Because cataract extraction is the most frequently performed surgical procedure in the US and because revenue for the vast majority of these procedures comes from Medicare and therefore is fixed, it's critical for surgical facilities to understand and control their costs per case. Fortunately, it's not necessary to have a phalanx of CPAs to do this. Because of the nature of this procedure, a straightforward, common sense approach will yield the kind of results needed by the vast majority of surgical facilities.

Understanding costs
Calculating cataract case costs can be relatively simple. Here's how:

First, don't worry about fixed costs, which include things like rent and utilities. Although they certainly have an impact on your bottom line, fixed costs are very difficult to reduce or control.

Instead, focus on variable costs. These include items such as supplies and labor.

I suggest breaking supplies down to four major categories:

• IOLs;
• viscoelastic;
• phaco tubing; and
• the surgical tray

Admittedly, there are many other items used during surgery, but "the big four" should represent 85 percent of total cost per case.

Create these four categories, and then track what you spend in a typical month. Divide each total by the number of cataract cases that month, and you'll have your per-case cost for each supply item. Add these together, and you have your overall per-case cost for cataract supplies.

Next, go back and do this calculation again, broken down by surgeon. Using a typical month (not a month when one or more cataract surgeons is out on vacation), track the cost of IOLs, viscoelastic, phaco tubing and surgical trays for each surgeon. During this calculation, keep your eye out for other high-cost items used at surgeon discretion (e.g. intraoperative medications).

Add these totals together and divide by the number of cases performed by the surgeon to find your total surgeon per-case cost for cataract supplies.

Next, figure a labor cost for staff. This is best done as cost-per-hour of operating the facility. Take a typical surgery day, and add up your total labor cost, including all full-time and part-time patient care staff. You may or may not include your receptionist and business staff; either way, the calculation works as long as you are consistent.

When you have your total labor cost for that typical surgery day, divide it by the number of hours the facility was open. This is your labor cost-per-hour. Apply it as a factor to your per-case cost for cataract supplies.

Once you have these figures, you'll know the answers to the following questions:

• How high are your per-case costs?
• Does any single cost category seem drastically out of line?
• How do your surgeons compare in terms of supply and labor use?

To get the most benefit, repeat the above calculations on a quarterly basis for the past year. Are your costs going up or down? Is there a consistent pattern? Given what's predicted to happen with Medicare reimbursements for cataracts, your costs should be going down.

Reducing your costs
When you know your case costs, you can begin to control them.

In my experience, the single most important aspect of effective cost control is attitude. Surgeons and staff need to embrace innovation and change on a continual basis. They need to have an enthusiasm for cost control and avoid falling into the trap of complacency. You are never through examining ways to control costs, and trying new ideas that will save time, money, or both.

It's not unusual for medical professionals to express dismay at the concept of cost control. They will note that their priority is patient care. My response is that these priorities are not mutually exclusive. You do not make cost control changes that compromise care. You constantly look for ways to control costs, but choose only to make the changes which do not affect or may even improve quality of care.

A second key to cost control is a loose determination of "best practices."

In the past two years I've observed wide disparity in the use of supplies by surgeons. I've encountered per-case supply costs ranging from $90 all the way to $240, with $120 to $140 per eye being the average. It's instructive to look at surgeons on either end of the spectrum.

$90/case