Today's SurgiCenter - Surgi Business

Benchmarking Your Way to Success

By Caryl A. Serbin, RN, BSN, LHRM

Successful people and successful businesses set goals and work hard to meet or exceed those goals. In an ambulatory surgery center (ASC), this is done by benchmarking important parameters, both clinical and financial, and comparing them within the facility and with outside databases. Only once it has been determined where your facility stands currently can you set realistic goals for improvement.

Most facilities do internal benchmarking as a matter of course (i.e., case costing, insurance reimbursement, performance improvement, etc.). Doing this on a monthly basis allows problems to be pinpointed quickly so that corrective action can be taken. Most of the information needed to compute indicators for internal benchmarking are easily obtained from your ASC software system, accounting records/software, accountant, medical supplier, etc.

• Payroll amounts
• Medical supply costs
• Profit margins
• Overhead expenses ASC software system provides:
• Case information
• Charges
• Adjustments
• Collections

External benchmarking involves comparisons of data from your center to other surgery centers. This comparison of performance processes and outcomes and financial data gives you an idea of how your center is performing overall as compared to other centers your size. Some facilities do external benchmarking by comparing their center to other similar centers using information from an outside source such as Medical Group Management Association (MGMA), Federated Ambulatory Surgery Association (FASA), American Association of Ambulatory Surgery Centers (AAASC) and state ASC organizations ASC management companies may also be able to provide your center with this type of service based on data from the centers they manage.

Demonstrated below are examples of data (indicators) to compare or benchmark. Involve the governing body in deciding which indicators are important to measure in your facility and to assist in setting time periods to evaluate.

• Performance of patient care processes and their outcomes provides your facility’s management team with valuable knowledge to aid in the improvement process. This should be done through the Performance Improvement Committee.
• Performance of patient care processes with up-to-date scientific, clinical and management information available and applicable to the facility’s scope of care. Facility processes and outcomes should be measured utilizing standards of care from applicable organizations such as the Association of periOperative Registered Nurses (AORN) and the American Society of PeriAnesthesia Nurses (ASPAN), as well as community standards of care and recommendations made for improvements as applicable.
• Monthly comparisons of financial data allow management to monitor the facility’s success and/or address problems in a timely manner. Some internal financial indicators that should be addressed include: average charge per case; average reimbursement per case; contractual adjustments; expenses; salaries; medical supplies; contracted services; linen/laundry/ uniforms; office supplies; net collection percentage; overhead percentage; profit percentage; and number of days in accounts receivable.

Although benchmarking your facility’s data is really only a comparison of information, by following the steps below, the benchmarking process becomes measurement, improvement, and results. Consider using your benchmarking processes as performance improvement projects.

• Decide what to benchmark (financial, clinical, management, etc.)
• Select team (a lot of ASC benchmarking is done through the performance improvement committee)

• Collect information (from accounting or ASC software or other source)
• Determine what you are benchmarking against (internal comparisons or externally against another like facility)
• Collect information from source (from software programs or other facility)

• Compare processes/information and identify gaps (i.e., between your past and present information or that achieved by another like facility).
• Identify superior performance characteristics (i.e., are your days in A/R higher/lower than previously?)
• Determine how to close the gap

• Set improvement goals (reduce A/R days by five in three months.)
• Close performance gaps

Step 1: Plan. Determine why Nee, Cap & Associates ASC is showing more of a profit than your ASC with the same number of cases and medical supply costs.

Step 2: Gather information. From your ASC software, run reports that show annual number of cases and your average reimbursement/case. Obtain your medical supply costs from your medical supply invoices or financial reporting software.

Step 3: Analyze data. Compare gathered information and identify the differences (i.e., reimbursements are higher per case).

Step 4: Adapt and improve. As the only difference between your facility and Nee, Cap & Associates ASC in this comparison is reimbursement per case, start by checking and/or correcting the following:

• Determine if your staff is collecting aggressively
• Check to see if your managed care contracts are only paying for one procedure when you are billing multiple procedures — renegotiate
• Check your contracts for capitation of reimbursement — renegotiate
• Determine if your contracts are reimbursing for implants — renegotiate
• Identify substandard managed care fees — renegotiate

This benchmarking process can be successfully utilized in many areas of your ASC to identify problems with your processes and improve them. Setting goals and motivating staff members to work toward those goals is a vital component of successful management. Once begun, benchmarking important parameters for your ASC will become second nature.

Caseload vs. Percent of Net Revenue