As we approach the end of the year, ASCs should already be working on their budget for 2019 or at least planning to begin soon. A good starting point when designing a budget is to evaluate the current year's budget. Determine where projections aligned with reality and where figures were off, why numbers were inaccurate, and what these figures should have been going into the year. Use this information to generate a baseline budget and then adjust it based upon your plans for the new year.
Some plans are more likely to reshape your budget than others. Here are seven areas to focus on that can significantly alter line items in a budget and your overall forecast.
1. New specialty. Few developments can impact a budget as much as the addition of a specialty. Unless you have already identified all physicians who will bring cases for this new specialty, allocate money for marketing and recruitment. Plan for new supplies, devices, and possibly capital equipment. Also consider whether you need to hire additional clinical staff to support new physicians and their case types and business office staff to handle the increase in and/or changes to coding and billing of new cases.
Other potential costs associated with a new specialty to consider: training and education for clinical and business office staff; credentialing and privileging for new physicians; marketing to promote the new specialty to your community; and updates to your website and marketing collateral.
2. New physician/procedure. Even the addition of a new physician and/or procedure can affect numerous aspects of a budget. When this occurs, many of the same cost considerations of a new specialty come into play. New capital equipment may not be necessary, but significant supply costs, including implants, could be a factor.
3. Outsourced services. While the services your ASC outsources can bring costs with them, significant savings opportunities must also be taken into consideration during budget planning. For example, let's say you decide to outsource your ASC's revenue cycle management operations. Be sure to calculate potential savings achieved by reducing business office staffing, assigning staff to other roles that may help you eliminate the need to hire new staff, and/or cutting back on overtime.
For currently outsourced services, budgeting season is a good time to reevaluate these services and their contracts and explore whether other companies may be able to provide these services more effectively and efficiently, delivering a better return on investment (ROI), and/or at a reduced cost. Consider consolidating existing outsourcing of services, like coding and transcription, and use a single vendor or fewer vendors. This type of change would help achieve notable cost savings.
Before outsourcing a service or making a change to an existing outsourced service, perform your due diligence on the vendors you are considering. Make sure the company you select understands the ASC business and its unique needs and requirements and will provide a service tailored to the industry. You're looking for more than just service providers; you want trusted partners that demonstrate a proficiency and an eagerness to help you achieve your short- and long-term objectives.
4. Information technology (IT). The addition of new IT, such as transitioning from paper to electronic documentation or adding a document management solution, will likely bring with it several different types of costs to factor into your budget. There's the cost of the technology itself; any hardware needed to power and use the technology; the contract for ongoing maintenance and upgrades; and possible modifications to electrical systems to support the technology where it's needed in your facility. Consider the implementation timeframe and how staff training may impact your daily operations and case load. When budgeting for this technology, also factor in projected cost savings that will be attained by eliminating paper use, medical records storage, and staff time for chart preparation and maintenance.
5. Construction. If 2019 is the year you're planning to expand your space or convert existing space to serve a new purpose, you not only need to consider the numerous costs associated with construction (e.g., personnel, permits, insurance, blueprints, legal fees, interior and exterior considerations, mechanical, electrical, utilities, HVAC) but also how it will impact existing operations. If you must close on days your ASC is typically open or scale back working hours, project how that will impact revenue and operations costs.
6. Capital equipment. Failure to budget for a capital equipment purchase can create significant issues if you determine that such a purchase is necessary during the year. There's the cost of the equipment itself to take into consideration and how to pay for it. If you lack the cash required to cover the purchase, financing the investment could be a solution, although it will typically carry interest charges. You may need to invest in training and education for staff members who will be tasked with using the equipment. If the equipment requires mechanical and/or electrical support that does not exist where the equipment will go, project the costs for these additions/modifications.
7. Staffing. We end with staffing because decisions concerning many of the areas highlighted above, as noted, can result in changes to staffing. There are those investments more likely to be associated with additional staffing, such as adding specialties/physicians and growing your procedure list (and hopefully total case volume in the process). Then there are those decisions, such outsourcing services and adding IT, that can help you at least maintain a current staffing level or even reduce it. Your budget should account, to the best of your ability, for such projected changes.
Quick tip: If you make an investment and/or change to your operations during the year that will dramatically impact your budget, consider revising your budget for the remainder of the year. Take into consideration any costs, cost savings, direct ROI and trickle-down ROI (i.e., improvements you can make because of the investment/change). Trying to stick with a budget that doesn't accurately reflect your new operations will be a fruitless exercise. In fact, it will likely prove to be more difficult, if not impossible, to make educated, cost-conscious decisions.
Randy Bishop (rbishop@surgicalnotes.com) is chief operating officer for Surgical Notes. Surgical Notes is a nationwide provider of revenue cycle solutions, including, transcription, coding, revenue cycle management, and document management applications for the ASC and surgical hospital markets.