ASC efficiency and increasing revenue are often the two biggest goals for ASC administrators.
1. Integrate a compressed schedule. One of the most impactful things administrators can do is integrate a compressed or vertical schedule. If a center has multiple ORs with an under utilized caseload, the ORs aren’t being fully utilized. If an OR is underutilized, shut down that OR for one or more days per week to condense the number of active ORs. By taking this initiative, an administrator could reduce spending on staff while improving ASC efficiency.
2. Proper inventory management. It is good practice for administrators to work with inventory managers to ensure proper inventory management. The inventory manager should only order the necessary supplies and negotiate with vendors for the lowest cost. A letter of commitment and contract compliance from the vendor can lower the cost even further.
Invest in technology that will streamline inventory management and allow your managers to spend less time on material management.
3. Keep a close eye on accounts receivable. Administrators should know the minute details of their accounts receivable no matter the facility type, with the average AR return is 40 days. However, it should be noted that the number of days vary when Medicare is taken into consideration.
4. Gain preauthorization and send claims out the door quickly. Preauthorization or pre-certification for patients before the day of surgery is of the utmost importance, followed with sending the claim out within 48 hours. Improvements in technology has improved the claim process greatly. Help with an EHR platform is something our partners at Surgery Center Management Services can offer. Allowing physicians to complete their case dictations electronically. This step not only insures a health bottom line but also ensures your ASC efficiency is at peak optimization in its paperwork process.
6. Start cases on time. Physicians who constantly starting late can bog down a center. If a physician has a 7 a.m. OR time slot but is consistently late, administrators can reiterate the importance of punctuality or move that physician to a different time block.
7. Prevent cancellations. ASC should work and come to expect a less than 1 percent of total case volume canceled. A patient cancelling the day of surgery can greatly impact the bottom line of an ASC.
8. Perform case costing and benchmark profitability. A profit margin of 40 percent should be the goal that an ASC strives to achieve. Medical supplies should account for 25 percent of net revenue while payroll accounting should be around 30 percent. This will enable administrators to drive profitability while allowing a focus on case costing.
9. Track overhead cost per minute. Overhead cost per minute is one of the most important tools an administrator has. “Physicians start looking at this because they want to see where they stack up against their peers.” Then the physicians can help administrators bring costs down.
Here is a suggested formula to enable your evaluation of overhead cost per minute:
- Run a profits and loss report in an accrual basis for the month you are costing
- Subtract out the cost of drugs, supplies, implants and any interest, depreciation or amortization expenses.
- Divide that number by total operative minutes (time in the OR) per month
10. Recruit new physicians. Recruiting physicians can be an easy way to add in new revenue. However, in most communities there are few unaffiliated physicians to pursue. In these instances it is best to seek out physicians near the end of their hospital contracts. Several physicians take contracts with hospitals near the beginning of their career, and the second contract is often less attractive. Administrators should approach these physicians to gauge interest in becoming an ASC owner or user.
11. Add related specialties. Consider adding a specialty related to the cases already performed at the center. With a single specialty, administrators should work with physicians to bring in their colleagues. Administrators have to conduct a deep analysis when considering adding other specialties to ensure it’s not a costly mistake, especially if the center would need to purchase new equipment.
12. Stay out-of-network as long as possible until the in-network contracts are right. Newly formed ASCs begin operations out-of-network until the administrator can negotiate in-network contracts. While is may appear enticing to be in-network, administrators should not rush contract negotiations.
Through the use of these practices and other services that Surgery Center Services of America and our partner at Surgery Center Management Services provide, you can produce noticeable improvement in your ASC efficiency while also building a profitable center that can attract new physicians.