ASCs: Take These 6 Steps to Stick to Your Budget

"ASCs face numerous challenges to adhering to their budgets," says Kerri Ubaldi, RN, vice president of operations for Merritt Healthcare in Ridgefield, Conn. "For example, there are the unexpected expenses, such as equipment failures and facility issues (e.g., leaks, floods, fires). You may have physicians who feel most comfortable with a specific type of equipment even if what you already purchased can still meet their needs. Salary models can sometimes be disrupted if competition increases salaries, forcing an ASC to do so as well. Finally, higher rates associated with new service contracts (e.g., security, housekeeping, equipment maintenance) may also be unpredictable and exceed expectations."

Help your ASC stay on its budget by following these six steps recommended by Ubaldi.

1. Develop formal processes for supply and equipment requests.

Frequently, Ubaldi says, the individuals who request new supplies and equipment do so to please a physician but lack an understanding of the bigger picture associated with such an investment. "They may not realize the ASC even has a budget or fully appreciate the importance of sticking to it. They may also not realize or feel comfortable discussing with the physicians that we already have a similar piece of equipment available for use."

To avoid financially bad investments, require individuals who are responsible for purchasing new supplies or equipment to provide documentation with key pieces of information. "Have them submit a form that states what the product is, the cost of the product, what procedure it will be used for and the reimbursement for that case," Ubaldi says. "Then management can perform an evaluation to determine if the reimbursement for the procedure will, at the very least, cover the cost of the purchase and the governing board can give its approval or disapproval."

2. Conduct monthly review of key metrics.

Use data to ensure financial decisions are supported by evidence. "For example, look at metrics associated with staffing, room utilization, types of procedures and what current equipment exists to assist in making decisions about adding supplies, equipment, and staff," Ubaldi says.

For clinical staffing purposes, she recommends ASCs evaluate and benchmark their hours per case every month. "By doing this, you will have a better idea of whether you are utilizing staff efficiently. The Ambulatory Surgery Center Association benchmark in 2016 was 8.07 hours per case. This is somewhat dependent on the type of procedures that your ASC is performing, so it is important to trend it for your facility. If you follow the benchmark and your ASC is at 12 hours per case, then you are likely overstaffed. If you are at five hours per case, you should examine whether your facility may need more staff to help prevent burnout, increased employee turnover and other problems associated with understaffing."

As with new supply and equipment requests, Ubaldi recommends following a formal process for the addition of staff. "The administrator or other department manager should submit documentation to the governing body explaining why a new staff member is necessary, citing key metrics like hours per case, and what role the new staff member will fill. For those positions that may not require a full-time employee, consider cross-training that staff member to assist with a different role at the center."

You will also want to perform a similar analysis for supplies. "Evaluating your costs per case for every procedure is a good place to start," Ubaldi says. "Your goal should be to eliminate large discrepancies between these costs across all physicians. When you perform an initial analysis, you may find large variations between surgeons. To assist in aligning the costs, showing the physicians their data in comparison to others by blinding it will allow them to see how they compare to others. This often generates conversations between physicians about their process and many times leads to less of a variation between case costs."

3. Keep the budget in the spotlight.

It is of utmost importance to educate your staff on the ASC's budget once it's assembled. Then, during staff meetings, review how well the center is performing with meeting the budget.

"Keeping staff informed of the progress with your budget and the cost of supplies will involve them in the overall goals of the facility," Ubaldi says. "For instance, while the staff is picking supplies for each case, they can pick all potential items that may be required for the case. However, while preparing the operating room (OR) for the procedure, only open those that you know will be used in the procedure and keep the potential items off to the side."

She continues, "Scrub techs often do not want their surgeons to wait for supplies to be opened, which can lead the techs to open everything at the beginning of the case that physicians might need. But there are often supplies brought into the OR that physicians will likely not use. If staff know how much each supply costs and the impact of these expenses on the budget, they may think twice about opening a supply just for convenience sake. The surgeon also does not want to waste supplies and will typically not have an issue with waiting for an expensive item to be opened if it is determined necessary for the case."

4. Educate physicians.

Make sure all physicians have a baseline understanding of your ASC's budget and the consequences to the bottom line if the ASC spends above its projection.

"Going over-budget typically means reduced distributions, postponing of capital purchases and other delays in important investments," Ubaldi says. "As with your staff, keep physicians informed about how well your ASC is performing concerning the budget with a monthly scorecard and evaluation of the center's financial picture. While a center would not want to sacrifice quality or positive patient outcomes to save money, a periodic reminder to your physicians about the importance of only asking for supplies they need to deliver great outcomes versus what they would enjoy using can help develop better ordering and purchasing practices."

5. Regularly evaluate service contracts.

A good best practice, Ubaldi says, is to review existing service contracts and research other vendor options to determine the most cost-effective options for your ASC.

Try to sign contracts for the shortest timeframe, unless locking into a very low fee for services proves to be beneficial to the facility, she says. "The developments in healthcare change so rapidly that it is important to keep your options open should newer technology arrive on the scene. When the contract is coming up for renewal, even if you are happy with the service, there's no harm in determining whether there are other options that may be more economical and still provide the same level of service. New vendors are coming on the market all the time and eager to secure business. Leverage your position as a buyer of these services to help keep your costs as low as possible without sacrificing the quality of the service being provided."

6. Act fast if you go over budget.

If your ASC exceeds its budget — and many do — you may be able to reduce any potential long-term negative impacts by moving quickly.

"Determine the reason that the budget is over its limit and create a plan to bring it back into line with goals and a timeframe for which you intend to do so," Ubaldi says. "Then get to work. If the appropriate documentation was completed before the purchase and the purchase was approved, determine how and why this occurred. Solicit staff for ideas on potential cost-savings measures that can be potentially swapped to negate an over budget item. The staff are in the trenches every day and often have excellent ideas on how the facility can save money. Providing incentives for ideas has also prooved to be helpful."

Work to renegotiate contracts with supply and equipment vendors, she adds. "If vendors want to keep your business, they may be willing to work with you on better terms. If you need new equipment, look at rental or lease options as well as other types of vendor financing available to you. All of these efforts — and others — can help you 'right the ship' and get your ASC back on track with its budget hopefully without needing to make any significant and difficult decisions."

Free Resources for Members

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• AORN Journal CNE Article: Improving OR Efficiency (1.6 CHs)