Ambulatory surgery centers are subject to unique financial pressures. Compared to hospitals, they are often reimbursed at lower rates, and negotiating higher reimbursement rates with private payers and managed care organizations is a constant challenge, according to Sandra Jones, senior vice president and COO of ASD Management.
"What we get paid by Medicare doesn't make any sense," Ms. Jones said during a panel discussion called "The Business of ASCs" at Becker's 22nd Annual Meeting. Ayla Ellison, finance editor at Becker's Healthcare, moderated the discussion. "Part of our challenge is gathering data we can provide the managed care organizations we're contracting so we can show them why we should get paid what we want."
If ASCs can't negotiate with private insurers and managed care organizations for better reimbursement rates, it becomes increasingly difficult to retain surgeons and offer competitive prices to patients. As a result, patients may end up seeking care at hospitals instead of ASCs, Ms. Jones said.
Inadequate reimbursement is compounded by the cost of fulfilling employee demands for enhanced benefits, as well as the high cost of supplies and waste.
"The supply chain may account for 10 percent of a hospital's expenses, just 5 percent of a physician office's expenses, but can be up to 20 or 30 percent of an ASC's expenses," said Scott Jackson, general manager of healthcare systems at Henry Schein Medical.
Because the supply chain accounts for a large portion of an ASC's costs, it is imperative to maintain efficient management systems and processes and eliminate waste. However, as many ASC professionals are aware, this is easier said than done. Ms. Jones, Mr. Jackson and Josh Carter, senior vice president of sales of Medline's ASC division, the third panelist, outlined key steps ASCs can take to control supply chain costs.
1. Educate surgeons. "It's constant education with physicians," said Ms. Jones. "They don't know how much things cost, they just know they like this or that, or they like a certain vendor." However, physicians are inherently evidence-based thinkers. When presented with hard data related to costs and utilization — especially when the numbers report on their personal costs compared with peers — they are more likely to respond. According to Ms. Jones, showing physicians the use rates and prices for supplies increases the likelihood they will become more cost-conscious.
2. Involve the right people. While big ASC chains and those affiliated with hospitals might have sophisticated systems to manage inventory in place, many smaller or standalone ASCs do not. "In many cases, we have materials directors who are not trained, such as a nurse or technician," said Mr. Jackson. Properly training those who will be responsible for managing inventory is essential for making informed ordering decisions, preventing excess stock and eliminating waste.
3. Be informed about your relationship with your group purchasing organization. According to Mr. Jackson, the vast majority of ASCs have relationships with a GPO. However, it is essential actually sit down in the same room with the distributors and manufacturers represented by the GPO to ensure you are signing up for the best possible contract. For instance, many key suppliers have additional tiers of committed and noncommitted levels, and these levels differ significantly in pricing.
"You need a partnership where the distributor knows your goals and what you're working with," said Mr. Carter. To define those goals, Mr. Carter suggests asking yourself, "What are we missing in efficiencies? What's being thrown away too much? What can we remove from the supply chain?"
4. Minimize what's in storage. The oft-told joke in ASCs is there is usually not enough storage space, but when there is, supplies end up filling every possible drawer and shelf. Unfortunately, this is a lead cause of waste, as unused supplies eventually expire and need to be thrown out. To prevent this from happening, closely manage inventory so supplies are only ordered when they are needed. In the event a needed tool or supply can only be ordered in a large package, Ms. Jones suggested finding a sister facility with whom you can split up the supplies and the cost.
Mr. Jackson added intuitive and cloud-based management systems can help manage inventory and reduce the burden on ASC workers tasked with managing inventory on top of other daily duties.