This Week in Surgery Centers: Kristin Truesdell – Capitalizing on the Cardiology Boom: Maximizing Revenue

Kristin Truesdell – Capitalizing on the Cardiology Boom: Maximizing Revenue

Here’s what to expect on this week’s episode. 🎙️

Our “Capitalizing on the Cardiology Boom” series continues this week with Kristin Truesdell, who is the SVP of Consulting at Corazon.

Kristin sat down with Nick Latz to discuss how to maximize revenue. Whether you’re thinking about adding cardiology to your specialty line or opening a new center, Kristin shares great insight into anticipated expenses, payor contracts, and reimbursement strategies.

💰 Significant Investment: Adding cardiology to an ASC involves substantial costs, particularly for imaging equipment and facility expansion. Expect to invest several million dollars.

👥 Operational Differences: Cardiology cases demand experienced cath lab staff and a higher nurse-to-patient ratio for post-op care, emphasizing the importance of specialized training.

💸 Reimbursement Strategies: Utilize the new C-codes introduced in 2023 to maximize reimbursement, particularly for diagnostic and pacemaker procedures. This can significantly enhance your ASC’s revenue.

🤝 Payer Negotiations: Start negotiations 9-12 months in advance and leverage physician data to secure favorable rates. Delay your go-live date if necessary to ensure optimal contracts.

🏥 De Novo Considerations: For new facilities, focus on volume and funding sources. Aim for at least 800 cases annually to ensure a quicker return on investment.

Check out the full episode on YouTube or your favorite podcast platform!

Related Episodes: 

• Kristen Richards – Capitalizing on the Cardiology Boom: Key Considerations Before Adding Procedures

Episode Transcript

[00:00:00] Welcome to this week in Surgery Centers. If you are in the ASC industry, then you are in the right place every week. We’ll start the episode off by sharing an interesting conversation we had with our featured guest, and then we’ll close the episode by recapping the latest news impacting surgery centers.

We’re excited to share with you what we have, so let’s get started and see what the industry’s been up to.

Erica: Hi, everyone. Here’s what you can expect on today’s episode. Today is part two of our three part series about how you can capitalize on the cardiology boom. Last week, we talked with Kristen Richards about key considerations before adding CV procedures to your ASC. And today we’ll be sitting down with Kristen Truesdale, who is the senior vice president at Corazon.

Erica: to cover all things money related. So we’ll get into what expenses you’ll encounter, how to negotiate with payers, and [00:01:00] just general strategies ASCs can leverage to maximize reimbursement on those CV procedures. In our news recap, we’ll cover Rapper Phat Joe on Capitol Hill. Trends that are exciting ASC owners right now, the power shift in ASC ownership, and of course, and the new segment with a positive story about a groundbreaking device called Popsy that was recently developed by a nurse. Hope everyone enjoys the episode.

Erica: And here’s what’s going on this week in surgery centers. Kristen, welcome to the show.

Kristin: Thank you. Thank you for having me.

Nick: So, Kristen, excited to talk to you today about cardio and the cardio boom we’re seeing in the ASC space.

Nick: Can you give us a little bit of your background, specifically, your experience with cardio?

Kristin: Sure. So my name is Kristen Truesto. I’m a senior vice president at Corazon. Just a little bit about Corazon. It’s a national leader in [00:02:00] strategic program development for cardiacs mainly, but we also do vascular, neuro, spine, and all of that.

Kristin: Orthopedics and surgical service lines. And whenever I say that I, our team of subject matter experts has worked with all types of not only surgery centers, but also hospitals and practices across the country. And so our firm is a little bit unique in the sense that we offer any type of organization That total program solution with planning, implementation, recruitment and accreditation services in my background actually come from finance.

Kristin: So, I am the numbers geek. I’m going to talk about a lot of the financials around cardiac and an ASC.

Nick: Fantastic. Okay. And for listeners or industry participants that are interested or thinking about adding cardio as a specialty line to an existing ASC, what are some of the key things that they should be considering as it relates to expense or equipment or [00:03:00] additional things they might need for that specialty?

