Becker's ASC Review

Sign up for the FREE Becker's ASC Review E-Weekly at www.beckersasc.com or call (800) 417-2035 Renegotiating these contracts can have a significant impact on the surgery center's bottom line. 5. Purchase implants wholesale.  Several implants on the market today are considered commodities, which means they should be purchased wholesale from the manufacturer instead of from sales representatives at a mark-up. There are new companies forming to facilitate wholesale purchases of the most common implants for a lower price. "They are like brand name pharmaceuticals because after the initial patent comes out they release the generic product," says Mr. Dailey. "The products are close to the same, but the generic costs less. There is a 60 percent cost difference per implant in some cases, which can make a big difference in overhead costs." Not every implant will fit into this category, but surgery centers can save on implants and cases that do. "I think, over time, more people are going to use these quality implants because they are comfortable with them and the cost savings will be there," he says.  Physicians may be weary of switching from their name brands and sales representatives, so work with them to make sure the new devices are clinically viable. "Work with your physicians to identify supply choices that may have the same clinical results at a lower cost," says Mr. Scott. 6. Place drug orders electronically. Look at how your surgery center orders pain drugs and anesthetics to see where cost-savings could occur. Many centers order manually with paper, but there are new platforms available online to make electronic purchases which are more organized and limit user errors. "These applications on the computer can also highlight when you are ordering a name-brand drug that has a generic equivalent so you can decide which one you want to order," says Mr. Dailey. "People may not know there is a generic drug, so we encourage our administrators to use these applications." These programs can also calculate the savings surgery centers achieve when ordering generic implants, which adds up to a significant amount by the end of the year. 7. Reprocess materials when possible. Several implant companies — including large companies such as Stryker — have developed reprocessing branches. Take advantage of reprocessing services to lower implant costs and become more economical. "There are companies that focus on reprocessing and they are safe," says Mr. Dailey. "The instruments are still effective after they are reprocessed, so you can get a second or third use out of them. This cuts down on the purchasing. I encourage people to take a closer look at reprocessing because there are services out there." 8. Refinance debt and renegotiate leases. Most surgery centers have high building and equipment costs that aren't necessarily fixed. If these costs are problematic, refinance your debt on them because interest rates are low and banks may be willing to work on a new contract for the future. Surgery centers can also renegotiate leases on equipment. "One option is to restructure equipment leases to a per procedure cost structure," says Mr. Scott. "If you are not using the equipment pretty consistently, you may be able to work with your vendor to pay for the equipment on a per use basis instead of a flat monthly rate." If you do restructure the lease to a per use basis, the vendor typically brings in the equipment on a scheduled basis and removes the equipment. This may present some scheduling issues with your physicians that use the equipment. 9. Reconsider employee benefit plans. Another way to lower overhead costs is to offer employees a health savings account instead of the traditional PPO plan. HSA premiums are typically lower than traditional 11 PPO plans which will allow employers to save each month for each employee that  enrolls in a high deductible health plan. The employee can also contribute to their HSA account on a pre-tax basis and the contributed amounts build up in the account unlike a flex spending account were the funds must be used within a calendar year. "The cost savings from switching to a HSA account can be considerable and should be considered," says Mr. Scott.  By involving the employee in the decision of how to spend their funds for healthcare has shown to reduce healthcare cost thereby helping to improve the surgery center's bottom line. 10. Send employees home on slow days. Give your work schedule some much needed thought.  Do not over schedule staff on slow days and be open to sending employees home early if necessary.   In exchange for leaving early, you can still always employees accumulate paid time off or comp time for hours that were cancelled. "It's always good for employees to take time off," says Mr. Scott. "It's better for their mental health to have time off. By spending some time on the schedule, you can plan for that time off around the slow times thereby reducing your employee-related costs. Allowing employees to carry over two and three weeks of PTO instead of taking the time off can have a real impact on the center." Surgery centers can also eliminate overtime for employees to improve the bottom line. 11. Benchmark and set goals for next year. It's difficult to benchmark a facility's costs because they are different depending on the types of procedures, location and surgeons involved. Find a system where you can drill down to cost data based on similar centers because you don't want to compare an orthopedic surgery center where surgeons perform scopes to ASCs where surgeons are performing joint replacement procedures. "If you compare centers with different specialty mixes, you are going to get a different set of values," says Mr. Scott. "Supply costs per case are hard to compare, but you can use benchmarks from ASCA or similar facilities if you are with a corporate partner can provide a place to start digging deeper. Salary data can be a bit easier to benchmark using FTE's per case, cost per OR minute and other benchmarks." Mr. Scott suggests benchmarks for salaries should generally be in the range of 25 percent of total net revenues. For cases per full time employee, you want to be around the 18 to 23 cases per FTE depending on the case mix.  Try to keep billing and equipment costs around 25 of net revenues if possible. "The closer you can get to the 25 percent range or even below, the better," he says. n Contact Laura Miller at lmiller@beckershealthcare.com. register today! 11th Annual Orthopedic, Spine & Pain Management-Driven ASC Conference June 13-15, 2013 • Chicago Keynotes: Mike Krzyzweski (Coach K), former basketball player and head coach at Duke University; Brad Gilbert, former professional tennis player, TV tennis commentator, author and tennis coach; Geoff Colvin, senior editor-at-large for Fortune Magazine and author of Talent is Overrated; Forrest Sawyer, TV journalist and entrepreneur in innovative healthcare and founder of FreeFall Productions 97 sessions, 52 physician leaders speaking and 130 speakers in total. To register or receive a brochure, call 800-417-2035. For information on sponsorship and exhibits, call Jessica Cole at (800) 417-2035.

• Cover