Solutions for a Healthy Bottom Line

Solutions for a Healthy Bottom Line
Improving Business and Clinical Operations

By Kathy Dix, Kris Ellis, and Jennifer Schraag

Reducing costs to an optimal level across all aspects of a facility’s operations may have a significant cumulative effect on the bottom line. Attention to big-picture issues as well as minute details can pay off in this respect. Successfully addressing cost inefficiencies while maintaining optimal conditions for patient safety can be advantageous for any ambulatory surgery center (ASC).

Susan R. Kizirian, RN, MBA, vice president of operations at Ambulatory Surgical Centers of America (ASCOA), identifies case costing as a common cost reduction strategy, but notes that it is rarely implemented effectively. “Case costing is the process whereby a list of disposable medical supplies, implants, prosthetics, and pharmaceuticals used for the patient from admission to discharge is collected,” she says. “The data is then reviewed and analyzed for the appropriateness of each item. The cost of each case is then compared to the same procedure performed within the facility and ultimately against some external benchmark.”

Kizirian explains that this strategy allows the ASC to examine its purchasing processes in conjunction with its supply utilization processes periodically and thoroughly. “If case costing is actively embraced as a continuous learning and improvement process to select supplies, implants, prosthetics, and pharmaceuticals that are optimal for each procedure and patient, it is a win for the patient, a win for the surgeon, and a win for the facility’s cost containment efforts.”

Carrie Dickerson, senior vice president of operations design at Nueterra Healthcare, notes her organization’s supply value analysis is a useful cost reduction tool. “We take the highest supply dollar amounts and review those for very specific things,” she says. “Are we paying the correct price? Are they on our group purchasing organization (GPO) contract? Are there generic or alternative items that can be used that would reduce the cost? If there are, are those items comparable in quality, and if so, are they acceptable to the physicians? We go through that on every item.”

Making the effort to negotiate favorable contracts with distributors, manufacturers, or a GPO can be key in cutting costs, according to Karen Cox, RN, BSN, director of clinical operations at Regent Surgical Health. “When you have negotiated the cost and you know what the price would be, you use the materials management portion of your software, and when anything comes in, do a quick check to make sure that you’re actually getting that pricing,” she says. “You’d be surprised at how many deals are negotiated but the prices are never inputted and never checked, and they’re incorrect.”

Kizirian notes that there are many organizations that will assist ASCs in assessing lower prices for the products and services they use. “The dilemma ASCs face is the complexity of the GPO and utilizing the processes and ever-changing data from the GPO effectively. Tracking the discounted price that was billed is tedious, and information systems often do not interface (or the cost is prohibitive to interface) to track and trend this data. Ultimately, GPOs will reduce the cost of disposable medical supplies, pharmaceuticals, equipment, and instrumentation. To what level that reduction will occur depends on the savvy of the ASC using their particular GPO’s services and the service the GPO provides to assure that the ASC is getting optimal pricing and accurate invoicing.”

In addition to cost-effective supply procurement, efficient use and conservation of supplies may also be a key strategy. “In surgical suites, our OR (operating room) staff members do not open any surgical supplies until the surgeon actually needs or asks for it,” says Ann S. Deters, MBA, CPA, chief executive officer of SevenD and Associates LLC. “This has allowed us to recognize significant savings in supply costs per case.” Also, Deters notes that surgeons frequently don’t use all of the items listed on preference cards.

Informing staff about supply costs and getting them on board with cost savings efforts may prove beneficial. “Get them involved with various processes that allow your staff to become better educated on particular costs incurred at a surgery center,” Deters suggests. “For example, we involve all our staff in quarterly inventory counts. This highlights for them the excess items and allows them the opportunity to ask questions about particular inventory items, i.e., what are the costs, why do we have so many quantities in stock, etc. In some facilities, our staff posts unit costs on each inventory item in order to educate the staff and the surgeons on the costs incurred in each and every case.”

