7 Costs Your ASC Could Cut in 2011

In 2010, Tampa Bay Specialty Surgery Center won National Surgical Care's "Center of the Year" Award for saving a significant amount of money on utilities, supply cost, staffing and services. Laura Smith, administrator of the center, discusses how they did it.

1. Rent and taxes. According to Mrs. Smith, Tampa Bay Specialty Surgery Center realized significant savings by looking more closely at the center's lease agreement. The center shares its facility with a physician-owned group and was paying rent, electric, water, hot water and maintenance fees to the group. "I started looking into it and realized there were a lot of issues with the rent," Mrs. Smith says. "We were paying an extra 400 square feet in rent, which [cost us] $22 per square feet." She says the for three years, the center had paid taxes based on an "estimated tax bill," which the center had accepted as accurate. "Instead of somebody looking at it, it was just being paid," she says. "We were challenged at our national [management company] meeting to decrease the cost in all our centers without foregoing patient care, and I thought this would be the best place to start."

Once Mrs. Smith looked more closely at the tax bill, she realized the center was overpaying almost $5,000. With the rent and the taxes adjusted, the center saved around $13,000 — all from simple vigilance and research.

2. Water and electric bills. In addition to the overpayment for rent and taxes, the center was paying 25 percent of the facility's electric bill, regardless of the number of kilowatts per hour used. "I didn't think that was fair," Mrs. Smith says. "I thought we should pay [based on] whether we used more or less." The center had a separate meter installed and now pays only for kilowatts used, saving around 30 percent on electricity.

The water bill posed a similar problem: the center was paying 75 percent of the water bill for the building when they only occupied around 20 percent of the facility. "I had the water company and specialists come in, and they told me we should only be paying 25 percent," she says. "We now only pay 25 percent of the water bill." The center was also paying 100 percent of the hot water heater bill for the entire building. The ASC now pays for 75 percent, following Mrs. Smith's research.

3. Maintenance. According to Mrs. Smith, Tampa Bay Specialty Surgery Center was paying 25 percent of the building maintenance worker's salary prior to her research. "When I started reading into the lease, [maintenance] was supposed to be included in the lease," she says. The center approached the landlord with this concerned and ended up cutting out that cost. Mrs. Smith says when she presented these cost-saving accomplishments at National Surgical Care's yearly meeting, her main message was: look at your lease agreement. "It is so full of valuable information when you start looking into it, especially if you lease from a landlord," she says. "If [payments] have been happening over and over again, nobody ever looks at it. When you really understand the language and get to know the lease agreement, there is money that can be saved."

4. Drugs and medical supplies. Mrs. Smith says her ASC used to staff a materials manager who took little responsibility for saving money on drugs and supplies. "At the beginning of the year, I [hired someone new] and she was able to go through and really work with vendor reps for all our medical supplies and get our costs down significantly," she says. She says the materials manager went after the center's shipping charges, which originally applied to all drugs and medical supplies Tampa Bay ordered. "I asked our materials manager to contact all the vendors and re-negotiate all our charges, some of which we were paying $100 for shipping," she says.

Many ASCs run into problems when trying to re-negotiate with vendors. If the ASC has historically accepted high prices for their supplies, vendors can be hesitant to provide anything lower. Mrs. Smith says the key to re-negotiation is to get physicians involved. "If your physicians are in the room using the rep's [specific supply], and they say, 'You need to decrease the cost on this specific item or I'm no longer going to use it,' that will have an effect," she says. "Usually a vendor doesn't have the market for one special item."

5. Office supplies. Many ASCs have found success with a group purchasing organization, and Tampa Bay is no different. To save money on office supplies, Mrs. Smith says her ASC joined other surgery centers in purchasing through Office Depot. "With all of us purchasing as a group, we're offered discounts, and the more we use [Office Depot], the more we can get back from them," she says. Mrs. Smith says the center's affiliation with National Surgical Care has been essential in being able to join with 22 centers and create stronger leverage.

6. Staff salaries. Unfortunately, the need to cut costs meant Mrs. Smith was forced to lay off several staff members. "With the declining economy and decreased census, the difficult decision had to be made to lay off some key people: a clinical director, a business office team member, a PACU nurse, a pre-op telephone nurse and a GI tech," she says. The center also decreased its per diem staff. She says while layoffs weren't easy, the consolidation helped the ASC function more as a team. "We could either keep those positions and decrease everybody's hours to part time, or be able to increase some members' hours [by laying off others]," she says.

She says the "team" mindset at the ASC means that staff members never stand around when there's no work to be done. "Most of the team members get an average of 32 hours a week, and when their cases are done, they leave," she says. "Our pre-op team is absolutely wonderful. If they just have cases in the morning and there's a huge block in the afternoon with no cases until 1:00, they'll clock out, go home and come back."

7. Physician schedules.
Mrs. Smith says the center saved money on staffing by asking certain physicians to condense their schedules. "One of our pain physicians had a Tuesday-Wednesday-Thursday block scheduled for him, and he'd do four cases on Tuesday, three on Wednesday and then 12 on Thursday," she says. "I asked him to condense his Wednesday into his Tuesday, and now he only uses Wednesday as an overflow day." She says the physician was very amenable to the change.

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