Surgery centers increasingly are under regulatory scrutiny, and their industry is evolving quickly. One of the more predictable changes is the push for greater efficiency and cost-cutting.
The regulatory focal point and greater emphasis on cost-cutting traditionally have been on hospitals, but now are shifting to the ASC industry, notes Lori Callahan, director of Algonquin Road Surgery Center.
ASCs are responsible for high-quality patient care and helping investors realize a return on investment. This means cost-cutting pressures overlapping with improving patient care practice, she adds. Callahan offers the following four strategies for cutting costs without negatively affecting quality care:
1. Negotiate with vendors, using cost data.
“I have this large board in my office, and I put on it the implant cost by vendor,” Callahan explains. “I list everything they’re charging.”
The chart illustrates which vendors charge more and which charge less. Then, Callahan shows vendors the reimbursement differences between like products. If an ASC director cannot negotiate a lower cost based on these data, then the surgeon can try.
“The surgeon can go in and fight to get the price reduced,” Callahan says. “We need a physician advocate to come in and push those prices down for us.”
Directors can take the same cost spreadsheet to investor meetings to show ASC owners each case and the implant used based on cost and what payers will reimburse.
2. Hire the right staff.
When a surgery center’s staff is a poor fit, it can affect cost and quality.
“Sometimes, if you bring in someone who’s only used to a hospital or large department, they’ll be used to doing one thing at a time,” Callahan says. “ASCs need to find people who can multitask and change.”
The two main qualities a director might seek hiring new employees are finding people who provide the highest-quality care to patients and whose work provides a return to the ASC’s investors, she says.
“If I don’t meet those goals, then I will struggle,” Callahan says.
Other desirable qualities in staff include:
• ability to speak out when they feel something could have been done better;
• personality that enjoys work for more than just a paycheck;
• ability to follow infection control, safety management, and other important areas.
“We have staff competencies and benchmarks for people to meet, and our board gives employees a bonus every year based on measures the ASC has to meet,” Callahan notes.
3. Pay attention to contracts.
A surgery center that passively accepts whatever contracts payers offer might run into financial constraints over time. Instead, ASCs should negotiate contracts, paying attention to the details of what insurers will pay and how these contracts are structured, Callahan says.
“We are finding that insurance companies are willing to step up and work with us more,” she notes.
This willingness to listen and renegotiate has been increasing over the past few years, but there also have been more barriers to reimbursement.
“This year, we’re seeing more insurance companies denying payment if they can’t read the physician’s signature, and we never saw that before,” Callahan adds. “We audit cases to see why we received a denial on this, and then we collect data and educate physicians.”
4. Benchmark for quality and finances.
ASCs should benchmark their patient care quality outcomes and financial/cost outcomes, she says. Comparing their results with competitors and peers will help ASCs identify areas of improvement, and it will provide information that can be used during vendor and payer negotiations. It’s also a good way to look for trends and determine how to stay ahead of those trends, Callahan notes.