Vendors at the Gate,
The last decade has been particularly difficult for ASCs to stay profitable or even stay in business. Approximately 77 percent of the revenue taken in by an ASC is spent in operating costs. Insurance companies, including CMS (Medicare) have continually cut reimbursement. To add insult to injury, hospitals are paid as much as three times more the reimbursement for the same procedure that can be done in an ambulatory surgery center for much less cost.
As an example of diminished reimbursement, CMS now reduces our surgical services fee by 0.5 percent as a tax for the Affordable Care Act (ObamaCare). In the meantime, state, federal, and private accrediting agencies are enacting ever more onerous requirements for the ASC to follow. I have heard such requirements from these agencies as “you need to hire an outside infection control nurse for your IC program.” “You need an outside professional risk manager.” “You don’t have enough disaster supplies stockpiled.” “You need another 18 vials of Dantrium.”
As those in the ASC business know, these additional requirements costs hundreds and even thousands of dollars per year in goods or personnel work hours to maintain. The attitude of these agencies seems to be “who cares how much money the ASC has to spend to comply, it’s not our money.”
As if the above mentioned weren’t bad enough, we have vendors/service agencies that charge the most outrageous fees for parts and service. These “fees” include what they call trip charges, fuel surcharges, service calls, hourly labor rates, etc. A good conspiracy theorist would conclude there are a number of agencies in a cabal bent on the financial destruction of the ASC.
These are some of the actual examples of prices and service quotes we have experienced at our ASC:
1. A fuse in a microscope needs to be replaced. The cost was a $495.00 service call and a $2.95 Radio Shack fuse. Time spent at the ASC — seven minutes, total cost $497.95.
2. The AC fan wasn’t working. A $150.00 trip charge and an $850.00 service fee to reset a breaker. Time spent at the ASC — four minutes, total cost $1,000.00.
3. A light bulb burns out in the ophthalmic laser headlight. The company charge was $199.00 plus shipping for the bulb with a $330.00 service call to install it. Time spent at the ASC — seven minutes.
4. A small battery in an ophthalmic machine needs to be replaced. The batteries cost $4.99 each and are the size of a nickel. The company charged us $60.00 handling/shipping for the batteries. We have two of that type of machine so we have the batteries changed in both. Time spent at the ASC — 30 minutes, total cost is a charge of $1,340.00 ($670.00 each machine).
5. Our endoscope washing machine breaks down and is then repaired. The repairs came to a total price of $55,000.00. The cost of a new machine is $35,000.00.
I could go on, but this is a sampling of some of the ridiculous prices we are expected to pay and situations ASCs are put in that are untenable. Companies trying to force us to pay hundreds of dollars per hour for labor is absurd. I don’t understand what world these service personnel live in that they think ASC’s are bottomless pits of money. If you look at their service fees in terms of worth, they charge more than doctors or attorneys for their hourly rates. No offense to them, but they are not worth what they think they are. They are trying to kill the goose that lays the golden egg, the ASC.
What can an ASC do to fight back? What I have done is to create a network of local ASCs to agree to use one service company in exchange for lower rates. I have negotiated a rate of $75.00 for a trip charge and $75.00 per hour for labor. That is certainly a huge savings over what others want to charge and what we have been paying. In other situations you can buy the needed repair parts from a third party (OEM) over the internet yourself and have technicians install them at a preinstall negotiated price, thereby avoiding vendor mark up and huge labor costs. In certain situations, you can just switch companies to one that sells the same or similar product, but at a reduced price. There are some types of equipment repairs that you have to use the manufacturer of that piece of equipment for service. What I do is challenge them on their price quotes. You generally will get some reduction in costs, but if you don’t ask for a price break, you pay a high premium for parts and labor.
Just by negotiating these price breaks, you can save thousands of dollars per year in service/repair calls. Stand up and question these vendors on their prices because ultimately, you are paying them and it is your money being spent. Remember, any and all added costs may mean the difference between staying in business or your facility ending up in an ASC graveyard.
Tim Luckett, CRNFA
Administrator/DON
ADSC, Alhambra, CA
626-308-9000
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.
