Profiting During the Pandemic


Find ways to cut costs and increase revenues during this uncertain time.

Earlier this year, Buffalo Surgery in Amherst, N.Y., Center was humming along as usual. More than 30 physicians packed its ORs and procedure rooms with 1,500 cases a month, creating a constant buzz of activity and filling the reserves with a steady stream of revenue. Life (and business) was good in Upstate New York.

And then poof, the cases were gone. Just like that.

"We were shut down essentially overnight when COVID-19 hit," says David Uba, MBA, the center's CEO. "It was a little unnerving."

The orthopedic-centric center lost 98% of its usual case volume over April and May when only emergent procedures were performed. Elective cases restarted in June, and the facility's surgeons began digging into a backlog of more than 4,000 postponed procedures, which allowed the center to reach full capacity by the end of the month.

"Our plan is to maintain 95% capacity and run the year out," says Mr. Uba. "We lost two-and-a-half months of revenue, and I don't think we're going to make it up."

Sound familiar? A month ago, you were probably thrilled (and exhausted from implementing new COVID-19 precautionary protocols) to reopen your ORs and ramp up case volumes. Now you're probably wondering how to ramp up revenues. It's going to take some creative thinking, honest conversations and, as if you need more of it, plenty of hard work.

  • New business. Elective procedures in Virginia were called off in early April, forcing Andy Poole, FACHE, to regroup and reassess the business plan he wrote for Monticello Community Surgery Center (MCSC) in Charlottesville. His physicians performed only 37 urgent cases in April, a fraction of the more than 400 procedures that fill the facility during a typical month. In June, with physicians working through a backlog of cases, the facility hosted more than 500 procedures. Mr. Poole, the center's CEO, expects that bubble to burst in the fall.

The cases in which MCSC specializes are short in duration — cataract, GI and pain cases — and performed with conscious sedation instead of general anesthesia, meaning they don't require the stringent between-cases cleaning needed during this COVID-19 era. Fast room turnovers make these procedures good options for ramping up case volumes.

MCSC, which reopened its four ORs and procedure room on May 4, reached full capacity last month thanks in part to Mr. Poole's networking. He donned his inside sales hat and made sure the physicians who regularly bring cases to the center were aware it was open for business and had plenty of slots to fill on its schedule. He also asked them to spread the word.

Several of the physicians hadn't been able to return to other facilities in the area that had yet to reopen.

LESS IS MORE Review the case costs of high-volume procedures to identify opportunities for significant savings.

"We've captured a lot of the cases they would have performed elsewhere, especially interventional pain procedures," says Mr. Poole.

"Other local physicians who had never been to our facility used this opportunity to give us a try.

"No one predicted the outbreak, but everyone was impacted," he continues. "It's the hand we've been dealt, so look for opportunities for new business where you can find them."

  • Contract renegotiations. Your facility likely didn't perform revenue-producing cases for more than two months. You weren't buying supplies from vendors and your capital equipment budget has been reallocated to cover short-term expenses. Your finances might be hurting, but so are those of equipment and supply manufacturers.

Mr. Poole says you're in a position to be aggressive during negotiations with vendors who can't hit margins on supplies stacked in a warehouse. "Find out if there's any wiggle room in pricing," he adds. "Vendors are motivated to secure your business, but they also need to make money. Be a good partner and meet them somewhere close to the middle. Now's a great time to recognize you're in this together."

He spent time during the shutdown looking for ways to limit expenses in order to increase profits. He suggests combing through case costs to identify spending issues and review the contracts with the companies that provide the supplies or implants that are eating into the profits of your high-volume procedures.

"Look at where most of your dollars are going, and work with reps to lower those costs," says Mr. Poole. "Have honest discussions about your financial situations with vendors, who you've hopefully fostered positive relationships with."

Vendors who aren't willing to offer discounts might look for assurances of maintaining your future business. Maybe this is the time to let them know you're willing to spend your dollars elsewhere.

