New Technology in the Urology Office Evaluating and Onboarding New Lines of Business – Rezūm (BPH)

Key Points: Physician practices must offer new services targeting quality treatment procedures and care delivery models. Evaluating and implementing new, successful business services is critical for sustainable profits.

Overview Today’s dynamic and complex heath care environment necessitates the urology practice adapt and change to prosper. Offering access to state-of-the art quality care and treatment models offers dual rewards – ensuring the practice remains competitive and financially sustainable. Evaluating and implementing new care service lines for patients and providing community-based treatment procedures continues a successful pathway. Simply, providing quality care and services will drive increasing patient demand, reduce patient out-migration, and assist with growing profitable market share. Future financial success dictates the practice grow to meet changing demands.

As you consider new technology in the practice, we encourage you to remember the urology practice is a complex ecosystem with many moving parts. Onboarding a new service line may initially appear an overall easy process. However, you will find it is more often not straight forward. Ensure you take a broad look at the practice impact in total. First and foremost, as a urology care giver, you need to consider the clinical aspects of the technology. Support of the new technology from a clinical prospective will drive utilization. PRS is approaching this article from a financial prospective to provide you with an informational example of how to apply data to consideration of new technology. The article assumes the practice providers believe in the clinical relevance of the technology.

Once you are able to determine clinical relevance and support for the new technology, the analysis you provide will require you to consider a number of different factors. The length of this article will require we leave out some questions that each practice will need to consider in addition to the financial data you obtain. For example, will this be an additional service line for the practice? Will this increase patient demand or substitute or exchange treatment? Will it lead to overall practice profits and good patient care or is the technology a break-even or even a loss? Implementing successful new practice service lines requires skilled leadership, a culture committed to change, staff capable of navigating the complexities of quality healthcare delivery and effective patient payments. All of the above factors are required.

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 effective due diligence and business case analysis. Accurate practice data can make a convincing argument and promote financial incentives for new business ventures.

  I. Brief Action Plan Summary

Step 1. Define where the practice is today and where you need to be downstream.
Step 2. Align core practice data with robust analytics.
Step 3. Define actionable data and plans
Step 4. Develop effective top-down communications to support practice team buy-in.
This is arguably the most difficult. Successful communication is often more art than science.

Step 5. Align practice assets for future profitability.
Step 6. Re-engineer the practice to meet targeted goals and supporting objectives.
Step 7. Implementation.
Step 8. Review, monitor and adjust delivery model as needed. This is not a static business.

 II. Evaluating New Lines of Business

Evaluating and implementing new lines of business is not easy. In today’s environment, new services must offer quality and value, yet be profitable. Yes, doing the math and extensive homework really does matter. Effective due diligence is required for defining value and overall impact on the practice. Also, remember, you are asking people to leave their comfort zone and commit operating capital.

Evaluating New Lines of Business

The above shows key points necessary for evaluating new lines of business. These represent a complicated set of relationships both tactical and strategic, so clearly show need, value, and upside.


Business Case Analysis Rezūm (BPH)

For this article we will briefly review evaluating a new line of business. The Rezūm System is a minimally invasive procedure for the treatment of symptoms associated with an enlarged prostate gland. The Rezūm procedure can be performed in a clinic or out-patient setting. Rezūm uses the stored thermal energy in water vapor (steam) to treat the extra prostate tissue that is causing symptoms such as frequency, urgency, irregular flow, weak stream, straining and getting up at night to urinate.

For this analysis we are using practice data from a large pool of Urology practices. We have used the data to develop the numbers for a Urology group consisting of 8 Urologists and 2 APPs. We are using Medicare 2019 reimbursement rates without Geographic adjustment. Coverage and coding are discussed and based on our experience with a majority of payers and Medicare carriers. As you apply these types of analyses to your practice you will have to determine and apply local payment rates and coverage as they apply to your practice. We have attempted to identify key assumptions. As the practice proceeds with a specific analysis, assumptions should be clearly identified and in the process of reviewing the technology. Once implemented, all assumptions should be monitored and verified going forward. This not a static business and, as you know, healthcare is shifting rapidly and things will change. So, plan accordingly and continue monitoring the initial data used and understand adapting to change is essential for long term success. And finally, we are using 2019 Medicare reimbursement data (RBRVS and conversion factors with no geographic adjustments.

