Pathology Options for the ASC
Pathology Lab • Outsource all of your pathology specimens
For the Gastroenterologist
Obstacles to overcome
Business plan development
Harry Sarles Jr. MD FACG
Disclosure:
• Currently contract Pathologist Services with
Quest Inc. (formerly Ameripath)
• Currently own shares in ASC’
ASC’S through
ownership in Digestive Health Management
• Currently own and operate a path lab, infusion
centers and an anesthesia company.
• Currently serve on the ACG board of trustees.
• Currently president of the GIPAC.
Why a pathology lab?
• If you own an ASC you must develop a
pathology management plan.
• Can represent a significant revenue
stream to the practice depending on the
business plan.
• Can be helpful in contract negotiations
with insurance companies as part of the
menu of services provided.
to a pathology company, hospital, etc.
• Build your own pathology lab as an
extension of your practice (office) not an
ASC extension per federal guidelines.
• Hire or contract pathologist services.
What to do with a new idea?
• What are other groups doing?
• Networking…
Networking….How did they get started?
• Attend ACG meetings and gather the
background info needed.
• Develop a vision for your group and then
develop the business plan.
• Do not present the idea until a solid
business plan exists!
Obstacles to overcome
• Your own inertia…
inertia…(be a finisher)
• Legal fears
• Blinded partners (non-
(non-visionary)
• Timing of the vision presentation
• CAVE’
CAVE’S citizens against virtually
everything…
everything….(J. Leavitt)
• PAC’
PAC’S physicians against change
• PPR’
PPR’S preexisting personal relationships
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 Obstacles cont. ASC Data
• Agreement in principal vs the final vote • Monthly volume
• Governance of your group • Payer mix
• Timing of all the project parts • Case mix
• Special stain mix
• IBD vs polyp practice

Zig Ziglar CPT CODES

• Obstacles are the things we see when we
take our eyes off our goals.
• 88305 level IV surgical pathology, gross
and microscopic examination
• 88312 special stains for microorganisms
• 88313 special stains (other) iron etc.
• 88342 immunohistochemistry (each
antibody)

Business Plan Development Reimbursement Dallas 2005

• Many companies want your business. (a clue) • 88305-
88305- $108.47
• Many will provide extra services for you (a • 88312-
88312- $83.11
bigger clue)
• 88313-
88313- $60.35
• Establish what you are “giving away”
away” when you
send your specimens out. • 88342-
88342- $93.36
• Establish a mock Performa and a mock build out • These codes are not bundled and are
budget reimbursed 100% even with multiple
• Research and understand federal and state laws codes on the same specimen (same day)
governing path labs.

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 Reimbursement Dallas 2010 SAEC model continued
CPT GLOBAL TC PROF-
PROF-26 • $78,136 / month gross cash flow
• $937,632 / year gross cash flow
88305 $102.16 $65.06 $37.10
• This model is based on actual volumes in
88312 $98.48 $72.28 $26.20 a real EASC, published CMS
reimbursements and hypothetical contract
88313 $72.03 $60.36 $11.67 rates.
• All estimates are on the conservative side.
88342 $98.61 $57.11 $41.50

What is at stake? (pathology

revenues) demonstration only
• San Antonio Endoscopy Center (SAEC)
• Last month did 694 cases (220 EGD’
EGD’S 474
Colonoscopies)
• 87 CMS patients, 607 insurance or private
pay
• 134 specimens (bottles) / 100 CMS
patients
• 93 specimens (bottles) / 100 contract
patients
Pathology Options
• Federal laws (Stark regulations, New anti-
anti-
markup legislation as of 2009 final rule)
• State laws (anti-
(anti-markup and disclosure
regulations)
• Ethical considerations
• Contracting ability with insurance
companies and pathology companies.

SAEC model continued State Regulations

• $68.92 (TC) x 117 med. pts. = $8,063.64 • Some states have anti-
anti-markup regulations
• $90.00 x 567 contract pts. = $51,030.00 as well.
• 100% of EGD specimens got special • Many states also have disclosure
stains and 10% of colon specimens got requirements.
special stains.
• Advisable to understand what your state
• 39% of bottles get additional codes
requires and to stay informed of new
($68.08 CMS, $72.00 non-
non-CMS)
health care legislation that could inhibit
• $68.08 x 46 CMS specimens = $3,131
your labs ability to exist.
• $72.00 x 221 non-
non-CMS = 15,912.00

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 CMS anti-markup provision Ethical guidelines
• Part of anatomic pathology diagnostic • AMA ethical guidelines policy 8.09
testing services. addresses all laboratory services.
• Final rule 2009 • www.ama.assn.org
• Requires lab to be an extension of your
• Summary…
Summary…A physician should not charge
practice where space and employees are
yours. an excessive mark-
mark-up above the amount
for the service provided and accounted for
• Net effect dissuades part time lab
arrangements (pod/condo) that are shared by the laboratory.
among several practices.

