How Can Hospitals Improve Their Bottom Lines in the OR?

The perioperative service line typically comprises up to 65 percent of a hospital's spend. This large percentage of operational budget means there are plenty of opportunities for savings — up to $1 million per operating room per year.

By tightening up their OR management, hospitals can also improve their clinical outcomes, surgeon satisfaction, patient volume and financial performance. Some hospitals are approaching this by streamlining their governance structures and implementing a more innovative approach to perioperative services, that of the surgical home.

Jeff Peters, president and CEO of Surgical Directions and a founding member of the company, says improving OR management can help hospitals make significant progress in value-based purchasing, 30-day readmissions reductions and shorter lengths-of-stay. But an OR overhaul requires a comprehensive restructuring of how hospitals think about both labor and non-labor costs.

One of the first ways to improve OR management is to enhance governance. Co-medical directors — one for anesthesiology and one for surgery — can create a surgical services executive committee, which is then responsible for growing and improving perioperative services. The committee is made of stakeholders and helps health systems establish best-practices for priorities. Committee members can examine market data and existing operations to identify the most sound opportunities for improvement within the hospitals' ORs. In addition, these committees establish daily pre-surgical huddles to identify potential patient complications before they happen, 24 to 72 hours before surgery.

"Our first goal is to help our hospitals cope with the financial and clinical pressures. We want them to make the improvements they need in order to meet their financial targets. Our second goal is help them establish a competitive advantage in the perioperative service line," says Robert Dahl, vice president of Surgical Directions.

A new way some hospitals are managing their perioperative service lines is through establishment of a surgical home. "The surgical home is a very innovative way to organize and deliver care. That patient is followed from admission to even after they're discharged, which is important for complex surgical patients. Complications post-discharge are most often patients with co-morbidities," says Mr. Peters. With post-discharge follow-up, patients have more success in managing their chronic conditions post-surgery, which is effective in reducing 30-day readmission rates.

Financially and clinically, the entire approach can end in better results for the payer. Mr. Peters and Mr. Dahl cite the example of one of , Memorial Hospital in Hollywood, Fla. The safety net hospital was facing difficulty in meeting its financial targets and needed to meet the needs of its patient population while attracting surgeons and a viable mix of payers.

By changing the governance structure and improving OR efficiency, Memorial saw a double-digit improvement in surgical volume within 12 months and added $20 million to its bottom line. 

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