Kristin: Sure. Sure. Let’s go high level at that. We’ll There’s several different avenues that a center can come to adding cardiac to an ASC, but let’s talk about existing ASCs that are out there today. So that means like a physical location exists already. So this is likely the most least expensive.

Kristin: Avenue to offer cardiac, because I say that because there may or may not be facility construction required to build the cath lab. And so regardless of whether that’s an OBL to an ASC conversion, a de novo ASC, or even an existing ASC, we need to make sure that the cath lab itself in the ASC center meets the facility standards.

Kristin: And I say that because. It’s not small space. You have a cath lab that’s 600, 600 [00:04:00] square feet, the control room, which is about 100 square feet, holding bays. For every one lab, you probably need 4 to 5 holding bays, the support space, clean, dirty utility, restrooms, all that support area. Yeah, so it’s not uncommon for a.

Kristin: Surgery center to look at, around, give or take 3000 square feet. And so that expense certainly nowadays with inflation and the cost per square foot, it can be quite significant of the seven, several millions of dollars of investment on the facility side, depending on your region of the country, and that’s just facility.

Kristin: So, but on the equipment side, certainly adding cardiac equipment is where. Any type of ASC needs to invest and that’s likely going to cost around a million to 1. [00:05:00] 8 million for a single calf lab and all the other stuff like the holding bays, the additional support space. But I say that in caution because there are several equipment vendors that exist that have ASC packages.

Kristin: You can use any kind of price negotiations that you want, maybe through a health systems GPO, but you can also negotiate and take a look at different options to buy new or to buy refurbished equipment, which is just as good as the new, but If to give you a ballpark, if you’re looking around new equipment, it’s around two to two and a half million dollars.

Kristin: So tack that onto facility. It could be a several millions of dollars of investment costs as part of that.

Nick: So this is a significant investment on the, and I want to go back to the facility side in a second, but on the equipment side, when thinking about key pieces of equipment, some of the [00:06:00] bigger bigger ticket items, what fall into that bucket of driving some of the main expense line items?

Kristin: Oh, yeah, the single largest driver of that expense is the imaging equipment. That can alone can cost upwards of a million dollars.

Nick: Okay. Got it. So that’s the big one.

Kristin: Oh, yeah.

Nick: And then going back to the facility side with the cath lab requirement and what comes along with that significant need for space, right?

Nick: So for your clients that are looking at adding cardiac is a specialty, are they typically looking at expanding an existing facility and doing a construction project along with that?

Kristin: Yeah, that’s actually a great question. The calls that we’ve gotten in the projects that we’ve worked on recently have either been an existing ASC that actually is with peripheral vascular in it.

Kristin: Or pacemakers, and they want to start adding the heart [00:07:00] stuff to it, or it’s an OBL or an office based lab that does peripheral cases, peripheral vascular cases, and in order to do the cardiac side PCI, more in the heart stents. Can only be approved in the ambulatory surgery center. So if they wanna get into cardiac, they’re gonna have to convert that OBL space to an A SC license center.

Nick: So in the OBL scenarios which we’re seeing a lot of too, , HST for those conversions, the space is there. Because they’ve built that out, and so the conversions are largely then driven by regulatory and reimbursement.

Kristin: Yes, absolutely. For those OBLs, though, they, there is actually a nuance.

Kristin: We’ll talk a little bit maybe about that on the, maybe a question around reimbursement, but the OBL is under a payment The different payment system than the ASC. And so there’s several, there’s a [00:08:00] term out there called the hybrid model where you have certain days operate as an OBL versus certain days as an ASC.

Kristin: And so there’s. It, that model is complex in every which way. And so the way that CMS is driving continued added CPT codes to the covered procedure lists and surgery centers almost looks like it’s favoring more into the ASC model rather than a hybrid. And I say that because peripheral vascular, even though it’s not cardiac.

Kristin: Has been traditionally more profitable in an OBL setting. That is starting to trickle away with certain CPT codes that are moving into a a better reimbursement model in the ASC and now tacking on to that, the easiest thing if you’re doing peripheral is to add the cardiac side because a lot of times cardiologists are doing the same type of they’re doing the same case.

