In an increasingly consolidating industry, ASCs must remain sharply focused on cost containment, according to Raghu Reddy, chief administrative officer of Cumberland-based SurgCenter of Western Maryland.
Mr. Reddy spoke with Becker's about his biggest cost-cutting tactics.
Editor's note: This response was edited lightly for brevity and clarity.
Question: What are some cost-cutting tactics you recommend?
Raghu Reddy: Whether you're losing money on the revenue side because of reimbursements issues or not, I think any ASC should absolutely not leave any penny on the table. I personally operate under the assumption that a penny saved is a penny earned.
I think most agencies should focus on their high-cost areas and go after them because 20 percent of the costs on the ASC business costs 80 percent, and the bulk of it is your staffing costs and your supply costs. Capital costs, on the other hand, are one-time payment, get negotiated, you get a deal and you move on. But this regular recurring cost of goods that are associated with supplies and implants is the area where you need to hone in.
Obviously all ASCs are struggling with the staffing costs, especially in bigger metropolises where their salaries are already at the high end of the pay scale. You're gonna have to be creative, like bringing in LPNs, who cost less than the registered nurses, and augmenting their roles as a support staff for the nurses. This way, the nurses can focus more on what they are hired to do and also some of the burden is lessened by the LPN who can offset the cost there.
Additionally, it's key to have very lucrative group contracts and address pricing with the vendors or the manufacturers directly as much as you can. The leaner you are, the more profitable you are, and from materials management to scheduling to anything else in between, creating those efficiencies and just paying attention to detail will be key.