Brian Brown, regional vice president, operations, for Meridian Surgical Partners, recently identified "10 Ways a Surgery Center's Budget Can Go Awry." Mr. Brown, who oversees the budget planning for the management and development company's surgery centers in his region, identifies five budget-related statistics ambulatory surgery centers should track and benchmark.
1. Same-store sales. When putting together the budget, it is critical to be aware of your physicians' status in terms of case volume, specifically their growth — or non-growth — from a year-over-year standpoint, Mr. Brown says. This includes determining if their practices are growing, if they are bringing in new partners and if they are adding new procedures.
"Your budget ultimately is dependent on those physicians who are performing cases at your facility," he says. "This is the info you need to project the 2012 budget in a way that will grow your center. So, how do you grow? Do you need to add new product lines to the surgery center like laparoscopic gastric banding or spine? As things are migrating out of the hospital setting into an outpatient setting, what steps can you take to capture that business in your ASC?"
2. Supplies per case. "It's important to focus on the current run-rate, or trailing 12 months, to identify where the current supplies per case, taking into consideration the mix you currently have at your surgery center," Mr. Brown says. "Then set that aside and remember where you want your ASC to be in the next year."
Your objective should be to keep the total increase of supplies per case at the very minimum, he says. Keep in mind that plans to add new cases will sometimes come with adding new costs to your center, such as implant costs associated with stimulators and laparoscopic gastric banding. The added cost of these implants needs to be accounted for when determining your supplies per case.
"Take into account your trailing 12 months for supplies per case, and then incorporate what you plan to add to the ASC," Mr. Brown says. "This will give you a benchmark for your supplies per case next year."
3. Wages per case. Salaries consume a significant portion of the controllable expenses in an ASC, so it is important to accurately project the wages you intend to commit to each case. To gain an understanding of where your wages should fall, review available benchmarks specific to your region as well as analyzing wage indexes, Mr. Brown says. You need to determine the best ways to stay competitive with salary increases in order to keep your employees happy, and therefore keep your patients and physicians happy. Additionally, it makes sense to review your bonus structure.
"You should benchmark by reviewing the last 12 months to identify salaries per case, taking into account your current ASC volume," he says. "Determine whether you intend to add physicians to accommodate new volume at the center, and then decide if you need to add staff as well.
"Or you could look at it from a different perspective," Mr. Brown says. "Perhaps you want to streamline cases so you can reduce hours at the ASC to achieve a specific salary per case target. Ask yourself, 'How do we do that? Can we compress our schedule or better utilize block times?'"
4. Revenue per case. Review your managed care contracts, Mr. Brown says. Work to identify what is on the horizon for Medicare and Medicaid, understanding what percentage of your volume is reimbursed through government programs and how projected changes could impact your revenue.
"Also, look at any new procedures you plan to add — new procedures can drive revenue per case up," he says. "If you're expanding a GI or pain program, for example, your net revenue per case, even with new procedures, could go down. You need to budget that appropriately and understand where the business is coming from and what's driving revenue per case."
5. Trends from the prior year. "This sums up everything — what has occurred in the last 12 months?" Mr. Brown says. "Take a detailed review of your current business and use that data to better predict the future. Review what's occurred, not just in your financial statements, but also in your marketplace. Are there new physicians in your area that have changed the competitive landscape? Are there new pressures on physicians to perform in places other than your ASC? Those are trends to be aware of and track on a go-forward basis."
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