Nick: Got it. [00:09:00] Okay. Yeah. Question for you for, aSCs that may not have as much experience in the cardiac and are just getting their heads around what this means or what this could mean. Are there major operational differences that you see in terms of things like, case volume or length of the procedure?

Nick: We talked about some of the physical space differences in the equipment differences, but are there other different core differences of these cases that people should keep in mind?

Kristin: In terms of core differences? Certainly. Absolutely. For staff. Once you get into the heart, you’re going to really need to hire the experienced cath lab staff.

Kristin: It’s required to have three people in the lab. And I say that because sometimes in other cases, you may only have two. And so you have three people in the lab and then because they are required to be on monitoring in the holding areas, that nurse to patient ratio to care for those Post op is [00:10:00] around a two to one nurse to patient ratio.

Kristin: So not only do your cath lab staff have to be experienced coming into this, it’s also the care afterwards. And they’re going home same day. So these are low risk heart patients and cardiac patients. And, but also the physicians comfortable with that staff is key as part of that too.

Nick: Okay, that’s good to know.

Kristin: Yeah.

Nick: And you touched on before reimbursement rates and billing. And so I wanted to circle back to that. Are there strategies that centers can use to maximize reimbursement rates in the cardiac space?

Kristin: Absolutely. And I can’t talk about the maximizing without talking about the. new codes that were added in 2023 specific to diagnostic and PCI cases, actually diagnostic and pacemaker CPT codes, because [00:11:00] in the past there’s added technology that a physician might use on a diagnostic cath case, such as IBIS or FFR.

Kristin: Traditionally, that’s just an add on code that is packaged. It’s a package service, meaning it’s not separately paid. And so they were eating that cost if they were using that technology, and that technology is there for a very good reason. But in 2023, CMS actually adopted complexity adjustment factors that created globally, not just cardiac related, 50 new C codes.

Kristin: And those C codes are exclusive to the ASC Center, meaning it does not get paid in a hospital setting or an OBL setting. And there are several that are cardiac, peripheral vascular, and pacemaker specific. And so whenever I say that, in terms of diagnostic cases, [00:12:00] There is a new C code range of C 75 16 through C 75 29, and so that means it’s a CAF plus IVUS or a CAF plus FFR that gives a SC centers 900 extra dollars of reimbursement for these cases.

Kristin: So if you have a cardiologist using them, making sure these codes are coded appropriately, gives you that extra bump in. Reimbursement. Same goes for pacemakers. Actually, pacemakers is one of the top kind of cardiac cases with the most opportunity to maximize that reimbursement because traditionally in an ASC center, standalone pacemaker codes have Declined in reimbursement over the last several years, but pacemakers got these new C codes and it provides an additional 3300 [00:13:00] in payment for a total of around 10, 100 for actually higher than that 10, 800.

Kristin: And this is the first time I’ve seen that this is a cardiac case where it’s more reimbursement per case exists in a surgery center than it does in a hospital outpatient department. And so it’s going to be interesting to see how these. Particularly pacemaker devices and implants start to shift to the surgery center.

Nick: It’s really interesting, isn’t it?

Kristin: Yes, it is. But I guess, other tips, sorry to cut you off, I think other tips around just maximizing reimbursement. Cardiac in nature is a very complex complex coding environment. Particularly if the center is also offering peripheral vascular. And so, a lot of times ASCs outsource coding.

Kristin: And so you want to make [00:14:00] sure that your company is adhering to benchmarks and quality assurance metrics. So a good benchmark for ASCs to monitor with their outsource coding company is a clean claim benchmark of greater than 95%. And then the other one is maximizing, re maximizing reimbursement is around payer negotiations.

Kristin: If you can renegotiate. Take a look at it. These types of cardiac cases are traditionally heavily Medicare, around 60%. And so you want to make sure that you’re getting the best rate possible with those third party payers.

Nick: Got it, and giving it sounds like there’s some nuance here in the billing and coding side of this or some things that are new for your customers.

