Labor cost at your surgery center — 3 key concepts

Thomas Jacobs, president and CEO of MedHQ, discussed strategies to control labor costs at Becker's 13th Annual Spine, Orthopedic and Pain Management-Driven ASC Conference + The Future of Spine in Chicago.

To clarify what cutting labor costs will mean for surgery centers can be the hardest administrative task; all surgery centers want full utilization of the OR as possible.

In addition, handling employee discipline is a top concern for ASC HR managers . According to a California Ambulatory Surgery Association survey, 58 percent said this was the number one issue at their surgery center. Surgical center management teams should also be setting goals, such as benchmarking total paid hours per case.

"Benchmarking is a strange thing. Sure we can look at everybody else and see what they're doing, but a lot of times it is hard to get anything out of that," said Mr. Jacobs. "Start from where you are and work from that."

Mr. Jacobs is focused on how to allocate funds to a more effective strategy. One option lies in HR, where the benefit of outsourcing will be cost-neutral or cost-savings, it is a strategy to address some issues.


First concept: Outsource your HR services

Culture in your facility will be driven by the strong personalities said Mr. Jacobs. Partly, by outsourcing your HR services, you can address these issues.

Best reasons for outsourcing HR:

1. Create automation through better information technology

2. Gain professional expertise by allowing HR experts to do what they do best.

3. Gain efficiencies from scale/size

4. Reduced exposure to employment practices risks

With HR process automation, having a system is vital for compliance and licensing. Also, the ACA requiring employees to know how long they work. Electronic employee records are also usually okay with AAAHC and Joint Commission, according to Mr. Jacobs.

A good HR system has employee self-services where they can request PTO, etc., without interrupting management's time. Outsourcing HR will also take care of state and federal taxes. You can also automate alerts for credentialing deadlines.

From the compliance area, there are so many updates to employment law and ACA, an HR system will keep surgery center up-to-date on the latest legislative changes.


Second concept: Compensation

The Federal Government is in the process of changing exempt vs. nonexempt rules and PEO/HRO firms are liable for payroll mistakes. However, payroll processing firms are not typically liable.

Online compensation resources give surgery centers data to guide them in understanding the appropriate level of compensation using a point factor analysis.

For example, a point-factor analysis score will equip centers with industry grading data and labor statistics to mitigate employment practice risks and allow the, to compensating correctly, with an objective basis for why people are paid what they are paid.

"We want to keep everybody in that 50th percentile at every range, based on if they were entry level, had a big learning curve, have made a significant impact, receive a cost of living adjustment or merit adjustment," said Mr. Jacobs. "Merit means they have added value to your facility and you want to compensate them for that."

Compensation management in your HR is vital, and should include your salary ranges as part of the various components of your HR system.


Third concept: Health Insurance

On June 1 2015, insurance carriers announced large premium increases for individual and small group PPACA plans, informed Mr. Jacobs. The ACA has a lot of changes on the revenue cycle side, but a lot of the ACA changes effect the small group and individual insurance markets. They require plans to use the community rating method of pricing. There is no longer much variation between groups based on the actual health of a specific group.

"One of the things with an HR outsourcing firm, is it will allow you to get out of the small group market and into a larger one. It can be more cost-effective in the long run," said Mr. Jacobs.

More articles on ASC issues:
How to tackle the one the most common types of ASC turnaround scenarios
Tenet completes USPI, Aspen acquisitions: 7 things to know
Selling your ASC: 3 critical considerations

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