges related to the payer mix. Putting a plan together that offers the most appropriate mix of Medicaid- and Medicare-covered patients with those covered by private insurers will be a challenge. This will only be further complicated by the proposals for bundled payment and price transparency. Monitoring governmental and congressional changes in rules and reimbursement through the Society for Vascular Surgery is essential. For instance, the multiple procedure reduction in the technical component of imaging services in 2010 alerted the vascular community and dictated a change in the policy of multiple testing within VLs. There is also constant pressure from the Medicare Payment Advisory Commission, a congressional agency, to remove vascular imaging from the in-office ancillary services exception to the Stark law. With all the changes and financial fluctuations through government regulations, pushing to develop increased cooperation and patient coordination of care among providers is vital. Accountable care organizations could offer this framework by supporting a relationship between quality indicators and appropriate costs. If practicing vascular surgeons decide to seek full employment within a health system, there is a
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choice to keep the VL as a separate entity or to roll it over into the hospital’s VL, with the pros and cons as previously discussed. Moving VL services out of the hospital settings into outpatient clinics does improve efficiency and increases revenue because of the technical fees collected by the practice. However, maintaining an efficient VL requires constant attention to all aspects discussed in this paper. The relationship between the volume of examinations and the space available to handle the examinations should be carefully planned. There are cultural differences between caring for hospital-based patients and caring for those patients in an outpatient setting that need to be carefully evaluated. Monitoring patient satisfaction through simple surveys is essential because unlike in a hospital, barring exclusion based on insurance, patients do have a choice as to where they go for their VL tests. CONCLUSIONS As our health system continues to evolve and stresses the importance of management of chronic disease, noninvasive vascular testing continues to grow as a cost-effective, safe technique to evaluate patients. A VL is an integral part of every vascular surgeon’s practice. Competition from other specialties and continued pressure on reimbursements will require the utmost efficiency in managing expenses and appropriate marketing. Paying attention to creating a realistic budget based on anticipated volume and performing a basic cost-volume-profit analysis are useful to project revenue and to control expenses. Having qualified sonographers and a well- functioning accredited VL within an efficient outpatient office is paramount in a competitive market.
AUTHOR CONTRIBUTIONS Conception and design: BS, LM Analysis and interpretation: BS, LM, PV, JE Data collection: BS, JE Writing the article: LM, BS Critical revision of the article: BS, PV, LM, JE Final approval of the article: BS, PV, LM, JE Statistical analysis: LM, JE Obtained funding: Not applicable Overall responsibility: LM REFERENCES 1. Morillas P, Corder A, Bertomeu V, Gonzalez-Juanatey JR, Quiles J, Soria F, et al. Prognostic value of low ankle-brachial index in patients with hypertension and acute coronary syndromes. J Hypertens 2009;27: 341-7. 2. Satiani B. Exceptions to the Stark law: practical considerations for Surgeons. Plast Reconstr Surg 2006;117:1012-22. 3. Freeman G. How group purchasing can boost practice revenue. Available at: http://www.healthleadersmedia.com/page-1/FIN-288408/ How-Group-Purchasing-Can-Boost-Practice-Revenue##. Accessed December 15, 2013. 4. Satiani B. Measuring profit and loss: the roles of cost and volume measurements. In: Satiani B, editor. The smarter physician, vol. 2. Conquering your practice’s billing and reimbursement. Medical Group Management Association: Englewood, Colorado; 2007. 5. Waters J, Blount L. Mastering the reimbursement process (billing and compliance). 3rd ed. AMA Press: Chicago; 2001. 6. Satiani B, Kiser D. Timeliness in notification of critical vascular laboratory test results is part of quality assurance. J Vasc Ultrasound 2010;34: 189-91. 7. Satiani B, Miller S, Patel D. No-show rates in the vascular laboratory: analysis and possible solutions. J Vasc Interv Radiol 2009;20:87-91.
Submitted Dec 17, 2013; accepted Apr 27, 2014.