Josh Billstein, practice manager of the ambulatory surgery center at The Polyclinic in Seattle, discusses eight ways surgery center leaders can save more money on supplies and staffing.
1. Compare insurance plan allowables with supply costs. Every month, Mr. Billstein's sits down and audits ASC supply costs versus the allowable charges for every insurance plan. This is reported to the governing body because when physicians understand that the ASC is receiving a finite amount of money from each insurance carrier, they tend to be more flexible in exploring alternative products, Mr. Billstein says.
"For example, we did an audit of one of our urologists for an [incontinence] case and found that the supplies were not the most cost-effective on the market," he says. "When you compare products side-by-side with the physician, you can move that data point more easily." He says the physicians enjoy comparing their supply costs with the amount of money the insurance carrier provides for a particular case.
2. Incentivize supply staff to keep inventory management cost-effective. Mr. Billstein says his surgery center incentivizes the surgical techs who work on inventory management to watch supply costs. The surgical techs provide par levels for each supply based on physician preference cards, keeping in mind how many supplies would be needed for a "worst case scenario" at the surgery center. Mr. Billstein says this "worst case scenario" does not always directly represent how many supplies are kept at the center, but it's useful for more critical items. He says his surgical techs divide supplies into three categories: level A, which must be ordered early and checked on a continual basis; level B, which can swing one way or the other; and level C, which are ordered infrequently and are not necessary for most cases.
He says he incentivizes surgical techs to keep supply costs down by providing gift cards and monetary rewards when they stay on-budget. "It's like a competition for them — can we beat what we did last month?" he says. "It's important to empower your on-site staff and try to reward them."
3. Standardize as much as possible. Like many surgery center leaders, Mr. Billstein tries to convince his physicians to standardize their supplies and equipment as much as possible. Standardization doesn't only pay off by eliminating those "outlier" supplies that cost hundreds more than the average brand — Mr. Billstein says the surgery center can also save money if it orders a large number of products from a particular vendor. He says while complete standardization may be unrealistic; he tries to limit every supply to 2-3 brands.
4. Ask physicians to fill out a "clinical justification form" for new products. If physicians are hesitant to accept standardization — or they come back from every specialty conference with a request for a new piece of equipment — you might ask them to fill out a "clinical justification form" for every new product. Mr. Billstein says if a physician wants to bring a new product to the surgery center, he or she must fill out a form that details any relationships the surgeon has with the product vendor, why they want to use the product and how it compares to other products on the market.
He says mandating this process for every physician helps each surgeon feel comfortable about what his or her colleagues are receiving from the surgery center. If every physician has to go through the same justification process, the surgeons can assume that purchasing decisions are not taken lightly. They also may hesitate to come to the administrator with a request for expensive equipment if they know they don't really need it.
5. Revisit your pricing frequently. Take a look at your vendor contracts on a regular basis and determine whether you need to start negotiations again, Mr. Billstein says. You should never be losing money on supplies, though for some, you may accept breaking even. If you notice that a certain supply is dragging up your case costs, talk to the vendor and explain the situation.
If you're bringing in a new product from a particular vendor, you can also use that to negotiate deals on other products. "If we're adding procedures for our urology group and we need more scopes, we want to know how long we can lock in the price for those scopes," Mr. Billstein says. Even if the vendor has reached a limit on offering price breaks, they may be able to offer extended warranty or maintenance free of charge.
6. Build a consistent pool of per diem staff. Mr. Billstein says his surgery center leverages per diem relationships as much as possible. While the surgery center keeps a solid cadre of FTEs in pre-op, operating room and PACU, Mr. Billstein makes sure the surgery center also has a good, consistent pool of per diems that can come into the surgery center when needed and go home when the schedule is empty.
He says it helps to hire a strong RN supervisor who can make these expectations clear when hiring per-diem workers. The RN supervisor also gives him "ground-level knowledge" about how many FTEs are needed for each area of the surgery center, as well as how much the ASC can depend on per-diem staff.
7. Check on every outpatient-appropriate case that physicians send to the hospital. If physicians are sending ASC-appropriate cases to the hospital instead of your surgery center, you are almost certainly losing money, Mr. Billstein says. Every week, his center performs what it calls a "case leak report," where it uses the Medicare-approved procedures list to determine which procedures could have been performed at the ASC. "We run a report that ticks off which cases were done by our physicians at the outpatient surgery department of the hospital that could have been done in our ASC, and we provide it to our governing body and partnered physicians on a monthly basis," he says.
The physicians then look at the list of cases and explain to Mr. Billstein why they did not bring those cases to the ASC. Sometimes the reasons are based in clinical safety — the patient's BMI was too high, for example, or the patient had significant co-morbidities. In other cases, the physician simply didn't know the case was appropriate for the ASC, or chose to take it to the hospital for non-clinical reasons. Once you know how many cases are going elsewhere, you can work with physicians and their schedulers to make sure your ASC doesn't miss appropriate cases.
8. Find expert staff for your volume-based specialties. For volume-based specialties, efficiency is critical, Mr. Billstein says. Profiting from a specialty like ophthalmology depends on moving cases through the surgery center quickly so each physician can pack a high number of cases into his or her block time. For these cases, Mr. Billstein recommends advertising for and hiring experienced, dedicated staff members who have performed ophthalmology cases in the past. "We want dedicated staff who are comfortable with eye cases and can do them quickly but appropriately," he says.
