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Cost control managers can be nonclinical
Different perspective enables potential savings
Outpatient surgery programs are so busy that staff members are required to wear many hats. When it comes to the responsibility for cost control, your efforts may not be successful if the staff member perceives this is a secondary responsibility. Even if you decide to make cost control a priority for a staff member, not all administrative or board members view the position as necessary.
"I was told that my request for an operating room business manager was approved as long as the person I hired saved at least $50,000 in the first year to cover the salary," says Rosemary Roth, RN, MSN, CNOR, CNAA, director of surgical services at Rochester (NY) General Hospital. "Not only did the person I hire meet this threshold, but he saved more than $150,000 the first year with his attention to contract pricing and to putting policies in place to control spending," she says.
The majority of the savings were a result of the business manager's efforts to meet with vendors and renegotiate contracts for better pricing, says Roth. "He also developed policies that described more closely controlled evaluation and purchase of new equipment," she explains.
Roth's business manager, Dave Putnam, has always had a top-five list of the most expensive supplies for his department. The list might include high-priced supplies such as skin graft material that may not be used in a lot of cases but is expensive to purchase, or it might include sutures that are relatively inexpensive but are purchased in high volumes, he explains. "I look at each item to see if we are getting the best price for the item we purchase or if we can find a suitable replacement that costs less," Putnam says. Once he believes that the cost is as low as it can be, he takes the supply off his top-five list and moves another item onto the list, he says. "I always have five supplies to evaluate," Putnam says.
Roth had primary responsibility for overseeing costs before Putnam was hired. "I was responsible for so many different things that I didn't have time to carefully evaluate prices for all of our supplies," she admits. "Finding ways to save money is a key responsibility for the business manager."
Being able to focus on pricing information, inventory, and contractual agreements makes it possible for a staff member to have a positive effect with cost savings, says Rebecca R. Craig, RN, CNOR, CASC, administrator of Harmony Ambulatory Surgery Center in Fort Collins, CO. Although Craig and her staff have always strived to maintain the most cost-efficient supply list, it is hard to keep supply costs a priority when you are handling patient care, staff management, and physician relationships, she points out. "My senior accountant has all materials management coordination as her responsibility, so she can make cost savings a priority," she says.
Clinical background not necessary
Because her senior accountant is not a clinician, she often sees different ways to handle equipment and supply costs, says Craig.
"She has spent a lot of time working closely with the clinical staff, observing procedures, and asking why a particular item is used," she says. Although she recognizes clinical staff members and physicians' preferences for certain brands or items, she is also able to bring in alternatives for evaluation, Craig adds. "No one had time to set up trials of different products before we hired a senior accountant, but now we get to test different supplies and equipment at no cost, to see if the lower cost items are just as good or better than what we were using," she adds.
Craig was hesitant not to use an RN in this role. "Then I realized that a business-oriented person could learn how items were used without losing sight of overall costs, professional liability, and patient safety," she says. Clinical staff members would not have the background to be able to tie all of these issues together, Craig maintains.
Not only did Roth hire a nonclinical person as business manager for the operating room, but also she hired someone with no health care experience at all. "I had six people I seriously considered, including one surgeon with an MBA who wanted to move away from the clinical side of medicine," says Roth. "I was concerned that a surgeon might have a hard time working with other surgeons in this role." Instead, Roth hired someone with an MBA and 20 years of corporate experience in project and budget management. "The MBA is important because it demonstrates that the person has the educational background to handle financial and management responsibilities," she says.
The other key facet of a successful business manager or other person to oversee cost control is the person's personality, says Roth. "He or she must be a people person who is comfortable talking to nurses, physicians, and all other surgical services personnel," she says. Not only does the person in this role have to gather information and make presentations, but they also have to be able to say "No, this won't work" in such a way that the person requesting the item understands why, she adds.
Give your cost control expert time to learn the operating room business, says Roth. "My business manager spent the first two months on the job learning health care, observing procedures, talking to staff and patients, and asking questions," she says. This on-the-job training as well as his willingness to be visible and accessible to surgical services personnel gave him credibility, she adds.
Although your business manager also may supervise other staff members who perform materials management, accounting, or budget functions, be sure not to overload the person with extraneous responsibilities, says Roth. "Be sure that you let them focus on cost control and budget management as a priority," she says.
Look for a well-organized, detail-oriented person, suggests Craig. "The person you hire should be excited about digging into the nitty-gritty details of cost reports and research products to find out what's available," she says.
Craig says that the position more than pays for itself, not only in actual savings but also in the time it gives Craig. "Because I don't have to focus on supply costs, I have time to plan facility expansion, explore other revenue opportunities, and participate in state-level activities to affect legislation related to surgical services," she says.