ASCs require optimal efficiency to operate a lean and successful business in today's healthcare environment. At Becker's ASC Review 24th Annual Meeting: The Business and Operations of ASCs, held in Chicago, Vice President of Sales at Cardinal Health Mark Misplay and Vice President of Procurement at United Surgical Partners International Stephanie Phillips gave a presentation on how ASCs can leverage data and analytics to drive operational efficiencies and savings.
USPI’s goal for 2017 is to reduce costs by $22 million across the system which includes several orthopedic-focused ASCs. The company budgeted for a 7 percent increase in overall medical device and implant spend due to the cost of orthopedic implants, but felt the $22 million cost reduction was still an attainable goal.
USPI decided to track two metrics to gauge progress throughout the year in their cost reduction goals: general cost per case, and drug, medical and implant supply costs as a percentage of income (DMI). Just measuring cost per case didn't go deep enough to fully describe their progress, given the specialty mix.
"Data analytics are an important tool that we use at Cardinal Health to help great partners like USPI achieve their efficiency and cost reduction goals," said Mr. Misplay. Cardinal Health helped USPI narrow down large amounts of data into easily analyzed sets of information that lead to actionable insights. "Based on those insights, and collaboration with UPSI's leadership team, we developed a strategy that was deployed throughout the network."
After analyzing the data, USPI began streamlining procedure packs across facilities where possible and implemented best practices for preference card management, workflow and standardization. USPI and Cardinal Health also focused on maximizing distribution agreements with group purchasing organizations.
"For the first eight months of 2017, we've been running over budget because our implant costs are up 13 percent, versus the 7 percent originally forecasted," said Ms. Phillips. "However, during the same period, our supply costs are down 5.8 percent. This is due to our reduction in supply spend which is helping us offset rising implant and pharmacy costs. In 2018, we will begin breaking out pharmacy spend into a separate group to further monitor that spend."
Ms. Phillips also reported that Cardinal Health worked with some of USPI’s facilities that needed extra support to meet their goals. Ms. Phillips outlined efforts at two USPI facilities, beginning with a North Texas orthopedics-focused ASC with 10 operating rooms and around 12,000 cases per year. After implementing changes based on a Cardinal Health clinical assessment, the center realized a 4 percent decrease in DMI and more than $77,000 in overall savings, including more than $61,000 in savings specific to procedure packs.
At the second center, a smaller Oregon-based facility supporting 1,000 cases annually, after conducting the Cardinal Health clinical assessment and implementing changes the center reported a 12.2 percent decrease in supply and pharmacy costs, a 2.2 percent decrease in DMI and around $60,000 in annual pack savings.
The Cardinal Health clinical assessments included process improvements and safety standards, evaluating procedure supply efficiency and identifying cost-saving initiatives. USPI implements the process across facilities by beginning with a 30 minute kick-off meeting where they outline savings opportunities. USPI then delivers monthly scorecards for each facility and conducts three operating review calls per month; facility management presents during one call and USPI leaders lead the remaining two. The company also conducts an in-depth analysis of each facility's cost reduction performance a few months after launch and engages Cardinal Health to intervene when more savings are possible.
"We all know how busy the staff of every facility can be," said Ms. Phillips. "It can be hard to find time to focus on managing supplies and lowering costs with product conversions. Yet, as you've just seen, these efforts can create significant savings that can help offset the rising cost of medical devices and pharmaceuticals. That's why we ask our facilities to take 5 minutes daily to review their savings goals with their suppliers, so that everyone can work together to achieve them."
UPSI and Cardinal Health plan to continue using data analytics to drive efficiencies and savings within the system in the future.
For more information on the Cardinal Health clinical assessment process, you can visit cardinalhealth.com/surgerycenter.