“Schedule compression is another common strategy that is seldom well-utilized,” Kizirian says. “Schedule compression views a certain portion of wages and benefits expense as variable.” Given that wages and benefits often account for up to one-fifth to one-third of an ASC’s expense budget, Kizirian suggests this is a wise strategy to embrace for those with bottom line responsibilities. “This strategy embraces a core staff to provide services for a fixed number of cases, and then a peripheral staff to provide additional services for a variable number of cases. Additionally, the schedule compression calls for reallocating surgeon OR time based on utilization by the surgeon. The schedule is then ‘compressed;’ only running the necessary number of ORs for the optimal number of hours with a smooth flowing schedule of ‘to-follow’ cases. Surgeons have to be flexible in reallocating their office hours. There is virtually no impact on safety or quality. It is just a smart use of the ASC’s resources.”

Cox explains that effective scheduling requires working closely with surgeon partners and schedulers. “You try to give as much block time as you can and fill that block time up,” she says. “At your physicians’ staff meetings, always let them know if the ASC could be more efficient if somebody moved their block time up, for example. Your physician investors are concerned about money matters as well; they’d like to have a bigger return on their investment, and as managers of surgery centers, we try to let them know how they can be more helpful in that and you’d be surprised at how many of them listen and do try to become good, productive partners in an efficient manner.” 

In terms of staffing, Dickerson notes that productivity value analysis can help to identify cost containment opportunities. In this case, overall productivity measures are applied to the OR, pre-op, and the post anesthesia care unit (PACU), from a clinical standpoint. “We also take it a step further and look at each case that we do to see what staff we have in the room, and if those staff members are required throughout the case or only through part of the case,” she says. “Then we look at the fluctuations among physicians within the same procedure. For example, if you have a knee scope, one might require two scrub techs and a circulator, while another one requires one circulator, one scrub tech, and another scrub tech for 15 minutes of the case. Then we look at what creates the variances and if it’s an education and training event.”

Cox points out that staffing should be dependent on the case schedule. “When patients are there, that’s when you need your staff there,” she says. “That’s particularly true on the clinical side; when the patients are not there, you don’t need your staff there. It then becomes a balance of how to keep your good staff there and giving them the number of hours that they need.”

For new staff members, flexibility is vital. “They need to get out of the mindset that this is shift work,” Cox continues. “You might work from 7 a.m. to 3 p.m. on Monday, 7 a.m. to 5 p.m. on Tuesday, 10 a.m. to 2 p.m. on Wednesday, so find out what their flexibility is and explain to them that you’re going to get them as many hours as possible, but it’s just not going to be eight, 10, 12 hours like you’re used to getting at a time. The second part of that is many surgery centers rely on their per diem people; quite a few surgery centers live and die by their per diem people. This seems to be a trend across the country that I’ve seen — many nurses don’t want full-time work, but they want to work while the kids are at school, a few hours during this day, more hours during another day, and we take advantage of that and appreciate the hours that they do give us. A lot of planning goes into that; after a while you get to know what your general schedule is, what your heavy days are, what your light days are, and your staff gets used to that as well to some extent.”

A registered nurse (RN) who can work in pre-op, the OR, and PACU is also a valuable asset to the ASC, Kizirian notes. “During the course of any work day, the need for skills in these areas experiences many ‘peaks and valleys’ based on patient needs. If the RN can cross over and work in multiple areas during the peak periods, this eliminates the need to bring in additional staff. For instance, an RN who can admit the patients in the morning and then work in PACU or relieve the OR for lunch prior to the end of her early shift would eliminate the need to bring in additional staff to cover these time periods.”

“From a productivity standpoint, we usually look at pre-op and PACU, and stage 2 recovery, or step-down, in terms of areas that staff can normally cross-train fairly efficiently in,” Dickerson says. “With the OR, we find that this is a fairly specialized area, which makes cross-training difficult, but our OR staff members do train in materials management and sterilization.”

Interviewing a potential staff member who has experience in multiple environments, such as the OR and recovery area, is always a plus, Cox adds. “If everybody came to your facility with those credentials, you would be ecstatic. Some of the other cross-training, maybe you’ve got a top surgical technician who’s also into materials management; they can be the person who orders stock and supplies. Maybe you have a sterile processing technician who also has a background in surgical technology, and they can be there for an extra pair of hands.”

Cross-training of the business staff can also provide cost advantages. “An ASC is usually a small business,” Kizirian says. “Having the business office staff cross-train for patient registration, patient scheduling, insurance follow- up, reception, and medical records tasks is vital. During vacation periods and episodic turnover, the essential work continues and critical knowledge and skills are retained.”