Nick: Are you seeing more lean towards outside outsourcing the billing side of this? Because it can be more complex to do in turn. Oh,

Kristin: yes, absolutely.

Nick: Yeah, that makes sense.

Kristin: [00:15:00] Yep.

Nick: And what about on the payor side? What are some considerations for negotiating with payors?

Kristin: Yeah, actually, you could probably do a whole podcast about payer negotiations, but I think a couple tips whenever you do go to negotiate with payors.

Kristin: Because you’re adding new cardiac cases is start 9 to 12 months out before you plan to start day 1 of the cardiac cases. And once you start that negotiation process, make sure you have your hands on the physician data, specifically any of those codes that are high device intense procedures. And so another kind of tip there as well is if you’re still going through the negotiation process, maybe with your top third party payer, it’s okay to delay your go live date because try not to start cases until your contracts are negotiated because you’ll [00:16:00] lose leverage to lower costs and prove that you can lower costs rather than The vice versa of the payer now viewing it as an increased in spend.

Kristin: And so focus on any kind of savings because a lot of these cases are coming from the hospital setting is that you can focus on reducing costs because they’re coming out of the hospital outpatient department and focusing on those cost savings.

Nick: Yeah. Okay. So I want to switch gears just a little bit and put on the lens of a DeNovo and in groups looking to build DeNovo facilities in the cardiac space.

Nick: You mentioned the differences. We talked about differences before around space for the build out and equipment. And cost. Are there other differences in a cardio de novo that folks should keep in mind?

Kristin: I, certainly it’s not a light decision for any organization to start a de novo. As I [00:17:00] mentioned before, it’s a lot of money.

Kristin: But I think as It starts gaining more traction on the flip side. The reimbursement is also higher a lot for these cases as well. And so whenever organizations are looking to add cardiac, if they can’t focus on the top line, they got to focus on the, what’s the profit margin or the contribution margin to start these and how long is it going to take to pay back and start returning a profit on my investment.

Kristin: And and more and more cardiac ASCs are popping up around the country. And it’s, the numbers are small relative to the total ASCs that exist in the country, but it’s increasing tenfold every year, and that’s probably going to continue just given the shift. To the outpatient setting of care but there’s so many factors that whenever you’re starting a de novo, a cookie cutter [00:18:00] answer just won’t hack it quite honestly, because you take a look at volume, of course, you want to fill that lab up as much as you can volumes, the main driver for revenue funding source, right?

Kristin: So that depends on, Is it 100 percent physician owned equity model and they’re putting up their own money to start this DeNovo versus possibly a joint venture with the docs in the hospital. So there’s a lot of upfront discussions around that investment and how long it’s going to take to pay that off.

Nick: Yeah, and I’m curious on that upfront investment and time it takes to pay off from your kind of customers you’ve worked with. Have you seen longer payback periods for cardiac?

Kristin: Yes. Yeah. Particularly on the de novo side, if it’s an existing ASC and they have to do light facility and just add equipment, we, the best case scenario is under a year.

Kristin: For those cases, [00:19:00] and like I said, you can buy ref refurbished equipment and make it profitable, but a general benchmark that we’ve come to find is that you need to generate about 800 cases in a cath lab for your investment to be paid off. And so that’s probably half of a capacity of a lab. You can probably fill it between 1, 200 and 1, 500 cases, depending on your case mix.

Kristin: Yeah, but as organizations and as surgery centers or as your ASC administrators. You got to know some of these financial benchmarks and taking it look at a look at it on a monthly basis, such as profit margin. Standard benchmarks is around 25 percent for profit margin and about 30 percent for contribution margin.

Kristin: And if you aren’t hitting those but monthly. It’s going to be hard. It’s just going to take longer to pay back.

Nick: Yeah. [00:20:00] I love that benchmark of, or a rule of thumb around 800 cases is something to think about to keep your costs. So that can be, it seems like that can be a quick way to get your head around.

Nick: Okay. How long would this potentially take me?

Kristin: Yeah. Cause that’s actually one thing that. I probably don’t have enough time to talk on, to talk about on is that volume piece and what’s the potential to reach that 800 or reach the a thousand or whatever it is, and organizations really have to do their homework.

