4 Areas for ASCs to Focus on in 2019

Does your ASC aspire to make 2019 its most successful yet? January is the ideal time to lay the groundwork if you want to conclude the year in a stronger financial position than how you began.

"Often the most effective ways to improve an ASC's financial performance require changing the way we do things," says Robert Westergard, an ASC consultant who served 16 years as the chief financial officer of Ambulatory Surgical Centers of America (ASCOA). "This can be difficult because most of us resist change. But with the tradition of New Year's resolutions, we tend to be more willing to make changes and look at things in a new way at the beginning of the year."

He continues, "While there is no bad time to undertake improvement initiatives, this is probably when you have as good of a chance of getting initiatives off the ground as any time of the year."

The following are four areas Westergard recommends ASCs consider focusing on to improve their financial performance.

1. Case costing. Despite the many changes ASCs have experienced in recent years concerning reimbursement, payer coverage and other revenue cycle-related issues, Westergard says the fundamentals for a successful ASC haven't changed much.

   "If ASCs gain mastery of fundamental operating strategies, they greatly enhance their probability of being profitable," he says. "In my mind, case costing is the single most important component of controlling costs and running a profitable center. When ASCs understand their cost structure and can identify the costs directly associated with cases, there are so many good things they can do with that information."

   These include the following:

• Drive down supply spend — Once you know your costs, you're in a better position to encourage more prudent supply choices by physicians and staff, Westergard says. "Let's say one suture you use costs $1 and one is $2 and there is no care quality differential between them. You can educate staff and physicians to always pull the $1 suture unless a physician specifically requests the $2 item. That kind of knowledge helps you push your costs down." He says ASCs should also use case costing to help make better purchasing and inventory management decisions.
• Request reimbursement increase — When it's time to negotiate or renegotiate managed care contracts, accurate case costing can provide your ASC with strong argument for better rates. "If a payer offers a reimbursement amount you know is too low for your ASC to make money, share your case costing data as evidence for why the payer needs to bump up the payment," Westergard says.
• Better assess and manage case profitability — Case costing allows an ASC's partners and administration to engage in more meaningful discussion about whether a particular physician, payer or CPT code is profitable for the ASC. "If you know one cataract surgeon is taking 40 minutes to do cases, your case costing data may suggest to you that you should invite this surgeon to do those cases somewhere else," Westergard says. "While quality of care is supremely important, if an ASC is not making money on its cases, it won't be around to provide that quality care in the future."
• Push back against supply cost increases — If a vendor proposes raising the cost of a supply to a figure that will turn a profitable case into one that loses money, case costing data can help an ASC argue against such an increase. "Share relevant data with the vendor," Westergard says. "They need to understand that a price increase means your ASC won't be able to keep performing the procedure and, therefore, won't need to continue buying the vendor's product."

   

2. Schedule compression. Compressing your ASC's surgical schedule can deliver significant cost savings, Westergard says. "There's no rule that says your ASC needs to be open for a full day every weekday. This only makes sense if you have cases to fill your surgical schedule for all those hours and days."

   Consider a five-room ASC that performs 140 cases a week and can safely perform 50 cases a day. An effectively compressed schedule would see this ASC providing patient care for two and a half or three days a week rather than five or more. If important users are not able to change days, the same center could open only two rooms on light days.

   "While business office staff likely won't be affected, as they will still bill and collect regardless of whether there are patients in the ASC, you can scale back your clinical operations," Westergard says. "This includes clinical staff, cleaning services and sterile processing activities. Making these changes can be a lot of work as you will need staff willing to cooperate with such an arrangement. But if you want to run a cost-effective ASC, you need to achieve an optimal schedule. Compressing the schedule is an effective way to do that."



3. Staffing. Full-time staff are important to an ASC's success, Westergard says. Also important: knowing how many full-time staff members your ASC really needs.

   "Determining which core positions require full-time employees provides the basis upon which to build a successful center," he says. "Then it's a matter of using pro re nata (PRN) staff as much as possible to cover the rest of the work."

   Westergard says most areas of the country have good people available to fill PRN positions. "Bringing in PRN to expand and contract staff levels like an accordion helps control staffing costs, which are always one of the largest expenses for an ASC."



4. Physician recruitment. A more challenging way to improve the financial performance of your ASC, but one that has the potential to deliver a significant positive impact, is bringing in new physician users.

"For physician-owned ASCs, that usually means bringing in new owners," Westergard says. "This is a long-term focus, but it's something that has consistently proven to be the difference between a marginal and blockbuster ASC."

Such efforts, he says, require an ASC's partners and administrator constantly look for new physicians. "This means regularly speaking with the practice partners of your ASC's current owners; contacting physicians who are new to the area and those who may not be affiliated; and, when you learn of satisfaction issues with another ASC or hospital, immediately contacting the people who work there. Make sure the medical community knows that your ASC is looking for excellent surgeons to join you."

Last Piece of Advice

While Westergard says he believes all the areas he highlighted are worth pursuing, he recommends ASCs should do so judiciously.

"Make a list of what areas your ASC wants to focus on, decide which is the most important and focus on that one first," he says. "I suggest mastering case costing first. When you have that under control or well underway, then move on to the next one. Try to do too much at once and you can overwhelm staff. You will end up rushing off wildly in all directions. That can do more harm than good for your bottom line."

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