Best Practices in Case Costing
There are a handful of methods to get to the center of knowing what it costs to do a particular procedure. Case costing, where each CPT by surgeon is reviewed based on overhead, supplies and implants compared to reimbursement by payer, is the most fruitful way to manage and optimize costs.
The reality is we have six variables to track:
1. The surgeon
2. Supplies used
3. Operating Room Utilization
4. Fixed Costs
5. The anesthesia provider
6. Payer reimbursement
Surgeons have "preferences" as to supplies, equipment and instrumentation they require to perform a specific CPT. In general, where the surgeon does his/her residency influences preferences.
In the OR, preference cards are created to list in detail equipment, instrumentation and supplies a surgeon requires to perform a specific procedure. On these preference cards, items that are needed for every case are identified as well as items that are "on hold" and will not be opened to the sterile field unless required to perform the procedure.
Across all specialties and procedures within each specialty the spread of preferences is quite variable. In spine procedures, for example, positioning devices for the same procedure range from hundreds to thousands of dollars, depending on the surgeon's preference. Additionally, the surgical approach and size of incision in spine surgery through an incision as small as 18 millimeters to several inches dictates the equipment, instrumentation, supplies and time spent in the OR for essentially the identical procedure.
Creating discussion points with surgeons in the same specialty and/or subspecialty allows for a free flow of information regarding surgical technique, philosophy and outcomes. Demonstrating to surgeons how other surgeons select supplies, equipment, and instrumentation and individual incision time allows them to see others practice, collect information and make changes as they choose. One ASC Nurse Manager in a multispecialty facility had a simple and effective way to demonstrate supply usage for the same CPT. She would pull all the supplies for a specific high volume CPT for one specialty by surgeon and have them in a basket on a side table at her facility's board meetings. This would spur conversation among the surgeons as the baskets would vary in items as well as how much they were filled. Her surgeons' visualization of these items outside the OR facilitated dialogue and change.
Effectively managing OR time is critical to cost efficiencies. The ASC manager must make it part of the culture and daily dialogue to view and use the OR as a high cost resource, and, therefore high priority is placed on continuous improvement. When everyone is aligned with this perspective, then schedules are compressed for efficient OR utilization and supplies and equipment needs aligned with best practices. Variable costs will adjust downward.
Fixed costs such as rent, services, debt, and core wages and benefits should be optimized. Avoiding the "Build It and They Will Come" mentality when designing the ASC floor plan is vital. For instance, if the average case plus turnover is 60 minutes, then the OR could be used 2008 times in a calendar year. Less is more.
A frequent error is excessive services and maintenance contracts ASCs commit to. For example, there are many items the ASC should take risk and forego preventative maintenance contracts. In general, the ASC will come out ahead if it has maintenance contracts for high tech items, critical care items and high use items older than three to five years and take risk for the rest. Services such as cleaning and linen and laundry often times exceed what the ASC needs or require closer monitoring to assure what is being provided is needful.
A brief word on anesthesia providers. They are our partners in providing great patient care. Each provider, much like surgeons, has preferences. The best practice is for each anesthesia provider at the ASC to agree on preadmission testing criteria as well as drug cocktails, anesthesia care protocols, equipment and supplies. Once this standardization is agreed upon costs are optimized and safety is enhanced.
Payer reimbursement for each CPT performed is the last piece. Comparing reimbursement based on cost allows us to understand by payer what is profitable and what cases are losing money. Once we are armed with this data, we can approach payers with powerful information to discuss in depth the value of the proposals they offer or for specific CPTs for procedures being added that need rate increases. Knowing what the local hospital is reimbursed from the payer is critical information to show the payer that the ASC can save them money, especially on high acuity procedures.
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