How the right distributor can take your ASC to the next level

With payer pocketbooks tightening, ASC and surgical hospital administrators must examine every department in their facility for opportunities for savings to ensure they're staying as competitive as possible.

In a Sept. 19 webinar, hosted by Becker's Hospital Review and sponsored by Cardinal Health, Leawood, Kan.-based NueHealth's Sheila Knoepke, vice president of supply chain, and Dallas-based Texas Institute for Surgery's John Croley, CFO and vice president of finance, discussed strategies ASCs could implement to stay competitive in today's healthcare landscape and how distribution companies can help.

As the head of supply chain at a growing national ASC management company, Ms. Knoepke works to address a number of industry challenges to ensure her organization remains competitive. NueHealth currently has 49 surgical centers and hospitals in its portfolio. Its facilities perform 15,000 surgeries monthly through a network of more than 2,500 independent physicians.

Ms. Knoepke and NueHealth face challenges large and small, ranging from changes in national regulation to specific issues facing individual centers. For example, a November 2017 CMS ruling changed CMS' Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System redefining what a hospital is. Hospitals must now be primarily engaged in inpatient care. An inpatient, as defined by CMS, must be formally admitted, occupy a bed and have a care plan that spans at least two midnights. The rule forced NueHealth to change the classification for one of its facilities from specialty hospital to ASC.

"The majority of our patients are in good health with little or no comorbidities," Ms. Knoepke said. "As a result, our average length of stay is less than two days during the week and we frequently do not have any patients on Sundays."

This greatly impacted the bottom line by changing reimbursement for some NueHealth centers.

The Chinese tariffs imposed by President Donald Trump's administration, which has increased the cost of medical equipment, also sent NueHealth scrambling to contain supply costs.

"We need to look for every opportunity to save," Ms. Knoepke said.

Mr. Croley and the jointly-owned Texas Institute for Surgery deal with some of the same challenges. Although it’s a smaller organization than NueHealth, TIS performs up to 1,000 surgeries a month with its 60 admitting physicians and 300 physicians with staff privileges.

Mr. Croley's organization was also impacted by CMS' 2017 rule that redefined inpatient versus outpatient care.

"They are using the patient's clinical status to determine payment rates rather than another more appropriate measure such as time spent in the OR, in recovery and under nursing care," Mr. Croley said. "In the future, we may have EHR systems that designate a clinical status for care and a different status for payment."

Amid these changes, Mr. Croley and his organization are working to contain costs. Improving charge capture and standardizing processes are two ways he is keeping his spending in check.

Both Ms. Knoepke and Mr. Croley turned to their distributor to help their organizations get leaner and improve efficiency. ASC material managers are the unheralded jack of all trades, wearing many hats and helping centers function better. Cardinal Health worked with NueHealth's centers on material management to set inventory levels that aligned with center utilization.

Ms. Knoepke spoke on the relationship, "Cardinal Health not only benefits us financially, but we've also built a strong relationship. They're always innovative and available when there's an issue to solve."

For example, a local ordinance limited when deliveries could be made to a NueHealth center, bumping them from 6:30 a.m. to 8 a.m. The time difference impacted the delivery and staffing. She explained the situation to Cardinal. The company changed truck routes and helped the center work with the township to find a route which would allow the delivery to come in at 7 a.m.

Ms. Knoepke said the truck route example was just one way Cardinal has worked with NueHealth.

"Bottom line: Cardinal Health is always looking for new ways to save us money and give us more resources to support patient care," Ms. Knoepke said. "I can't say enough about how they've support us."

Cardinal Health helped TIS and Mr. Croley become leaner too. TIS has a small materials department and needs daily deliveries to keep necessary supplies on hand. Because of this, the facility needed a reliable distributor, which it found in Cardinal.

Yet, unexpected issues rear their head on occasion, and in those instances Cardinal Health's relationship proved the most valuable, according to Mr. Croley.

"One phone call took care of [our supply chain issue]," Mr. Croley said. "That's when I realized that someone else cares besides me. Given an opportunity Murphy's Law will apply, so it is more important to me how the distributor responds, than the fact a problem occurred."

Cardinal Health helped TIS cut costs by performing a procedure pack review. The undertaking improved OR efficiency, saved storage space and helped lower supply cost. Cardinal also provided Mr. Croley and TIS with the analytics to align physicians on supply changes too.

"Physicians drive a lot of decision at our facility, and they're scientists who live on data. If I make an emotional plea, I won't get very far, but showing the cost and utilization data makes it easier," Mr. Croley said.

Cardinal Health helped both Ms. Knoepke's and Mr. Croley's organizations become leaner and more efficient, all while boosting the bottom line.

Learn more about what Cardinal Health can do for you, click here. To view a recording of this webinar, click here.

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