Assumptions

  • Opportunity – Men with BPH w/LUTS either seeking to get off medication or failed medical or other therapy.
  • ROI Assumptions – Stable market, Continued vendor support, Existing space, Room time 45 minutes, Staff training from vendor. National Medicare reimbursement.
  • Technology – Rezūm generator, disposable treatment device from Vendor
  • Cost – Initial list $34,900 for generator with variable average cost, $1,220 per procedure
  • Delivery Model – In-office procedure room 2 staff set up, 1 staff and physician for procedure
  • Data Dive-Search data base for men with N40.1, R33.X, R35.0, R39.1X. 2744 Current Patients. 363 New patients 162 MIT procedures performed. Projected 12month 30% conversion from other MIT plus med conversion and new patients. Projected 100 Patients first year.
  • Target Market – Men with LUTS, BPH seeking treatment options.
  • Competition – One other area Urology group, neither using this technology
  • Financials and Production – Current OH for practice 65% excluding Drug costs. Production in two sites allows for additional patient services without change. 10% growth, Year 2
  • Staff – Scheduling, Admin, and Collections. Day of Room change,1 staff member plus physician
  • Training – Provided by vendor no additional costs.
  • Infrastructure – Support staff and space available. Will take time from existing patient load.
  • Scheduling -Specific to room and practice referral to location specific provider.
  • Referrals – Primarily in house after initial referral and Dx.
  • Bad Debt – 2% This can be reduced with effective front end eligibility verification and upfront patient responsibility collections.

Template for Quick Rezūm Procedure ROI

Costs – Initial $34,900                                  Recurring $1,220.00 each

Reimbursement (MCA)       53854           $1,875.84

Procedures                             $1,875.84 gross per procedure

Proforma

Month Annual 24 Months
Volume 10 120 252
Payment $18,758 $225,101 $472,712
Disposables $12,200 $146,400 $307,440
Proc-ROI $ 6,558 $78,701 $165,272

 

Analytics and Reviews

ROI Assessment and Onboarding. Initial financial review indicates a positive margin. With existing practice space no new equipment other than procedure specific generator will be required to add the service. Training for providers and staff  required and will need to be scheduled prior to offering the service. Clinical training is available. Recommend site visit to clinic currently offering the service to observe office flow and treatment.

  1. Practice impact -Tactical and Strategic. Two specific MA’s in the procedure room will be trained initially to assist 3 of the 8 physicians. Patients will be identified and scheduled for services in one location. All office personnel will need to be notified that the service will require patients to travel to the selected office site for the procedure. This along with patient education can be provided with the patient information sheet. Co-pays, prior authorization and co-insurance will be explained to the patient and a procedure deposit will be collected at time of scheduling once estimated cost per patient is obtained.
  2. New business line or exchanging for existing services? The service will be initially targeted to existing patients with BPH as an alternative to medial therapy, TURP, other Minimally invasive therapies and lifestyle changes. As this is an alternative to current therapies offered by the office it is considered an exchange for existing services.
  3. Staffing support, delivery model, scheduling and team education requirements. A patient information sheet will be developed to include options, explanation of procedure as well as pre- and post-operative care instructions. This informational packet will be provided to patients by the MA assisting the physician recommending the service. Pre-operative visit discussion will be provided by the physician to answer questions and review education and instructions.
  4. Startup time frame. Estimated 2 months until first procedure pending site visit to other groups, training, information packet development and scheduling.
  5. Two months post initial implant and patient follow-up for outcomes of initial patients marketing of procedure will begin with website announcement and patient testimonials. Additional marketing if successful will be considered for outreach with primary care, radio and other advertising within 12 months of startup pending results and reevaluation of service provision.
  6. Utilization, outcomes reviews and trends. Outcomes to be measured by AUA symptom score, patient review and Uroflow analysis where indicated. Based on outcomes candidate qualifications will be refined and disseminated to practice. Other physicians will be provided with outcome results and consideration of expanded offering and new participants will be considered at 6-month intervals dependent upon data. New patient referrals will be tracked by front office staff questionnaire with regard to chief complaint and “how did you hear about us”, for all services last year. Additional identification of new patient visits with BPH diagnosis will be reviewed for change from past.
  7. On-going Review and Strategies for performance improvement. Time for service and personnel required will be reviewed monthly to determine if staffing is accurate appropriate for service provision. Time in service will be measured and monitored for comparative improvement assessment and plan adjustment. Collections will be monitored and payer updates provided.

 

Conclusion: Building an effective practice infrastructure and implementing new services requires leadership and a skilled team. For this business case analysis, we focused on the core financials with limited clinical issues. When considering new business services and committing practice capital in-depth due diligence is required. Include not just financial and clinical issues but also, intangibles i.e. physician/APP support, an unscheduled physician loss. Understand while the numbers may appear positive, it only works if the procedure can be efficiently provided and accurate payment collected. We assumed the practice delivers quality care and has a choice in selecting new technology models. In closing, we understand the challenges and critical pressure points confronting today’s successful practice. We understand the stress and time constraints of evaluating and onboarding successful new business services. Our experience allows us to partner with the practice team. For more information or to discuss your practice please contact us.