Related Articles on Surgery Center Operations:
8 Ways to Involve ASC Physicians in Physician Recruitment
ASC Administrators' Holiday Wishlist: 10 Thoughts
Orthopedic Surgeon Compensation in 2011: 20 Recent Findings
1. Compare insurance plan allowables with supply costs. Every month, Mr. Billstein's sits down and audits ASC supply costs versus the allowable charges for every insurance plan. This is reported to the governing body because when physicians understand that the ASC is receiving a finite amount of money from each insurance carrier, they tend to be more flexible in exploring alternative products, Mr. Billstein says.
"For example, we did an audit of one of our urologists for an [incontinence] case and found that the supplies were not the most cost-effective on the market," he says. "When you compare products side-by-side with the physician, you can move that data point more easily." He says the physicians enjoy comparing their supply costs with the amount of money the insurance carrier provides for a particular case.
2. Incentivize supply staff to keep inventory management cost-effective. Mr. Billstein says his surgery center incentivizes the surgical techs who work on inventory management to watch supply costs. The surgical techs provide par levels for each supply based on physician preference cards, keeping in mind how many supplies would be needed for a "worst case scenario" at the surgery center. Mr. Billstein says this "worst case scenario" does not always directly represent how many supplies are kept at the center, but it's useful for more critical items. He says his surgical techs divide supplies into three categories: level A, which must be ordered early and checked on a continual basis; level B, which can swing one way or the other; and level C, which are ordered infrequently and are not necessary for most cases.
He says he incentivizes surgical techs to keep supply costs down by providing gift cards and monetary rewards when they stay on-budget. "It's like a competition for them — can we beat what we did last month?" he says. "It's important to empower your on-site staff and try to reward them."
3. Standardize as much as possible. Like many surgery center leaders, Mr. Billstein tries to convince his physicians to standardize their supplies and equipment as much as possible. Standardization doesn't only pay off by eliminating those "outlier" supplies that cost hundreds more than the average brand — Mr. Billstein says the surgery center can also save money if it orders a large number of products from a particular vendor. He says while complete standardization may be unrealistic; he tries to limit every supply to 2-3 brands.
4. Ask physicians to fill out a "clinical justification form" for new products. If physicians are hesitant to accept standardization — or they come back from every specialty conference with a request for a new piece of equipment — you might ask them to fill out a "clinical justification form" for every new product. Mr. Billstein says if a physician wants to bring a new product to the surgery center, he or she must fill out a form that details any relationships the surgeon has with the product vendor, why they want to use the product and how it compares to other products on the market.
He says mandating this process for every physician helps each surgeon feel comfortable about what his or her colleagues are receiving from the surgery center. If every physician has to go through the same justification process, the surgeons can assume that purchasing decisions are not taken lightly. They also may hesitate to come to the administrator with a request for expensive equipment if they know they don't really need it.
5. Revisit your pricing frequently. Take a look at your vendor contracts on a regular basis and determine whether you need to start negotiations again, Mr. Billstein says. You should never be losing money on supplies, though for some, you may accept breaking even. If you notice that a certain supply is dragging up your case costs, talk to the vendor and explain the situation.
If you're bringing in a new product from a particular vendor, you can also use that to negotiate deals on other products. "If we're adding procedures for our urology group and we need more scopes, we want to know how long we can lock in the price for those scopes," Mr. Billstein says. Even if the vendor has reached a limit on offering price breaks, they may be able to offer extended warranty or maintenance free of charge.
6. Build a consistent pool of per diem staff. Mr. Billstein says his surgery center leverages per diem relationships as much as possible. While the surgery center keeps a solid cadre of FTEs in pre-op, operating room and PACU, Mr. Billstein makes sure the surgery center also has a good, consistent pool of per diems that can come into the surgery center when needed and go home when the schedule is empty.
He says it helps to hire a strong RN supervisor who can make these expectations clear when hiring per-diem workers. The RN supervisor also gives him "ground-level knowledge" about how many FTEs are needed for each area of the surgery center, as well as how much the ASC can depend on per-diem staff.
7. Check on every outpatient-appropriate case that physicians send to the hospital. If physicians are sending ASC-appropriate cases to the hospital instead of your surgery center, you are almost certainly losing money, Mr. Billstein says. Every week, his center performs what it calls a "case leak report," where it uses the Medicare-approved procedures list to determine which procedures could have been performed at the ASC. "We run a report that ticks off which cases were done by our physicians at the outpatient surgery department of the hospital that could have been done in our ASC, and we provide it to our governing body and partnered physicians on a monthly basis," he says.
The physicians then look at the list of cases and explain to Mr. Billstein why they did not bring those cases to the ASC. Sometimes the reasons are based in clinical safety — the patient's BMI was too high, for example, or the patient had significant co-morbidities. In other cases, the physician simply didn't know the case was appropriate for the ASC, or chose to take it to the hospital for non-clinical reasons. Once you know how many cases are going elsewhere, you can work with physicians and their schedulers to make sure your ASC doesn't miss appropriate cases.
8. Find expert staff for your volume-based specialties. For volume-based specialties, efficiency is critical, Mr. Billstein says. Profiting from a specialty like ophthalmology depends on moving cases through the surgery center quickly so each physician can pack a high number of cases into his or her block time. For these cases, Mr. Billstein recommends advertising for and hiring experienced, dedicated staff members who have performed ophthalmology cases in the past. "We want dedicated staff who are comfortable with eye cases and can do them quickly but appropriately," he says.
Related Articles on Surgery Center Operations:
8 Ways to Involve ASC Physicians in Physician Recruitment
ASC Administrators' Holiday Wishlist: 10 Thoughts
Orthopedic Surgeon Compensation in 2011: 20 Recent Findings