"The current situation is making competitors a lot more competitive," says Mr. Poole. "Vendors are hungry and motivated to find new sales. We've been approached by a lot of reps who want our business."

During the shutdown, Mr. Uba reviewed reimbursement arrangements with third-party payers and renegotiated the rates of the bundled payments he manages for the center's outpatient total joints program.

He also called vendors with whom he deals with regularly and had frank conversations about the concessions he needs to ensure the center is profitable and able to purchase their supplies over the coming months. "We've leveraged the good relationships we already had with reps," he says. "They've tried to be accommodating to our needs. That's been nice to see."

Mr. Uba says vendors who refuse to offer discounted pricing might be more willing to get creative with rebate programs, deferred payment options and loans for high-end inventory or capital equipment. The key is to ask. Vendors are willing to work with you to maintain their relationships with your facility. They need you as much as you need them.

  • Flexible staffing. Staffing is among the biggest expenses of most surgery centers. Matching staffing levels to the surgical schedule helps to control labor costs, but doing so is a constant challenge. Fluctuating case volumes over the past several months and the uncertainty of how the pandemic will impact surgical care moving forward has added a level of difficulty to an already difficult task.

Mr. Poole tries to rightsize his staff with a mix of full-time and part-time employees, who were stretched thin in June when the backlog of cases and the influx of new procedures filled MCSC to capacity. He added needed help by building a pool of PRN employees, whose flexible work status is now more valuable than ever.

No one predicted the outbreak, but everyone was impacted.
— Andy Poole, FACHE

"Case volumes will likely dip again behind this recent surge, so make sure your staffing model can be adjusted to accommodate that variability," says Mr. Poole. "There are a lot of clinical professionals in the PRN population who offer that needed flexibility."

  • Smart scheduling. Buffalo Surgery Center works with more than 30 providers who want to work through their backlog of cases as quickly as possible. "When case volumes reached normal levels, we decided using our regular block time allocation was the easiest and fairest way to schedule cases," says Mr. Uba.

His center's physicians prioritized cases within their block times based on patients' pain levels and progression of pathology over the eight weeks of the shutdown.

Buffalo Surgery Center keeps patients informed with an app that sends alerts and messages about their care straight to their phones. The center's staff used the platform to inform patients about new COVID-19 testing protocols and the steps the facility has taken to protect them from exposure to the coronavirus — updated information that helps limit costly case cancellations.

The facility had already invested in scheduling software that helps staff manage block times and maintain scheduling efficiencies. "Our technology component has been a big help," says Mr. Uba. "It's been nice to rely on scalable care pathways and digital care navigation to connect with patients and keep our schedule on track."

  • Patient financing. The unemployment rate has hit 15% in the Buffalo area, leading Mr. Uba to assume he'd see a large number of patients who had lost their health insurance or struggle to pay their out-of-pocket expenses on the day of surgery. Surprisingly, that hasn't happened. At least not yet.

"Other facility leaders I've talked to are faced with that issue," he says. "I'm guessing we'll see more of those patients when we get deeper into our backlog. When we do, we're going to have to be flexible in the financial assistance we offer."

The financial hardships caused by the pandemic might require you to help patients pay for needed care. Consider partnering with a healthcare credit card company, which patients can sign up for online before their procedures or in your facility when they arrive for surgery. Financing companies collect upfront costs, pay your facility immediately and work with patients to collect balances. The arrangement lets you collect copays immediately and in full without adding to your accounts receivable. Those are important benefits if you need access to liquid cash over the next few months to make up for the financial hit you took during the shutdown.

Mr. Uba expresses confidence in the abilities of surgery centers to navigate the financial and clinical challenges they're facing because of COVID-19. "They're flexible, nimble and efficient," he says. "Outpatient surgery was made to handle uncertainty like this."

Still, these have been unprecedented times and facility leaders have been tested like never before as they manage their way through the crisis. "It certainly has been an interesting ride," says Mr. Uba. And it's not over yet. OSM

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