Kizirian points out that other opportunities to minimize cost may exist on the business front as well. “Outsourcing transcription or the use of template-driven operating reports is a simple change that can lower wages and salaries (transcription) or outsourcing (template-driven operating report),” she says. “There is a myriad of transcription services available, and template-driven operating reports can be quickly created and used at any computer workstation containing MS Word or MS Excel or their counterparts.”

OR Efficiency

OR efficiency is an important path to generating more revenue. The more cases a center performs, the more money it will bring in. Recent research has found many facets that can enhance efficiency. They include process design, effective communication, parallel processing, and fast-tracking.

OR turnover time and daily caseload can be improved by simply analyzing the routine tasks of the OR team and minimizing inefficiencies.¹ In a study conducted at the University of Florida, the assigned tasks and work flow patterns of the OR team during operations and OR turnover were studied and changes were implemented where inefficiencies were observed. The changes decreased OR turnover times (from 43.7 minutes to 27.7 minutes), and resulted in an increased number of cases completed per day among four different surgeons (from 1.78 to 2.34).

Problems in communication and information flow, and workload and competing tasks also have a measurable negative impact on team performance as well as patient safety, according to researchers at Brigham and Women’s Hospital in Boston.² In researching OR communication patterns, researchers found that automating certain aspects of preparing patients for surgery and surgical equipment management has the potential to decrease interruptions to clinicians and diminish the possibility of adverse events in the clinical setting.³

Parallel processing is an interesting concept. A study conducted at Massachusetts General Hospital researched the use of parallel processing in an attempt to increase caseloads in ambulatory ORs.⁴ The researchers explain that in most OR settings, patients move through their operative day in a linear fashion — beginning at registration and finishing in the recovery room. Given this pattern, only one patient may occupy the efforts of the OR team at a given time. By processing patients in a parallel fashion, the researchers say OR efficiency and patient throughput can be increased while costs remain stable.

In this particular study, patients undergoing hernia repairs under local anesthesia with intravenous (IV) sedation were divided into two groups – one received their local anesthesia in the OR at the start of the surgery, the other in the induction room while the OR was being cleaned and set up.

The turnover time and the induction time proved significantly shorter for the experimental group resulting in a cumulative reduction in time that was sufficient enough to allow the addition of new operative cases.

“This study demonstrates a system of increasing OR efficiency by changing patient flow rather than simply working to streamline existing steps,” the researchers wrote.

In a similar German study, researchers concluded that the use of parallel processing “increases productivity and profit despite the expense of additional staff.”⁵ The researchers found that the time of care of regularly scheduled cases was shortened and the number of cases performed within OR block time increased (151 to 184 cases). Nonsurgical time decreased (1:08 to 0:57), turnover time decreased (0:38 to 0:25), and anesthesia control time plus turnover time decreased (0:43 to 0:28).

Deliberate OR and perioperative process redesign improves turnover times and facilitates the execution of the processing mentioned above.⁶ During one Harvard study, researchers constructed a three-room suite which included an OR, an induction room, and an early recovery area. All nonsurgical activities were moved from the OR to the supporting spaces.

Performance improvement was achieved from relocating and reorganizing the nonoperative activities. Moreover, all components of nonoperative time were meaningfully reduced in this study and nonoperative time was lowered from 67 minutes to 38 minutes. Operative time also decreased by approximately 5 percent. This project involved additional costs, but the researchers conclude that the additional revenue generated by the ability to do more cases balances those costs.

Robert Goldstein, MD, a practicing board-certified anesthesiologist and executive vice president and chief medical officer of Somnia Inc., says parallel processing is beneficial, but advises it should only be used in the delivery of regional anesthesia. “We find it’s a great help for a number of reasons. Those blocks can take up to 15 minutes to complete, depending on the patient and the situation. The utilization of OR time for that can pose many significant hurdles.

“From a cost standpoint, there is certainly an expense factor for having a patient in an OR 15 minutes longer, a half an hour longer, however much longer it would be. Regional anesthesia technique is intended to be a long duration process, so if the patient has a numbed leg because you put the block in in the holding area before surgery and there was a delay of them getting into the OR for a half an hour that would be acceptable.

