The use of an ASC business and administrative management system can help your surgery center streamline and improve administrative and clinical processes that may positively affect your bottom line.
One way to accomplish this objective is by running and reviewing various financial reports. While the system should make running the reports easy, the question many ASC leaders face is, "We have all of this data, now what do we do with it?"
In a Becker's ASC Review column from earlier this year, we shared "6 valuable ASC financial reports you're likely not running." Here are six additional financial reports you should be running and ways to use the data to help you bring about improvements throughout your ASC.
1. Variance in physical counts. Whenever a supply is used during a case, it is important for staff to note its usage in the system. Accurate reporting of supply usage helps an ASC develop accurate costing reports. If you know exactly how much it costs to perform a certain case, you can use this information — supported by your accurate data — to negotiate payer contracts more effectively and push for a higher margin to offset costs.
However, when physical counts are inaccurate because supplies used are not accurately entered into the system, your data will show lower costs associated with a case. This may hinder your ability to negotiate effectively with third-party payers for a higher reimbursement rate.
If your information system has the ability to provide data on the variance for when you perform physical counts — showing items taken from the supply room but their use is not associated with a specific case — you can use this data to encourage staff to take physical counts more seriously.
Consider tying part of your staff bonus to the accuracy of those physical counts as evidenced by a decreasing variance rate. Since more accurate physical counts should help your ASC negotiate higher reimbursement rates as well as make more effective supply purchasing decisions, staff can be rewarded financially for their efforts to accomplish these objectives through their commitment to accurate entry of physical counts.
2. Cost per case. Analyzing cost per case data can help an ASC in many ways. This data can help with payer negotiations (as noted earlier), scheduling decisions and supply purchasing decisions.
It can also help influence physician behavior.
If your ASC is large enough that many physicians tackle the same cases, run a cost per case report that shows the average cost for each of your physicians. Then create a single graph that displays the average cost per case for each physician. Determine a way to label the chart in a manner that identifies the physicians' costs but keeps physicians anonymous from their peers (e.g., Physician A, Physician #1). Inform your physicians about their anonymous identifier.
Post this graph in an area where the physicians can view it, such as the staff lounge. They will be able to perform a quick comparison of their costs to their peers. If they find their costs are high, this can create a little peer pressure for them to look into ways to bring their supply costs down and capture a higher margin for those cases.
3. Overtime. With staffing costs usually one of the two highest expenses for an ASC, it's important to watch these costs closely and avoid overspending in this area whenever possible (as long as it's not at the expense of quality and safety). A quick way to run up excessive staffing costs and reduce the profit on a case is to pay overtime on a case when the overtime could have been avoided.
Run a monthly report that shows your ASC's number of cases and the clinical and administrative hours per case, and how those compare to either national standards or your own internal benchmarks. Note how many hours were associated with overtime scheduling.
Put this report on display for staff and physicians to view. This may make them less likely to add a case on at the end of the day that could be done another day during regular hours if they understand the cost implications.
4. Defective or wasted supplies. Some business systems allow you to identify if a supply was defective or wasted when entering the supplies used for a case. This information can serve as a powerful motivator to vendors and staff.
When you are negotiating pricing or talking to a vendor about pricing, run the report that shows how many defective items came from the vendor. With this data you can ask for a lower cost or additional items to offset the defective items.
Run the report of wasted items and share it with staff and physicians. If you can, put a price tag on how much those wasted items cost the ASC. Encourage staff and physicians to work together to make preference cards as accurate as possible and think twice about opening items that are more likely to find their way into the trash than serve a patient.
5. Completion time for critical financial tasks. Your system should be able to provide you with data on how long it takes for specific events to happen — such as how long it takes from the date the patient receives services until the charge is posted, from posting to getting the claim out the door and from getting the claim out the door to receiving that first payment.
Watch those trends over time, running reports on them on a regular basis. If you see any of them taking a longer amount of time, hone in on that area and determine what's causing the increase. By taking a proactive position, you are more likely to identify an issue sooner and before it has a chance to have a significant effect on your bottom line.
6. Inventory turns. Inventory turns/turnover is the number of times your inventory cycles over annually. For example, if you have $1 million in inventory and every three months you order $1 million worth of supplies to replace the $1 million you used in the previous quarter, you have four turns a year. This approach only makes sense if you actually use $1 million of inventory each quarter and don't purchase more supplies than you will use.
But if suddenly you find you have $4 million in inventory and you're still only using about $1 million a quarter, you now have an additional and unnecessary$3 million tied up in inventory — money that could be used elsewhere.
If your system allows you to track inventory closely (e.g., what items your ASC is purchasing over a period of time and how much of them; what supply categories are seeing changes; what vendors are seeing changes) and run a report that shows your inventory turns, you can monitor this area closely — consider checking it monthly — to help catch unnecessary supply spend before you have millions of dollars of unused items sitting on your shelves. Some ASCs will tie part of their administrator's bonus to maintaining a specific amount of turns of inventory per year.
Daren Smith, RN, BSN, is a clinical solution specialist for AmkaiSolutions (www.amkai.com) and Surgical Information Systems (www.sisfirst.com). Daren previously served as director of clinical services for Surgical Management Professionals, an ASC and surgical hospital management and development company; director of outpatient services for Avera McKennan Hospital; administrator and CEO of Fremont Surgical Center; and nurse manager at Grand Island Surgery Center.