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Surgery center turns around in 7 months — Here's how
How would you like to reduce your staffing costs from 52% to 20% of your revenue in seven months? It is possible, based on the successes at Melville (NY) Surgery Center.
The surgery center was filing for bankruptcy and was taken over, says Rita Colantuoni, administrator. A staff of nine was narrowed to three. Among the positions eliminated: the credentialing coordinator, accounts payable clerk, secretary for anesthesia, and human resources manager. "We reclassified their job descriptions, and we combined roles," she says.
When volume later increased, two people were added, Colantuoni says.
Overtime for nursing staff was eliminated, Colantuoni says. "We schedule staff according to the OR schedule," she says. When the day's cases are completed, staff members go home, Colantuoni says. Additionally, staff members were cross-trained to work across services and departments, she says.
Initially, most of the nurses were per diem, Colantuoni says. "Now that our volume is increasing, we have added more full-time nurses," she says.
Another success was achieved when supply cost went from 29% to 14% of revenues. "We made a lot of aggressive changes," Colantuoni says.
Previously, the center had a poor credit rating and, therefore, was paying top prices for many items. "We renegotiated with a lot of vendors," she says. Colantuoni took over responsibility for accounts payable and ensured that bills were paid within 30 days. Once vendors realized that the center would pay bills on time, they were willing to reduce prices, she says. Additionally, the center signed up with a distributor (Cardinal) and a group purchasing organization (GPO), which was Amerinet.
Supplies were streamlined for items such as gloves and sutures, which allowed better pricing, Colantuoni says. "We did trials and said, 'These gloves are less money,'" she says. "Everyone across the board used the same item."
All purchasing now goes through one individual, Colantuoni says. The material manager uses a software system (Advantx, Source Medical) that documents every item in an inventory control program. Previously, nurses in charge of different services would order their own supplies, she says. The result? Multiple ordering of the same items, Colantuoni says. "The storeroom was stocked to the ceiling," she says. "People didn't know where items were kept, so they had to order more."
Accounts receivable (A/R) went from 94 to 29 days outstanding.
"We hired a collector to work on outstanding claims," Colantuoni says.
Also, the center required physicians to dictate the operative reports within 24 hours so they could be coded, she says. "Within 24-48 hours, claims go out," Colantuoni says.
Electronic billing was another step that decreased A/R delays, she says.
Also, average revenue per case increased, from $846 to $2,586. Some of the contracts hadn't been updated since 1988, Colantuoni says. "By default of changing ownership, we were out of network and needed to renegotiate," she says. "We brought in a consultant, who got contracts that were very fair for us." The consultant was Naya Kehayes of Eveia Health Consulting and Management of Issaquah, WA.
Benchmarking, aggressively recruiting physicians, and renovations were other key elements, they say. David Benisch, MD, president of the board at the center, says, "Success breeds success."
Get physicians on board to help with supplies, billing
Physicians are a key component of putting your finances in order, according to David Benisch, MD, president of the board at Melville (NY) Surgery Center. For example, physicians helped the Melville center reduce its supply costs from 29% to 14% of revenues.
"Make surgeons cognizant of the costs of different things, Benisch says. Case costing alerted physicians to the possibility of items that were just as good, he says. "For the physician owners, it became a simple decision to switch to less expensive items," Benisch said.
Physicians also helped to reduce costs by not expecting sutures and other items to be opened prior to their decision that they were needed, Benisch says. "We had to educate nurses: Don't open what's not to be used," he says. "That reduced some of the costs as well."
Physicians also are involved with billing, Benisch says. "With tricky case with tricking billing issues, such as our lateral cases and things like that, surgeons go over proper coding with the coding people," he says.
You must have physician compliance in areas such as these to achieve your goals, Benisch emphasizes. "If you don't get the doctors to buy in, it just won't work," he says.