The financial sustainability and success of any ASC generally requires a careful balance of revenue generation and cost-savings — but this equation is more complicated in ASCs.
Having a firm grasp on the complexity of this process is key for ASC success, Thomas Durick, MD, an associate professor of anesthesiology at The Ohio State University Wexner Medical Center in Columbus, told Becker’s. Dr. Durick has worked in anesthesia and ASCs for over 30 years, including 21 spent as an ASC administrator and medical director.
He said that many leaders focus simply on increased utilization as the key lever for revenue generation. But without being fully embedded into the practice, they may miss opportunities for cost-savings or smart investments that bring in more revenue down the line.
“I have that tripod of experience because I’m in the [operating room] doing anesthesia. I’m seeing what’s going on,” he said. “I’m seeing what the surgeon is using, what implants, what supplies, what they’re opening, what’s necessary, what’s not necessary … if you don’t have those boots-on-the-ground kind of attitude, you really don’t know what’s going on in the OR.”
In addition to being present in the operating room, Dr. Durick has also been heavily involved with billing processes at facilities, allowing him to further connect the dots between OR performance, claims processing and revenue cycle management.
“My deep involvement in the in the billing side for the facility really opened my eyes as to how we get paid, what we get paid, when we get paid, how the claims have to go out, how you have to really stay on top of that and know what you’re going to get paid before you ever take the case,” he said.
Efficient case-costing requires administrators to combine this operational and financial knowledge with a strong grasp on staffing and supply chain matters.
“If you’re just randomly trying to improve utilization without knowing what you’re going to get paid, No. 1, and No. 2, what it’s going to cost you to do that case, you could potentially be doing more cases and losing even more money,” Dr. Durick said. In his previous roles, Dr. Durick knew “almost to the penny” what a case would cost his facility.
“We had very accurate case length accuracies,” he said. “We had surgeons that were very predictable, both fast and not so fast. And I knew what most of those surgeons use, but I also made sure they knew what they were using.”
Dr. Durick went as far as to post various implant costs to the wall of this facility, making it a priority that clinicians in the OR were also operating with an awareness of cost and efficiency, he said. Having a firm grasp on the financials behind each case allows ASC leaders to make informed decisions about when they can or should take on a case that might be less profitable.
“The other side of that coin is, if you have a surgeon who’s doing six cases at your facility, and they want to add a seventh case on that you can do in that timeframe, and that one case might lose you a little bit of money, you need to take that case and make that surgeon happy so that they’re not leaving and going across town to your competitor, maybe taking all seven cases off there,” he said,
The ASCs who set themselves apart will ultimately be those whose leadership is highly in-tune with minutiae of each case and the flow of operations within their facility — which may often look like physician-led ASCs.
“More of the private practice surgery centers are being owned, or at least majority owned, by some of the bigger surgery center partners, which is fine. The ones that still have their autonomy, the ones where the providers still have the proverbial ‘skin in the game,’ the ones where they have really good administrators or nurse managers who have a good open relationship with their surgeons, their GI docs, their pain management … those are the ones they’re going to going to do well,” Dr. Durick said.
Dr. Durick likens this holistic approach to a ‘farm mentality,’ in which leaders must approach surgery center finances as a multifaceted, dynamic operation, rather than separate silos with no impact on one another.
“You have to look at what is going to make the entire farm profitable and healthy. So if you want to just skimp on the one corn silo or the grain silo, and then you can’t feed the animals, because you save money over here, the whole farm dies. You have to look at that cost of care from the time the patient hits your door until they leave your door and everything in between: staff cost, overtime, equipment, supplies, medications, postage cost, shipping cost, your electric bill, the security guard, how much you’re paying to water the plants, he said.
“All those things matter. And if you don’t understand all those aspects, how can you possibly make a decision [about whether] this case is going to be right for your surgery center to be profitable? Sometimes you have to spend money to make money.”
