It can be a challenge to develop a strong ASC budget, especially amid uncertainty from the COVID-19 pandemic.
Three ASC executives provided advice for how to handle unexpected costs at the Orthopedic, Spine + ASC Virtual Event on Aug. 12. Below is an excerpt from the panel, lightly edited for clarity and style.
Question: What is your advice to leaders when unexpected costs dramatically hit an ASC's budget?
Douglas Wisor, MD. CEO of National Spine & Pain Centers (Rockville, Md.): My CFO would tell you the old expression: You can't cut your way to prosperity, but dollar-for-dollar reducing your expenses falls right to the bottom line. We have found that this past year, real estate was a great place to consolidate our costs because landlords were looking for long-term commitments and were willing to offer rebates. We exited some of the more attractive positions, and the same is true across the board on expenses with vendors. We've tried to grow out of our problem and underwent a fairly sizable merger in the past year with Prospira PainCare, a group of interventional pain physicians, where we grew by 30 percent. That allowed us to go back to vendors and talk about our scale and volume as customer and negotiate favorable terms.
That fell right to the bottom line. We were in collaboration with our providers. Usually if we're in a joint venture with providers in a facility that allows us to get aligned with staffing and make sure we use "pro re nata" nurses whenever possible. If we don't have enough days or operating time, we can be flexible on getting cases in after hours and compressing the schedule so everyone across the board is diligent on spending.
That's the only thing we can do, control [spending] during turbulent times. I think as government benefits are running out on unemployment, as people are getting back to new routines, I think that exercise will serve us well going forward because we've eliminated some waste that we may have turned a blind eye to in more prosperous times.
Anna Weaver, MSN, RN. ASC Administrator of Brunswick Surgery Center (Leland, N.C.): I think setting realistic goals and not being overzealous in projecting case volume, and managing expenses. Having team members understand the cost of materials, knowing we're paying $21 for an item and throwing money away if we can get that for $11. We've had those conversations over and over. I believe it's better to set a conservative budget and then meet or exceed it. But you also have to have a realistic budget so that if costs arise, you have flexibility.
Lianne McDowell. CEO and Administrator of South Portland Surgical Center (Tualatin, Ore.): Everybody's cash flow is a little bit different, so I would say always communicate with board members and owners. I have 14 owners, and three of them are board members. It's all about communication, and they understand the need to be quick and factual about information. If they have an urgent need that we're not going to finance, if it's not a capital expense or building improvement, I'm upfront with them. I tell them what our accounts receivable is for the month and what expectations are.
As far as collections, I tell them what percentage is their distribution for the next month, which may be cut by X amount of dollars, so there aren't surprises. Our 10-year-old building is starting to show its age, and so is some of the equipment. Those could be unexpected and sudden expenses, and we have to make sure we're communicating and researching all the different options we have.