Now on the flip side if you said to me why not use this induction room to put them under general anesthesia, roll them into the OR intubated, I would say that that is a whole different animal. You are exposing a patient to an extended period of anesthesia when there is no upside to it. With general anesthesia that exposure, in my opinion, is an unnecessary risk and there is no reward for it. The cost savings vs. the exposure to the patient is not reasonable.”

Bypassing the PACU, or fast-tracking (FT), is another avenue that is fast becoming commonplace. FT has been accepted as cost effective and safe — providing adequate patient selection.⁷

In a study involving 207 patients, anesthesia was induced and maintained with a standardized technique.⁸ At the end of surgery, patients were randomly assigned to either a routine or FT group. Patients in the FT group were transferred from the OR to the day surgical unit (DSU) (i.e., bypassing the PACU) if they achieved the FT criteria. All other patients were transferred to the PACU and then to the DSU. Overall time from end of anesthesia to discharge home was significantly decreased in the FT group. However, overall patient care hours and costs remained similar in the two recovery groups.

“There are definitely upsides to the concept of fast tracking,” says Goldstein. “If a patient has met the criteria (i.e. scoring high enough on the Aldrete scoring system) to bypass the recovery room, then in my opinion it is a waste of resources for a patient to be in a recovery room when they don’t need to be in a recovery room.”

“Nurse to patient ratio is lower in the FT room than in the recovery rooms, thus further decreasing the wasting of resources,” he points out, “and FT makes the center more proficient and able to see more patients.”

Anita Lambert-Gale, vice president of clinical operations, and John Snyders, vice president of business operations, with Nashville, Tenn.-based HealthMark Partners share some best practices for effective OR scheduling in an ASC. They recommend scheduling the more predictable, shorter OR time cases in the early morning because this practice will aid in keeping the OR schedule running more on time. “Cases requiring long PACU times should be done in the morning so these cases don’t unnecessarily keep PACU staff at the center into the evening on overtime,” they observe, and “schedule the pediatric cases in the morning,” they add.

Lambert-Gale and Snyders also say scheduling vertically, not linearly, provides more efficiency, and they point out that opening six ORs to accommodate six 7 a.m. requested surgery times is not efficient for the center if the rooms will be severely underutilized later in the day.

Other strategies for effective scheduling include monitoring closely the actual time a surgeon uses for various procedures. This will help in more accurately booking OR time for that surgeon and streamlining OR activities. Guidelines concerning block times should be developed and upheld center-wide. Lambert- Gale and Snyders advise the guidelines be developed quarterly, by the board, and block time review and reallocation should be based on a calculated utilization percentage.

Block time release guidelines can also prove imperative. The release should be far enough out so that the center can still benefit from other physicians scheduling into the released time, Lambert-Gale and Snyders point out. “In one facility the partners with the morning blocks blocked their cases from the end time up,” they share. “With this practice, if the surgeon does not fill the block fully, other surgeons are offered the start time of the day. This practice helps alleviate the slow down in the middle of the day.”

One University of Iowa study explains further; noting that the timing of releasing OR time isn’t as important as other contributing factors. The researchers examined the implications of releasing allocated, but unfilled OR time to maximize OR efficiency.9 “We found that postponing the decision of which service gets the new case until early the day before surgery reduces over utilized OR time by less than 15 minutes per OR, per day,” Franklin Dexter, the study’s lead researcher writes. “These results show that when OR time is released has a negligible effect on OR efficiency. What matters much more is having the correct OR allocations and, if OR time needs to be released, making that decision based on the scheduled workload.”

Other common problems encircling effective scheduling of the OR include unutilized block time or gaps in scheduling that create staff down time, physicians believing their required OR time per procedure is significantly less than it actually is, everyone wanting a 7 a.m. start time, and scheduling procedures at the same time that require the same equipment.

Lambert-Gale and Snyders offer the following tips to increase smooth operations:

• Work on maintaining strong relationships and communication between ASC and physician office schedulers. Consider inviting the scheduler or office managers to a lunch meeting where issues can be discussed and relationships may be built 
• Keep physician office schedulers updated on the ASC policies, provide an annual appreciation lunch, and invite them to the ASC • Make sure your OR manager and surgery scheduler are communicating and respecting each other 
• Cross-train employees to help with room turnovers and create an environment where team work is expected and appreciated 

When implementing any changes in an attempt to drive efficiency, Goldstein warns that patient safety must remain the first thing that is being addressed. “As long as patient safety is the first topic, efficiency and cost savings will be appropriately addressed.”