Kristin: Do a strong deep dive analysis into the cardiologist’s data and you’re drilling down to the CPT code, the payer code high risk versus low risk there and then just getting their general opinions about whether they just buy into doing these cases in a surgery center because one of those, again, The more volume you can do, the quicker you can turn a [00:21:00] profit.

Nick: Yeah. Fun scenarios to think through because it’s still relatively new, so I’m sure lots to learn every time you work on a new one.

Kristin: That is very true. There is never one that is the same.

Nick: Kristen, one final question for you, and we do this each week with our guests. What’s one thing our listeners can do this week to improve their surgery centers?

Kristin: Going back to the payer negotiations. With that, I would say you never get a better chance than your first contract, so make it a good one. Do your due diligence. If it takes you an extra 2 months to get that great contract, it’s well worth it in the long run. And then lastly, as you, regardless of.

Kristin: Existing ASD, OBL conversion, or a DeNovo organization, organizations have to make sure that they have enough working capital to sustain some initial losses that organizations will see in the beginning months. So that’s it. [00:22:00]

Nick: Fantastic. Thanks for joining us today.

Kristin: All right. Thank you. As always, it has been a busy week in health care. So let’s jump right in. Rapper Fat Joe is back at it again. So in May of 2023, we covered a story about how Fat Joe went down to Capitol Hill to advocate for price transparency. A few weeks ago, he showed up again, this time stating that millions of people are being robbed by hospitals and insurance executives.

Erica: In a public service announcement by Power to the Patients, he emphasized the need for officials in Washington, D. C. to act. In 2021, an executive order by then President Trump required hospitals to publicize service prices. President Biden later reinforced this with another order. However, a 2023 report by patient rights advocates found most hospitals are not complying.

Erica: [00:23:00] So speaking to NPR’s Morning Edition, Fat Joe called for laws that mandate health care providers to display these prices, believing it would foster competition and ultimately lower costs. He supports a bipartisan bill proposed by Senator Mike Braun and Bernie Sanders and urges President Biden to engage more actively in this issue.

Erica: As patients continue to struggle, With rising costs and lack of access to affordable care, it’s great to see someone using their platform to raise awareness about such an important issue. Obviously, the more voices, the better. And if you’re familiar with HST, you know that price transparency is something that is incredibly important to us.

Erica: Not only is it in the patient’s best interest, but it’s also in the provider’s best interest too. It helps to build so much trust within your community with the patients, their families and actually. Ultimately gets you paid faster, and we believe in this so much that we also have a great solution that lots of [00:24:00] ASCs use to make sure that they’re being fully transparent with their costs.

Erica: So anyway, we will keep an eye on this story for sure as it develops, and you can be certain that if that Joe is back on Capitol Hill, I will be talking about it again. But we just hope to see, continued progress in the fight for healthcare price transparency in the very near future.

Erica: In our second story, Becker’s ASC did a roundup of three trends that are exciting ASC leaders right now. April Odd is the administrator of Black River Ambulatory Surgery Center in Missouri, and she said that she’s most excited for all of the new procedures that are allowed to be performed in an ASC.

Erica: She shared, it is no secret that ASCs are beneficial to patients and the communities that they serve. Obviously there will always be a need for inpatient surgery, but why not focusing on opening some of the opening up some of the inpatient operating room space by sending [00:25:00] those cases that can be done in an ASC to an ASC?

Erica: She said, typically there’s a much lower cost to the patient, faster turnaround time, and often better outcomes. Matt Kramer, who is the administrator of Northern Arizona Healthcare, shared a very similar sentiment, but from a bit of a different angle. He said that he’s most excited for additional procedures to be removed from the CMS Inpatient Prospective Payment System, leading to, of course, an expansion of services that can be offered to the community in an outpatient setting.

Erica: He elaborated by sharing partnering with our product vendors and third party payers to create case and outcome specific contract carve outs allows us to provide services that may otherwise be directed to the hospital setting. And lastly, Jerry Tillinger, CEO of U. S. Digestive Health, said, We are most excited about the continued inflow of 45 to 49 year old [00:26:00] patients for screening colonoscopies, and the continued value that they’re receiving from GI Genius AI assisted colonoscopies.

