4 Ways Surgeons Can Increase Surgery Center Distributions

Thomas Wherry, principal for Total Anesthesia Solutions and medical director for Health Inventures, discusses four ways ambulatory surgery center surgeons can increase their distributions by cutting significant costs.

1. Be more flexible with block time and scheduling.
According to Dr. Wherry, many surgery centers do a poor job of tightening the schedule to decrease staffing costs. The schedule will show large gaps between cases, or the center will open for just one case. "The cost associated with keeping staff there obviously reduces distributions," Dr. Wherry says.

If ASC data shows OR utilization around 40-50 percent, the center is almost certainly losing money and something needs to be changed, he says. "There's an inherent conflict between the surgery center agenda and [the physician's] own personal office agenda, and that requires the administrator and management company to have a strong relationship with the surgeon scheduler," Dr. Wherry says. Surgeons can help increase distributions by facilitating that relationship and cooperating with the surgery center's requests to compress schedules. "It does require the surgeons to be more creative with their schedule, as opposed to "this is my block time and don't touch it,'" Dr. Wherry says.

2. Attend meetings for payor contract negotiations. Many centers don't review their contracts regularly enough, meaning they may be losing money from poorly negotiated contracts. Reviewing ASC contracts means considering carve-outs for certain high-cost procedures, negotiating improved reimbursement with the payor and considering a move to out-of-network if in-network rates are too low. "I think the surgeon can be helpful by attending meetings with insurance companies," Dr. Wherry says. "[The center] is certainly more powerful if a surgeon is present versus just an administrator." He says surgeons can also boost ASC leverage by writing letters to the insurance company's medical director on the key issues for a particular contract.

3. Pressure other surgeons to standardize supplies. An ASC will lose money if it stocks five or six different brands of one supply, Dr. Wherry says. In standardizing supplies, he says ASC leaders should start with high-end supplies, such as screws or implants, and work down to disposable supplies. Benchmarking data on different specialties can also help determine which specialties, cases and surgeons use the most expensive supplies. Surgeons can help reduce supply costs by showing transparent reports on their preference card costs to other surgeons. "I think with education and some outside pressure from other surgeons, you will see surgeons that will change their practice," Dr. Wherry says. "If you can get half of [the surgeons] to change [supplies], I would consider that a success."

4. Consider case contribution margin, not volume. When asked how to improve ASC profits, many ASC administrators refer to an old stand-by: increasing case volume. But Dr. Wherry says surgeons should be careful about bringing more cases to the center if those cases are not profitable. "When surgeons look at their own practices, they should work with the administrator and management company on identifying cases that provide a good contribution margin," he says. For example, some orthopedic cases have very high supply costs and can be performed at a loss if a center receives inadequate reimbursement. "It might be more prudent to take that case somewhere else," Dr. Wherry says. Surgeons should look at case costs and reimbursement rates to determine profitability and make sure case volume increases are worthwhile.

Read more advice from Dr. Thomas Wherry:

-4 Tips on Difficult Airway Management

-6 Ways to Cut Anesthesia Costs in Your ASC

-12 Anesthesia Processes to Track and Benchmark

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