5 Ways to Cut Surgery Center Administrative Costs
1. Look for unnecessary phone bill and internet charges. An ASC spending more than $1,500 per month between land lines, internet and wireless services can cut costs by hiring a phone bill auditor to find and recover billing errors and suggest ways to save going forward, says Mr. Rabinowitz. "On more than a few occasions, I've seen clients get billed for services they either didn't need or didn't even order in the first place," he says.
Phone bill auditors will typically charge half of the savings they achieve for the first two or three years, and they only get paid if they successfully generate savings.
2. Rent rather than own electronics. Under a "managed service" model, ASCs can rent computer equipment such as desktops, laptops, servers and firewalls from a managed service provider for a fixed monthly fee — a potentially more cost-effective strategy than purchasing or leasing the supplies, says Mr. Rabinowitz.
The monthly fee covers ongoing services including nightly backup, phone support and on-site assistance, which allow the ASC to handle equipment problems efficiently. "If a computer goes down and an on-site tech visit doesn't help, the managed service provider simply loads the latest backup data onto a new machine and ships it to the client via overnight express for morning delivery," says Mr. Rabinowitz. "Another model to consider is cloud computing, where the ASC's network is hosted off-site and can be accessed via any internet connection."
3. Switch to an energy service company. In some states, energy customers can save on their electric and gas costs by switching the supply portion of their utility bill to an energy service company. "It's similar in concept to a long-distance telephone carrier," he says. "In New York, for example, Verizon is the local phone company and each customer can choose Verizon or another carrier to handle long-distance calls. With energy, the local utility will still deliver the electricity and gas, and they will still come from the same power plants, but you can choose from many different companies for the supply portion."
However, depending on the ASC's market, the existing utility may actually be competitive on the supply portion, and there are several energy service companies that charge far more than the market rate, he says.
4. Use a professional employer organization to cut benefits costs. ASCs can save money on benefits by "leasing" employees via a professional employer organization. By aggregating many companies, PEOs allow small businesses to reduce the cost of benefits, worker's compensation insurance and payroll administration or offer better benefits to employees, says Mr. Rabinowitz. "The ASC's employees would become employees of the PEO but would continue to function as employees of the ASC, and the ASC retains hiring and firing rights," he says. The National Association of Professional Employer Organizations contains a directory of PEOs.
5. Negotiate for lower credit card processing fees. "If patients pay their co-payment by credit card, there's a good chance that the practice's merchant processor is keeping more than the risk model says that they need to," says Mr. Rabinowitz. "That extra amount is pure profit to the merchant processor and purely unnecessary expense to the ASC."
Merchant negotiation firms can typically arrange for a better margin with the processing firm without the ASC having to change providers or swap out equipment, he says. "If the ASC processes $100,000 per month in credit or debit card transactions — other than American Express — and the negotiator knocks half of a percentage point off of the discount rate, the ASC can save several thousand dollars per year."
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