1. Do a cost analysis of your ASCs supplies. Avanguard’s biggest expense is overhead supply costs, including the cost of purchasing disposable materials. Dr. Shamloo says approximately 65-70 percent of the facility’s operating costs goes toward purchasing supplies, which can amount to a couple million dollars a year. Conducting a cost analysis of which supply companies offer better costs has resulted in a 10 percent savings for the facility over time.
“One suture for eye surgery or spinal surgery would cost approximately $80, so when you get a box of 10, you’re talking almost $800,” Dr. Shamloo says. “We used to work with two supply companies, but after doing a cost analysis of other resources, we found there were other smaller businesses that have similar materials for about 20-25 percent cheaper. We were able to bring down supply costs 10-15 percent, and when you’re talking about a million dollars a year for just supplies, that’s pretty substantial.”
2. Adopt lean processes. Lean practices were first adopted in the automotive industry and were aimed to reduce, if not completely eliminate, waste by cutting out unnecessary steps or resources that may hinder efficiency, productivity and profitability. This philosophy was implemented in scheduling of staff members at Avanguard. Dr. Shamloo, who says payroll is the second highest overhead expenditure, says streamlining the staff members work hours will lead to the facility running more profitably and also efficiently.
“Our nurses were staying for 12-hour shifts, so over a full 40-hour week our nurses were being paid four extra hours of overtime for which they were paid back 1.5 times their hourly salary,” he says. “We decided to cut back on their hours so we didn’t have to pay overtime payroll and hire a part-time nurse to relieve them. This way, they also don’t get tired and become vulnerable to making more mistakes. This cuts back on human errors and is financially better for our ASC.”
3. Discuss ways to cut waste. The surgeons at Avanguard, who are also partners of the ASC, meet regularly to discuss the issue of waste and how to eliminate it at the surgery center. Involving physicians and staff members help the surgery center focus more of its efforts on how to reduce and eliminate waste and brainstorm practical ways to do so. For example, Dr. Shamloo says at the meetings physicians have decided to adopt a protocol of not pulling any supplies, such as sutures, before a surgery so as to prevent opening more than what may be needed for the procedure.
“Also, before we were providing parking spaces for all our employees and physician partners,” Dr. Shamloo says. “But that was quickly realized to be a waste because that was $3,000-$4,000 a month just for parking. So our physician partners decided that the staff who were not working at the facility everyday had to park their cars in the streets.”
4. Expand the surgery center. Growing a surgery center to allow for additional specialties, and therefore additional patients, can help an ASC remain more financially viable. Although multi-specialty surgery centers have a broader range of overhead costs to tend to, in the long run adding specialties can significant grow patient volume and help increase the facility’s profitability tremendously.
“Our surgery center has diversified since the economic downtrend,” Dr. Shamloo says. “We try to get other doctors from different specialties who otherwise might have done the procedures in a hospital setting. For example, spine surgery used to be done in the hospital for back surgery, but now it’s becoming more expensive to do it in that setting. So we’re trying right now to add those specialties to our group.”
Learn more about Avanguard Surgery Center.
