Surgeons, he said, are almost completely removed from the costs of operation. He demonstrated with a 2005 study from the Surgical Association in which surgeons were asked about the cost of a procedure that they performed regularly. Out of 150 surgeons, only 8 percent were able to correctly estimate the cost within 50 percent of the actual figure. A 2012 study from the same organization had similar results.
What’s more, said Dr. Hrywnack, this lack of fiscal awareness among surgeons remains constant while the switch from out-of-network to in-network has dramatically changed the income-generating specialties. In 2005, podiatry, orthopedics, neurosurgery, gastroenterology and general surgery made the highest net profits of any surgery specializations. Fast forward to 2012, and these five specializations are now the biggest money losers.
Dr. Hrywnack said that the biggest culprits in terms of driving up OR costs are annual increases for soft good supplies, the cost of living for employees, implants and service contracts on equipment. “It’s simple and straightforward,” he said. “I can’t control my income, but what I can control is my overhead. That way I can stay in business, pay my employees and make a little bit of money.”
To be lean enough to successfully navigate the myriad of changes facing ASC operations, Dr. Hrywanack suggested a regimen he finds effective for controlling costs:
1. Educate your surgeons on the cost of equipment and procedures. When surgeons are aware of costs, they have the knowledge to act accordingly. Don’t assume your surgeons are knowledgeable of equipment costs.
2. Be aware of vendors. Surgeon-vendor deals of which you are unaware may drive up your overhead unnecessarily. Be transparent and upfront about the types of vendor arrangements you will tolerate.
3. Select business partners on which you can rely. Partners keeping the most profitable cases for themselves are not the partners you want in your ASC. Also be aware of those only looking to turn an immediate profit. Re-investment in your ASC is crucial to survival and growth.
4. Don’t be afraid to adjust your surgeons’ preference cards. Give them what they need, not necessarily what they ask for, especially if there is a more economical alternative. “I can’t tell them how to operate,” said Dr. Hrywanack, “but I can tell them what to use.”
5. Ask staff to watch costs. Cutting costs starts with the staff using the equipment. Remember to ask rather than tell, so that physicians, nurses and administrators will be more receptive to money-saving measures.
6. Calculate your fixed costs into case costs, and review case costs frequently. Average numbers for things like electricity and gas, while not exact, are great ways to get working cost estimates. Checking case costs regularly provides the information you need to immediately address any developments that may be causing inefficient operations.
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