Cost reduction and benchmarking: 11 tips to improve efficiency and increase profits

Ambulatory surgery centers face unique financial challenges, as they are held against equally stringent standards but do not have the scale and resources of a hospital. However, there are certain steps ASC administrators can take to reduce cost and improve efficiency.

At the Becker's ASC Review 13th Annual Spine, Orthopedic and Pain Management-Driven ASC Conference in Chicago, Deborah Comerford, vice president of operations of Ambulatory Surgery Centers of America, Ann Geier, RN, vice president of clinical informatics for surgery at SourceMedical, and Robert Westergard, CFO of Ambulatory Surgical Centers of America, discussed 11 tips for ASCs to improve efficiency and achieve better financial outcomes.

Leadership

1. Adopt Kaizen. Strong leadership is critical for ASCs to survive. While leaders are traditionally viewed as the drivers of change, it is important not to try to change too much too quickly, according to Ms. Comerford.

Kaizen, the practice of continuous improvement, can be an effective strategy for ASC administrators as they confront the numerous financial and regulatory challenges facing their organizations, according to Ms. Comerford. Kaizen is used to develop a long-term competitive strategy, and is characterized by taking small, measured steps toward progress, instead of attempting to complete a system-wide makeover overnight. The implementation of Kaizen ultimately leads to the reduction of waste, improved customer service and increased respect for workers, according to Ms. Comerford.

Materials management

2. Invest in your inventory maintenance system. Supply costs represent the largest expense in ASCs, but there are several steps administrators can take to help keep costs down, according to Ms. Geier.

"The devil is in the details when it comes to materials management," said Ms. Geier. Inventory maintenance is time intensive, and attention to detail is critical. Because of this, ASCs cannot afford to have sub-par upkeep in the computerized inventory system. Ms. Geier suggests assigning one person to enter inventory information into the system to avoid variance, and to use standardized language to build categories of supplies.

3. Ensure preference cards are always current. Surgeons might have devices and products listed on their preference cards that do not need to be continually reordered and can be costing their ASC unnecessary costs. It is important to communicate with surgeons to keep their preference cards up-to-date, according to Ms. Geier.

4. Limit inventory on hand. ASC administrators should consider how often supplies are delivered and ensure they aren't ordering a surplus.

"OR nurses are hoarders," said Ms. Geier. "They won't be caught without an item because of past experiences with surgeons. However, the amount of supplies ordered at a time should make sense for the ASC's scheduled cases."

5. Do not drop ship. Drop shipping is required when an ASC doesn't order a necessary device or product far enough in advance of a scheduled surgery. Sometimes, the cost of drop shipping could be even more than the cost of the item. According to Ms. Geier, ASCs should utilize their vendors in these time-crunch situations: They can often find the item the surgeon needs and deliver it.

Storage

6. Control where supplies are stored. Ms. Geier suggests storing supplies in rolling carts that can be moved around as needed, as opposed to using cabinets in ORs or procedure rooms. In doing so, the ASC can avoid the fish bowl effect: The tendency of filling up storage space with supplies solely because it is empty. The fishbowl effect can be very costly to an ASC, according to Ms. Geier.

7. Put price labels on supplies in storage area. If an ASC uses a storage closet to store supplies, an effective method of making ASC workers more aware the cost of each unit — which can in turn reduce waste — is to label the units with their prices.

Staffing

8. Delineate core staff from non-core staff. Paying staff is another top cost for ASCs, according to Ms. Geier. While certain core staff should be full-time employees, an effective cost-saving strategy is supplementing with part-time and per diem workers.

9. Cross-train employees. According to Ms. Geier, essentially every ASC employee should be cross-trained in certain capabilities, especially for scheduling, insurance verification, billing/collecting and business office management roles. This is particularly important for ASCs that are just starting up.

 Benchmarking

10. Use benchmarking to measure quality and outcomes against peers. "Benchmarking is how you set the bar, compare yourself to your peers, identify good and bad performances and understand what contributes to each," said Mr. Westergard. Benchmarking critical indicators helps direct the business toward profitability by illuminating opportunities to improve.

11. Track case costing for internal benchmarking. According to Mr. Westergard, ASCs can track their exact expenditure by recording the number of minutes in the OR, supply cost, overhead and total cost, total revenue and profit or loss for each CPT code. By keeping track of these costs and revenues for each surgeon, ASCs can identify which partners are profitable and solve any issues contributing to outliers.

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