10 steps to improve profits at your ASC

From modifying leadership strategies to limiting inventory on hand, there are many changes ambulatory service centers can make to increase profits. However, trying to alter how an ASC operates can be challenging, and pin pointing an area to begin the change process can be overwhelmingly for administrators.

To help simplify the process, SourceMed CNO Ann B. Geier, MS, RN, CNOR, CASC, and Ambulatory Surgical Centers of America CFO Robert Westergard, CPA, offered 10 key steps to help ASCs improve profits at the Becker's ASC Review 22nd Annual Meeting — The Business and Operations of ASCs.

Here are the 10 steps Ms. Geier and Mr. Westergard discussed during their presentation.

1. Adopt Kaizen. An organization's leaders are key when implementing any change, as they have the ability to influence people to accomplish goals. Ms. Geier offered several tips for leaders who are trying to implement change at their ASCs, such as articulating a clear need for the change, not promising anything that can't be delivered and not taking on too much at once.

It's important not to try to change too much too quickly, according to Ms. Geier. She recommends using Kaizen — the practice of continuous improvement. Using Kaizen allows an ASC to develop a long-term strategy, and implement changes over time to reach its goals. "The key to this is the small doable steps," said Ms. Geier.

2. Target materials management. Supply costs are one of the largest expenses in ASCs, according to Ms. Geier. However, costs are controllable and there are several steps administrators can take to keep supply costs down, including investing in an inventory management system. "ASCs cannot afford to ignore the computerized inventory system," said Ms. Geier.

3. Limit on-hand inventory. To help keep costs down, ASC administrators should consider how often supplies are delivered to ensure they aren't ordering a surplus.

4. Do not drop ship. When an ASC doesn't order a necessary device or product far enough in advance of a scheduled surgery drop shipping is required. This is a costly practice, as the expense of drop shipping can sometimes be more than the cost of the item. To avoid drop shipping, Ms. Geier suggests reviewing the surgery schedule one week ahead to ensure supplies and implants are available to cover scheduled cases.

5. Control where supplies are stored. ASCs should consider not having cabinets in the ORs because "OR nurses are hoarders," said Ms. Geier. Instead, she suggests using moveable carts that can be moved out when the OR isn't in use for a case.

6. Use price labels. "Every employee has to constantly be aware of wasted resources," said Ms. Geier. By putting price labels on supplies in storage closets, administrators can make staff more aware of the cost of each item, which can in turn reduce waste.

7. Track case costing. "Everything revolves around the OR minute," said Ms. Geier. Subtracting supply costs from total costs and then dividing that number by total OR minutes gives you the overhead per OR minute. This allows for internal benchmarking. There can be wide variation from one surgeon to another, and administrators need to identify the outliers, especially those that are high end, to reign in costs.

"Our average cost per minute is $18 to $20 per minute," said Mr. Westergard. Therefore, the difference between a seven minute and a 40 minute cataract surgery is significant.

8. Compress the schedule. Block time is not an efficient way of scheduling at a surgery center, according to Mr. Westergard. "You just bleed money as you protect that time," he said. For example, if a surgery center is doing 100 cases per week, the goal would be to compress them all into three days rather than spreading them out by doing 20 cases a day. However, compressing the schedule takes surgeon buy in, and that can be difficult to get at times.

9. Review contracts. Administrators should review their ASC's payer and vendor contracts every year, according to Mr. Westergard. "You should ask for improvements — lower prices from your vendors and higher reimbursement from your payers." Although ASC administrators may not get whey they ask for, this process can help keep vendor prices from rising and help keep reimbursement from falling.

10. Identify fraud vulnerabilities. Whether its equipment walking out the door, time clock fraud or bad checks, there are a lot of different areas an ASC can lose money due to fraud. ASC administrators can help cut down on this by doing two simple things. First, administrators need to be aware of the areas that are vulnerable to fraud. Second, they need to let staff know they're aware of these areas, according to Mr. Westergard.

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