5 Ways for ASCs to Use Benchmarking to the Fullest
1. Pick the most important metrics for your center's improvement. ASC administrators are faced with a barrage of benchmarks on a daily basis and are constantly examining data points in different ways. "I walk into centers and they are looking at 85 different metrics," said John R. Seitz, president and CEO of ManageMyASC, and Tamar Glaser, RN, of ManageMyASC.com. "They cover so many things that nobody pays attention to any of them. Administrators need to pick the ones that are most important and solve those issues immediately."
Examine the different metrics you collect and choose which ones are most urgent for the center to address. For example, tracking income per minute is largely useless because of the surgery center's economy of sale. "ASCs have fixed costs and if you can get over that hurdle you can really change things," said Joseph Zasa, JD, co-founder and managing partner of ASD Management. "The first thing to look at is the number of cases performed at the center because a lot of data is case-driven."
In addition to case volume statistics, the other key area is collections. Track your revenue cycle in its most basic form to see how many dollars you collect. "Without case volume and collections, you don't have a successful center," Mr. Seitz. "Find what matters for you and focus on those metrics. It might be case start times, cases per day or overtime hours."
2. Include staff compensation. Surgery center leaders should always benchmark staff compensation, to ensure they're competitive within their local market, fostering recruitment and retention of talented employees, said Ann O'Neill, RN, MBA/HCM, director of clinical operations for Regent Surgical Health. She said the website Salary.com is a useful tool in benchmarking salaries; you can enter a wide range of job descriptions and filter the results by zip code. While the methodology is proprietary, Salary.com uses employer-reported data as a primary source in its calculations. Other salary surveys frequently organize salary data by region — "northeast," for example — but Salary.com dissects your area to the lowest level (down to a zip code), giving you a good idea of what the local facilities would pay your nurses.
Once you have an idea of the average salary for a particular position in your area, Ms. O'Neill recommends creating one to three wage ranges for each position in your ASC, depending on skill sets required. For example, an entry-level nurse might make a minimum of $30/hour and a maximum of $45/hour. The wage ranges have to be competitive with the basic market and correspond to the individual's contributions to your center.
3. Analyze payor mix and payor reimbursements by specialty rather than just overall. Many surgery centers look at their payor mix to determine where their reimbursement is coming from. "We go one step further and ask, 'What is our payor mix within each specialty?" said Matt Lau, corporate controller for Regent Surgical Health. For example, he would look at the surgery center's total pain volume and determine what percentage of those cases are billed to Medicare, Blue Cross, workers' compensation and other payors. He said he also drills down even further to determine reimbursement on a per-case basis by payor within each specialty.
Once you have an idea of your payor mix and payor reimbursements by specialty, take your last year of data and look at how your payor mix and reimbursements per case have changed for that specialty. "You might be able to tell that within orthopedic cases, you've really been pushing workers' comp because you're in a state that pays decent workers' comp rates," Mr. Lau said. "You'll see that your overall net collection for orthopedics is higher because you implemented the initiative to increase the proportion of higher-paying workers' comp cases."
He said you need that extra level of detail to determine when initiatives are working and when action is needed. For example, you might notice that your percentage of Medicare in a certain specialty has increased over the last year. Because Medicare reimbursement cannot be swayed — and is generally lower than commercial reimbursement — it may be important to push for higher-paying commercial cases to make up for the jump in Medicare volume. "Without that extra level of detail, you may not be able to head off a disturbing trend," Mr. Lau said.
4. Compare to your own record — not always to other centers. Many surgery centers benchmark against national, regional or local data, essentially comparing their operational data to that of other surgery centers. While this can be useful, Mr. Lau said, it's generally much more telling to compare your current data to your past data.
This is because surgery centers vary tremendously based on a variety of factors. For example, if your surgery center is heavily orthopedics, you will have higher net revenue per case than a center that performs primarily GI or pain management. You will also have longer case times and turnover times, making it difficult to compare with a more naturally efficient surgery center.
Even if you're comparing to another center with a similar case mix, you may be comparing to a center that depends on out-of-network reimbursement rather than negotiating contracts with payors. "Rarely are you going to find a center that's doing exactly what you do and operating with the same cost structures," he said. "The only way you can really, truly track what's going on with the center is to compare your current numbers against what you've done in the past." Every center should go back as far as they can in comparing their numbers — previous month, previous quarter, previous year, previous five years, etc.
5. Decide how often to track your progress. Once a goal is set, make sure you are tracking your progress regularly. By the end of the month, you should have a good idea about whether your center is on target to meet your goals or not. "Most people wait until the month is over before figuring out whether they've met their goals," Mr. Seitz said. "Instead, track your progress at regular intervals."
For example, if the goal is to collect $830,000 for the month, check your progress on the 15th of every month. At that point, you should have collected at least $400,000. If you aren't on track to fulfill your monthly goal, take action to change that before the month is over.
"Go back through and communicate where you are so the problem can be fixed," he said. "If your goal is a collection goal, meet with the billing people and see where you need the money to come in."
More Articles on Turnarounds:
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Lou Holtz: Leadership Tips for a Successful Healthcare Team
5 ASC Leaders on How They Improve the Patient Experience
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