Erica: Decreasing colorectal cancer cases in our community is one of our most important missions, he said, and we are screening more and more of these younger patients and achieving phenomenal detection rates, rate improvements. He didn’t say this part, but I’m assuming those improvements are from the GI genius AI.

Erica: piece of it. So overall, no huge surprise that all three ASC leaders are excited about the migration of more and more procedures and procedure types, but nice to hear from a few of them. Okay. Third story. Many long time ASC physician owners are retiring without clear succession plans, creating opportunities for investment in these centers.

Erica: So private equity groups, ASC management companies, and hospitals are increasingly investing in or purchasing ASCs. [00:27:00] Hospitals specifically are choosing to form joint ventures with physicians to handle the growing demand for outpatient. procedures. Building an ASC outright or just purchasing one outright is incredibly expensive.

Erica: So these joint ventures seem to be a happy medium for everybody. And these partnerships help hospitals manage elective cases more efficiently and reduce infection risks by separating elective surgery patients from critically ill ones. Joan Dentler of Avanza Healthcare Strategies, who has been on our podcast twice now, explains that hospitals are adapting to the trend of moving non urgent surgeries out of hospitals to meet patient and payer demands for better value and convenience.

Erica: Patty Schultz from AdventHealth. Also noted that hospitals prefer these joint ventures with physicians because they could focus on efficiency and cost management and be protected by non compete causes. But that might be [00:28:00] temporary given the all the non compete changes that are coming down the pike soon when it comes to private equity firms, though, they are increasingly involved in ASE ownership due to their profit potential, so there’s a lot of criticism of these PE firms and getting a PE firm involved just because they’re pretty much known for wanting that quick turnover and could lead to, potential for facility bankruptcies.

Erica: This is not a blanket statement, but for the most part, the reputation is that they actually don’t know the healthcare business. They don’t know the outpatient business specifically. They’re just looking for these, quick wins financially. But those in favor argue that it does provide necessary capital for expansion and facility upgrades.

Erica: However, maintaining control and ensuring patient care quality remains. A primary concern for many A. S. C. Owners. So what’s the takeaway? There’s definitely a power shift happening right now. [00:29:00] In advance is annual hospital leadership A. S. C. Study. They found that A. S. C. Ownership by hospitals and health systems continues on an upward trend.

Erica: So in 2019, it was 41%. 2021, it was 46%. And then in 2023, it was 48%. So at the end of the day, you just have to find the right ownership structure for your ASC and your physicians. You have to explore all options. And then you also have to have a plan for your physicians who are nearing retirement so that you can vet all options in advance and not feel rushed and panicked, like that you have to make a decision sooner rather than later, just because you do have docs that are retiring.

Erica: And to end our new segment on a positive note, Veronica Pellegrino, a nurse at UCLA Santa Monica Medical Center, has created a groundbreaking device called POPCY to ease the burden of opening safety sealed pill packs. [00:30:00] With support from UCLA Biodesign and success in funding competitions like the UCLA Health Innovation Challenge, Pellegrino plans to launch POPCY later this year or early 2025.

Erica: So she was inspired by her own struggles with the labor intensive task of unwrapping pills, which often leads to issues such as nail damage, arthritis, and carpal tunnel. POPC promises to be 85 percent faster and more effective than traditional methods significantly reducing the risk of injuries for nurses.

Erica: And a survey of over 500 UCLA health nurses showed that 93 percent are interested in using POPCY. And Pellegrino believes that on a national scale, POPCY could save millions of hours annually for hospital nurses and the device could also be beneficial for seniors and individuals with hand function issues.

Erica: Pellegrino is currently optimizing Popsie’s production and preparing for [00:31:00] its market debut. And that officially wraps up this week’s podcast. Thank you, as always, for spending a few minutes of your week with us. Make sure to subscribe or leave a review on whichever platform you’re listening from. I hope you have a great day and we will see you again next week.