Cath Lab Digest

  To create a successful wound center, you must recognize that no wound center is an island. It connects with every hospital department from housekeeping to the business office, including risk management, medical records, patient registration, quality assurance, and medical staff. Opening a wound center is a daunting task that begins with the development of a business plan and must include setting up a chargemaster — perhaps the most important function.

  To set up the chargemaster, you must know all the services that will be rendered and how they will be transmitted to the computer system that generates charges in relation to hospital financial cycles, a process unique to each institution. Wound care billing guidelines differ for all third-party payors — economic realities are attached to every wound care product and service. It is easy to understand why, faced with such an intimidating to do list, a hospital would choose the services of a management company. So what is the down side to using a management company?

Conforming to an Operational Model

  A management company has a basic pro forma and model of operation. It provides clinicians (often excellent) basic clinical, but not usually operational training. This is a framework in which you pay top dollar but that is not likely to be customized to conform to the unique circumstances of your facility. In essence, this makes you a franchise of the company rather than an integrated part of your hospital.

  Integrating care. Nearly all independent hospital-affiliated wound centers provide both inpatient and outpatient services to complete the continuum of care for the patient. Wound centers fail because of lack of integration. — they must be integrated inward within the facility and outward with local caregivers like nursing homes, social services, long-term acute care (LTAC) facilities, and the case managers of third-party payors. The typical management company approach is to set up a “tertiary department.” The Joint Commission does not look favorably on “islands of care,” a common result of the franchise approach to creating a wound center.

  Cost misconceptions. Most management companies require a substantial down payment (five figures). Hospitals may feel that they need the companies in order to provide turn-key operations, particularly to initiate hyperbaric operations for which they may not have the ready capital. However, manufacturers will lease chambers at reasonable rates to hospitals, usually for less than the down payment required by the management company. Furthermore, most monthly management fees average 75% to 90% of wound center collections, sometimes in excess of 100%. Management companies rarely wait until after the hospital has collected to invoice for their fees. Thus, depending on the turnaround time the facility has for collections, this can significantly reduce cash flow. The fact is, while hospitals may avoid up-front investment, over time, the management company fees will total much more than the cost of developing the program de novo since you are paying for the overhead of another company.

  Reimbursement. The argument for yielding virtually all wound center profits to the management company is that the wound center will spin off dollars for other hospital departments. However, Medicare is moving toward a reimbursement structure that rewards efficiency as opposed to interventions. The business model of the management company cannot support the move toward pay for performance, carve outs, and other new payment strategies on the near horizon.

  Furthermore, the Joint Commission requirements for live-time help with medication reconciliation, summary lists, and patient safety goals are not provided by any management company database. “Managed” wound centers still must handle these manually. Despite large management fees, paper charts remain the legal medical record at all wound centers run by management companies.

  Chart review limitations. Management companies work hard at improving performance and quality, usually by retrospective chart review. At best, approximately 1% of charts can be reviewed for quality issues. At this time, no national management company utilizes a Level 4 electronic medical record (EMR) for data management — all rely on web-based data management systems. None of these data systems calculates the physician or facility level of service; thus, they are incapable of providing automated, real-time billing auditing for either the provider or the clinic. Nor can they be used for broad quality improvement projects. Due to their retrospective nature of data submission, considerable time delays can occur in the submission as well as the analysis of data; such systems open the door for post hoc “vetting” of outcomes. These systems serve primarily to provide data for company marketing efforts rather than for improving direct patient care at point of service, such as incorporating clinical practice guidelines that would improve care at the time the patient is seen, a national standard for EMRs.

  In contrast, many independent wound centers have easily justified the relatively small expense of a wound care-specific EMR that addresses the necessary Joint Commission requirements, facility and physician billing calculations, and quality improvement automation. An EMR such as this is all that is necessary for medical quality improvement programs or to implement pay for performance. At this time, unlike many independent wound centers, no management company is prepared for the move to pay for performance for its providers.