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Don't Count on Colonoscopies

Elyas Bakhtiari, for HealthLeaders Magazine, November 12, 2009
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New procedural developments and a shifting market are changing how physicians and hospitals work together to deliver digestive health services.

The value of the colonoscopy as a revenue generator isn't its reimbursement or its nearly nonexistent complication rate, although both help. But it has been a money maker for gastroenterologists in recent years primarily because of is its repeatability.

Because the procedure can be performed in an outpatient setting in a relatively short amount of time, many gastroenterologists have prospered by taking advantage of the fee-for-service system and efficiently churning through a high volume of colonoscopies and other, similar, endoscopic procedures.

Prodded by a two-tiered reimbursement system that pays more for the same procedure outside of the hospital, they have moved en masse to ambulatory surgery centers and other outpatient settings to set up colonoscopy and endoscopy shops, and in doing so have broken away at times from local hospitals.

In this market, who can blame them? Colon cancer screenings are recommended for all adults over 50, and colonoscopies are repeatable once every 10 years. Only about half of adults in that age range get screened, so there is plenty of growth potential in what has already been a booming market.

But private gastroenterologists' income may become less colonoscopy-centric than it has been, for a variety of reasons. Foremost, colonoscopy reimbursement is being scrutinized by Medicare and rates have likely hit a ceiling for now, particularly in ASCs. Add to that technological developments that make it easier to look inside the gastrointestinal tract—at the same time creating the potential for others, such as primary care doctors and even nonphysicians, to cut into gastroenterologists' turf—and it's easy to see that while demand for colonoscopy-type procedures will continue, it has probably peaked as a top revenue generator for gastroenterologists.

"As you look down the barrel of where we're heading, as a gastroenterology group you have to think beyond the colon, beyond doing colonoscopies," says Mark DeLegge, MD, director of the digestive disease center at the Medical University of South Carolina, an academic health center that operates a 750-staffed-bed medical center. "If you sit back and think that in five years you're going to be making all your money from colonoscopies, although there's still a large volume of patients, that's probably not true. As gastroenterologists we've gotten too used to just living off of colonoscopy, and that may not be where we're going to be in five years."

That means physicians may need to expand and diversify the procedures they perform, which could redefine relationships between hospitals and physicians—perhaps pushing them back together after the ASC-driven rift. For both, it represents an opportunity to, perhaps for the first time, approach digestive health as a comprehensive, coordinated service line.

Service Line Success Key No. 1: Joint venture an ASC
Gastroenterologists' success with colonoscopies has allowed them to remain independent when they wanted (depending on local certificate of need requirements), but maintaining that independence may become more difficult as reimbursement changes—Medicare and others are reevaluating what they pay for colonoscopies—and other market realities require a more diversified practice. That opens up new partnership opportunities for hospitals.

Joint venturing an ASC is a logical place to start. Gastroenterology is the No. 1 specialty for procedures in ASCs by volume, and nearly 30% of all single-specialty ASCs are GI centers.

But physicians have become more hesitant to make major investment decisions related to some of these facilities in light of potential reimbursement changes. The faltering economy and limited access to capital hasn't helped, either.

Physicians' decision to partner with a hospital is certainly more straightforward when they are constrained by CON rules, but even in states with higher concentrations of physician-owned ASCs, joint venturing with a hospital can alleviate physician fears.

"Many of the reasons why more single-specialty GI centers weren't developed by physicians were because of some fear related to the hospital. Maybe [the hospital] owned the primary care base in town, and if the GI group broke away it wouldn't get referrals. Maybe the hospital owned good chunk of the payer market . . . When you go the JV route and the hospital's now your partner, all those fears go away," says John Poisson, vice president with Physicians Endoscopy, a company that specializes in developing freestanding ASCs.

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