Q: How has your ASC controlled and reduced costs over the past year?
Jim Stilley: We have taken two approaches:
- Proactive management of payroll. We gave our staff schedulers a formula to staff in relation to case mix. We have a multi-specialty center, and getting the correct staff-to-case ratio is a momentous challenge with 16 specialties. We watch hours per case very closely balancing having enough part-time and PRN staff in order to “add staff” appropriately on busy days. We can range between 20 and 105 cases a day.
- Manage contracts with vendors. I spend a lot of time getting vendors to understand ASC reimbursement and understanding why their products are priced how they are. Every dollar “over-spent” in a vendor contract is not available for recapitalization or distributions.
Q: What were one or two ways your ASC was able to improve profits (in addition to cost-reductions) and how were you able to achieve this?
JS: First, we negotiated payor contracts to the fullest extent possible. [In order to do this,] I knew how much and why I needed to receive certain amounts from each commercial payor type. Then, I spent the time to educate commercial payors on why my facility requested what it did, thus starting conversations from a position of market clarity. I put a dollar amount to the federal and state underpayments in relation to cost showing this as a value added tax imposed by federal and state government.
The next step was to debunk the myth that the CMS fee schedule is an appropriate benchmark to cost to perform. I laid out how CMS came up with their reimbursement plan, provided CMS MEDPAC minutes which outline CMS’s plan to pay ASCs less than hospitals even in relation to cost (CMS pays hospitals 97 percent of cost and ASCs only 70 percent or less of cost).
I showed how my high percentage of Medicare and Medicaid prevented my passing on the depth of savings the payor would like but showed how my requested reimbursement was still a bargain. My community payor mix has 45 percent Medicare (The Midwest average is 22 percent).
We also added new procedures as they became cost effective to perform. Medicare and some commercial payors’ fee schedules are not reflective of regional cost.
Q: What is a major operational objective for your ASC for 2010 and how do you plan to approach and accomplish this objective?
JS: Retain great staff, add revenue-generating procedures and educate payors.
Learn more about Northwest Michigan Surgery Center.