Anti-markup (2009) Your Cost

• The anti-
anti-markup provisions will not apply to the
TC if the TC is supervised by a physician who
performs at least 75% of his or her professional
services for the billing physician.
• The provisions will not apply if the TC is
conducted in the same building as the office of
the ordering physician.
• With respect to the PC the pathologist must do
75%of his or her services for the billing MD or
perform the services in the same building as the
billing MD.
• Space and personnel will be determined
by your volume.
• HVAC (heating, ventilation, and air
conditioning) an unexpected high
expense.
• Joint venture or go it alone.
• Consultant / architect (ASC contacts are
not the right way to go). (estimated cost
$35,000-
$35,000- $400,000)

Zig Ziglar Personnel

• The only way to coast is downhill. • Staffing accounts for 50-
50-70% of the labs
direct cost.
• Salaries vary widely. A recent survey
showed $12-
$12-$23/hr on a national basis
• R. J. Buesa Salaries in Histology Annals of
Diagnostic Pathology 12 (2008) 122-
122-127
• A good tech can do about 800-
800-1,000
bottles a month

4
 Staffing levels Mock Budget
Consultant / architect $50,000-
$50,000-$400,000
• For every 3 pathologists there are usually 4 Build out (HVAC) $100,000-
$100,000-$500,000
histotechs Lab equipment $100,000-
$100,000-$200,000
• Histotechs typically can process 8,600-
8,600-13,800 Fixtures $30,000-
$30,000-$40,000
blocks per year depending on lab set up and job
Computer hardware and $20,000-
$20,000-$40,000
descriptions. Those doing mainly embedding
software
and sectioning can handle the higher volumes.
Phone system and $15,000-
$15,000-$20,000
• R. J. Buesa Histology staffing levels still a work
wiring
in progress Advance for Medical Laboratory
Professionals I Sept. 25, 2006 22-
22-24 Personnel 1 tech / 10,000 blocks/yr
Summary #315,000-
#315,000-$1,200,000

Staffing levels Vision/Business Plan

• Additional needs are transcriptionists, • $1,000,000 in technical fees on the table
secretaries, histology aids, and potential • $315,000-
$315,000-$1,200,000 cost estimates to get
ASC site personnel. started
• Courier service • Have your group votes in order despite the
PPR’
PPR’S and PAC’
PAC’S in your group.
• Lab director
• Develop a project team and report updates
regularly.
• Have legal sign off on the project.
• Have Fun

Consultant
• Randy F. Wills MBA, President of Wills
Associates Inc.
• 561-
561-659-
659-4541 office
• 561-
561-758-
758-3932 cell
• 561-
561-671-
671-7513 fax
• randy.f.wills@gmail.com

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 My contact info Conclusions cont.
• Harry Sarles Jr. MD FACG • Stay in a growth mode in your practice
• 214-
214-274-
274-5464 cell • Focus on Quality in our increasingly
competitive marketplace
• 972-
972-771-
771-2222 office
• Add Legislative and regulatory spending to
• harry.sarles@gmail.com your annual budget/business plan
• Spend $1,000-
$1,000-$5,000 annually to help
reverse our GI misfortunes with CMS and
congress. Be a member of our sister GI
organizations that are legislatively active.

Conclusions Zig Ziglar

• Seek legal counsel but do not invite them • If standard of living is your major objective,
to a doctor meeting quality of life almost never improves, but if
• Avoid ASC consultants and architects for quality of life is your number one objective,
Path Lab needs your standard of living almost always
• Use Path Lab consultants but be aware of improves.
their costs and ongoing contractual
arrangements
• Use high quality path lab equipment (you
can’
can’t afford to go down!)

Conclusions cont.
• Get Insurance contracts in order before
opening your lab.
• Identify and hire a histotechnologist
champion to lead you through the process
and direct your lab
• See the vision and be a finisher