10 Proven Surgery Center Cost Cutting Measures

Lori Vernon, regional vice president of operations, and Stephanie York, director business office operations, of Health Inventures discuss 10 proven ways for ambulatory surgery centers to reduce their costs.


1. Renegotiate contacts for services. Service contracts is an area ASCs can always look for and typically find savings through renegotiation, says Ms. Venon. A prime example is with an ASC's banking fees. "With the economy [driving] more and more merchant service fees, I think there are some opportunities to renegotiate some rates," she says. "After an ASC enters into a banking agreement and then builds that merchant of service volume, it's important to meet regularly with your banker and look for opportunities for savings. I know facilities that have saved thousands of dollars a year in looking at their banking fees, how they're banking, what they are receiving in hard copy form, receiving electronically, the frequency [of these materials] and then renegotiating their fees."


Another contract to review for possible savings is biohazardous waste removal. "There are always new vendors coming on to the market and they are trying to get their foot in the door, so take advantage of those new companies," Ms. Vernon says. "You want to first and foremost ensure your processes abide by OSHA [regulations] but certainly looking at ways to impact your cost by how you're paying for your managing of your biohazardous waste is important." She suggests looking at aspects including whether a poundage structure is better than a box structure and the frequency of pickups.


Another critical component to capturing savings with external contracts is to make sure when you initially enter into a contract that you consider the terms of the agreement. You want to keep the door open to renegotiations and the ability to look at other options, and keep terms out of contracts restricting your ability to do so.


2. Target implant costs. There are ample opportunities to negotiate on implant costs, says Ms. Vernon, but to do so effectively you must know your ASC's usage and have the ability to accurately project usage to gain leverage in negotiations. "If you can say to your vendors, 'Here's what we use, here's our utilization history (you have to have good data) and here's what we're looking for, please tell me what you're willing to do,' you can create some competition," she says. "[Implants] are one of your biggest expenditures so you should look for every opportunity for savings."


Another area ASCs can target for savings is medical supplies. If you can get your physicians to agree to use the same type of supply for a significant percentage of the cases your ASC performs (standardize), you will put yourself in a much more advantageous position. "Then I think you can call upon these vendors and be very open saying, 'I am looking for the best price,'" says Ms. Vernon.


3. Purchase refurbished equipment. The economy is forcing many healthcare entities to close their doors, which Ms. Vernon says is helping flood the market with some very sound, current equipment. "This would fall under a used/refurbished category and [purchasing this equipment] can make a real, true impact on your capital budget," she says. Make sure your ASC makes such purchases through reputable vendors which specialize in refurbished equipment.


These vendors will sometimes allow you to trial their refurbished equipment and permit your biomed team member to inspect the equipment before committing to a purchase, which can help give you a sense of security, she says.


4. Cut lock box fees. Ms. York says a significant portion of the Health Inventures' centers have saved substantial costs on lock box and banking fees by implementing electronic check deposits along with electronic funds transfers and electronic remittance. "Electronic checking was fairly new a few years ago but now I find it nationally at banks," she says.


5. Standardize disposables. As described earlier when discussing standardizing implants to help reduce costs, you can do the same with your disposables and commodities. "If you can corral your physicians and get them to agree to basically a standardized platform, you can create a vendor war for like-supplies and have them competing against each other to be your exclusive provider of certain kind of disposable supply," says Ms. Vernon. Working to involve your physicians and getting the buy-in for your negotiating tactics with your vendors can help extend your negotiating leverage in this area, she says.


6. Reduce time spent on pre-op assessment. Staffing is a significant cost for any ASC, so it should always be an area targeted for savings. One particular area within staffing costs surgery centers can find savings is in the pre-op assessment process. Ms. Vernon says the clinical staff member assigned to conduct pre-op assessment is often a highly paid individual, so finding a way to reduce the time dedicated to pre-op assessment can have a significant financial impact.


"There are a number of products coming on the market now that allow you to do pre-op assessments online," she says. "I know facilities that by implementing that product, they can truly customize the assessment to meet the needs of their facility and the FTE savings is pretty remarkable."


Ms. York says the online pre-registration/pre-op assessment process is more than just obtaining demographics and insurance information. Products are on the market that can collect a patient's history and physical, obtain current insurance information and give patients the opportunity to view, print and sign the patient bill of rights and ownership disclosure form.


"This has been a wonderful savings for our centers," she says. "Having all of that online has helped drop many of our nursing pre-op calls from about 45 minutes to a 10 minute confirmation call."


7. Maximize potential of health information systems. Ms. York travels around the country conducting business office audits and says she finds herself regularly surprised by how many ASCs and their staff members do not maximize the benefits of their health information systems. "They're not taking advantage of all of the automation, the triggers and flags and bells and whistles," she says. "I think it's really important for people to use those systems the way they're intended to be used — it helps save on staff time and that reduces costs."


8. Cross-train basic functions. Ms. Vernon says many ASC cross-train their staff but do not do so effectively or extensively enough. "You can never exhaust cross-training," she says. "The more flexibility you'll have in your staffing to perform in various roles and various areas and functions, the more you're really going to see a gain."


Since most surgeons want to work in the morning, an ASC will often experience a lull in afternoon. Surgery centers should work to capitalize on the potential of having some of the same individuals function in one area of the ASC in the morning and then another area in the afternoon. This is more than just assigning an OR nurse to also serve as the infection control officer, Ms. Vernon says.


"Cross-training really needs to be your basic, every day operational functions," she says. "This can really impact your clinical hours per case and your ability to save in staffing costs."


9. Reap benefits of using credit cards. Making your supply and equipment purchases with credit cards can yield savings in a few ways. If you agree to pay for all of your purchases by credit card, some vendors may waive shipping and freight fees, says Ms. Vernon. "Just the same as we sometimes ask our patients to provide a credit card which we will hit with their patient balance when their EOB comes in, the vendor will allow the ASC to do the same thing and they hit [the ASC's credit card] as invoices occur," she says. "Obviously you still need to monitor those invoices carefully for accuracy. But the vendor is getting their money in a very quick turnaround and you can leverage some of that negotiation for shipping and freight."


As you make these purchases, and any purchases with a credit card, if you are using a card with a rewards program, you can apply these rewards to other expenses such as travel, supply discounts or cash. "With the dollar amounts ASCs put on those, there's really some potential there," says Ms. Vernon.


10. Reconsider recruitment process. Another way you may be able to reduce costs with staffing is through your recruitment process. "Often in the past you would just advertise in the newspaper or hire a recruiter," says Ms. Vernon. "More and more people are looking at Craigslist and in some markets, Craigslist is free. You want to really explore your recruiting options, keeping track in your market where people are looking for jobs."


Using resources like Craigslist or free online job boards may not only represent savings but might help you reach a larger pool of candidates as well, especially if you are targeting younger professionals who may be more accustomed to these Internet resources. "Just because that's what you've always done, you might be spending way more than you need to as well as not reaching the people you want to reach," she says.


Learn more about Health Inventures.

Thank you to GENASCIS, a provider of revenue cycle services and supporting technologies for surgery centers, for arranging this interview.


Read more from Health Inventures:


- 4 Creative Employee Benefits Your Surgery Center May Not Have Considered


- Application of Medicare Same-Day H&P Guidance for Gastroenterology Centers


- How to Ensure Maximum Operating Room Utilization in a Surgery Center

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