Becker's Hospital Review

Executive Briefing: Protecting OR Revenue The new surgical services environment OR revenue is shifting from quantity- or volume-based reimbursement to quality- or outcomes-based payment. Medicare has not paid for care related to preventable problems like surgical site infections and retained objects since 2008. Starting in 2015, CMS will begin exacting a 1 percent diagnosis-related group penalty on hospitals with high rates of these and other healthcare-acquired conditions. The CMS Hospital Value-Based Purchasing program currently tracks several surgical process metrics, and it will incorporate more surgical quality measures in the coming years (see "How VBP Affects the OR" below). In addition, Medicare readmission penalties may expand to cardiovascular surgery in 2015. New Medicare programs are also pushing ORs to foster greater cost control. Under the Medicare ACO and bundled payment initiatives, high surgery department costs may erode any shared hospital savings. Private insurers are also introducing quality-based payment and shared savings methodologies. Taken together, these payment trends are squeezing revenue for many hospital ORs. Meanwhile, the margins are also narrowing for surgeons. Surgical specialists have been experiencing declining reimbursement for years. Now, the Patient Protection and Affordable Care Act proposes a 24 percent decrease in reimbursement for surgeons who fail to meet certain quality metrics. At the same time, practice costs are escalating, with malpractice costs and health insurance premiums leading the way. Together, payment reductions and cost increases are suppressing surgeon incomes. Some surgeons are working longer hours to maintain revenue, but many are curtailing their practice or quitting medicine altogether. All of these trends are combining to put hospitals in a vice. Declining payment is suppressing revenue on one side, and surgeon struggles are leading to declining case volumes on the other. The good news is that four core strategies can address both problems simultaneously. 1. Involve surgeons in OR leadership Surgeon demands for schedule access, rich staffing and new technology have helped create costly ORs. Yet surgeon-owned ambulatory surgery centers prove that surgeons can run lean, cost-efficient surgery organizations. How can hospitals harness that management skill? Many hospitals have established effective surgeon leadership by creating a surgical services executive committee. Think of an SSEC as an operational "board of directors" for the OR. An effective SSEC is led by surgeons and includes representatives from anesthesia, nursing and hospital administration. 45 Its mission is to manage OR access, improve OR operations and optimize clinical safety and outcomes. Hospital CEOs often fear the idea of a surgeon committee running the OR. Will it become just a forum for new demands and increased headaches? These fears are unfounded. Surgeons welcome the opportunity to take greater responsibility for the OR, and well-designed SSECs conscientiously work to optimize department efficiency, resource use, clinical quality and overall financial performance. 2. Create an efficient work environment for surgeons Surgeons want to be able to access the OR schedule when needed, start their day on time, provide high-quality care and be as productive as possible. At the same time, hospitals need to make the most efficient use of the OR. In most hospitals, the top priority is to restructure the block schedule system. Block system reform can be complex, but two principles are key: • horter blocks (four to six hours) are less efficient than lonS ger blocks (eight or more hours). Longer blocks maximize efficiency in a vertical manner by creating consistency in the labor and non-labor resources required to improve overall productivity. • tilization thresholds are imperative. Most ORs do not require U surgeons to use assigned block time efficiently. Well-run ORs set a utilization threshold of 75 to 85 percent as the requirement for maintaining ownership of a block. Other block system changes help ensure schedule flexibility. In addition, ORs need to examine nursing processes to ensure strong clinical support and efficient turnover. Data-driven decision making is critical to productivity — key stakeholders should have access to clear and transparent performance dashboards and operational metrics. Taken together, these schedule and process improvements allow surgeons to maximize their case volume, sustain their income and improve their lifestyle through greater predictability. They also ensure the optimal use of the hospital's expensive OR resources. 3. Build quality into the system New payment models are putting ORs on the hook for surgical complications and poor patient outcomes. One core solution is to build quality into the system through standardized preoperative processes. How VBP Affects the OR The CMS Value-Based Purchasing program will expand its use of surgical quality metrics in calculating base DRG bonuses and penalties. Year Surgery-Sensitive Elements 2013 Calculation includes seven Surgical Care Improvement Project measures, including prophylaxis for infections, blood clots and other surgical complications 2014 Will add outcome measures such as 30-day acute myocardial infarction mortality (includes both surgical and non-surgical patients) 2015 Will incorporate a composite patient safety measure that includes deep vein thromboses, pulmonary embolisms, sepsis and surgical wound dehiscence

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