Improving Clinical Operations

Improving clinical operations can overlap with improving business operations in an ASC. The same processes that are valuable on the business side — valuation, accreditation, benchmarking, and education — can reveal performance improvement areas on the clinical side.

Christy Cox, RN, administrator of the Institute for Outpatient Surgery LLC in Columbia, Mo., comments first on education, saying, “First of all, education in the medical field changes all the time, so you have to have your staff not only reinforcing the basic-type clinical practices and standards but also looking at the new technologies out there, and you need to provide staff and physicians the tools to deal with those new processes.”

The ASC is a joint venture with physician owners, University of Missouri Healthcare, and Nueterra Healthcare.

Accreditation, Cox says, is also critical to improving clinical aspects of the center. “We were Joint Commission-accredited last year, and it has brought so many people more on board for the patient safety issue. So much of becoming accredited is relative to patient safety, to the outcomes any ASC wants to have. We did so much work getting ready to become accredited. To watch the staff in action, and seeing the physicians greeting patients and marking the site, hearing the ‘time out’ and all the related processes that we use here, including fire hazard vulnerability for each patient, is inspiring. I’m an RN, but since I’ve become an administrator, I’m not as directly involved with clinical as I used to be. Seeing this process, you think, ‘Wow, accreditation is a great thing,’ because ultimately, with all these processes — some of which we were doing before — we now have documentation that each room is doing this. It clarifies to the staff and physician and our patients that we do care about the safety issues.”

Cox notes that “improvement” is something that never ends — their current improvements focus on medication management. “We are making sure there’s a continuum of communications regarding all patient issues, but with a real focus on medication management,” she attests. “That’s one of the national patient safety goals with JCAHO this year, so seeing everybody getting involved, and getting all the input from all the staff, that has been a process the staff has welcomed here. Sometimes, you can get a little resistance – ‘Oooh, accreditation time,’ — but we have lots of people involved in doing the periodic performance review (PPR), and it’s exciting to see that people are into this. We do feel we’re the best around, and we’re not only going to maintain that, but also continue to make improvements. If issues arise, we’re going to pick them apart and do investigations so that it can be better for the next patient who comes along.”

Nurses at the center must maintain certain competencies that may not be required by all the accrediting bodies. They are rotated through all areas of the multi-specialty facility; they are also required to have basic advanced life support (ALS) skills. All the RNs must be certified in advanced cardiac life support (ACLS), and because the center also serves a large volume of pediatric patients, the nurses are currently being rotated into certification for pediatric advanced life support (PALS) as well.

Benchmarking is done in conjunction with Nueterra Healthcare, the facility’s management company. “We also are a member of Surgical Outcomes Information Exchange (SOIX), which is clinical-based, and that’s on a nationwide basis,” Cox adds. “I just got my last report — we were looking at post-op stay regarding length of time, because we’ve set our benchmark to be less than four hours. Of course we look at different particular cases; we’re viewing knee scopes, cataract removals, and tonsils with and without adenoid removal.”

Other factors measured include delays in discharge, complications, returns to surgery, admissions to hospital, and pain episodes not relieved with some kind of action. Of course, postoperative infections are also monitored; each physician has monthly reporting of all patients and the complications they experienced. “Last year, we did 7,240 cases, and our percent for actual post-op infection was 0.01 percent,” she observes.

Finally, Cox says, are physician proctor reviews. “When there is a reappointment for a physician — which comes up every two years — we do a thorough quality review, which includes the cases and allows us to see — before I go to the CQI members for reappointment — if there are any trendings going on that we need to address. That does help us improve or change anything should we need to change anything to improve a process. Of course, for every variance or incident report completed here, the person who discovers whatever needs to be addressed, it’s given to the director of nurses, and she does the investigation whether it’s in conjunction with other staff members or a physician. It comes to me, and is also shared with Nueterra’s risk manager on staff. Those things are all items that need to be there; we’re all human, and everyone is capable of making a mistake. We want to know, and to put any processes in place that we might need to.”

Another improvement may be seen by simply adding a short preliminary ASC visit by the patient. A study in the journal Anesthesiology analyzed the effect of preoperative clinic visits on OR cancellations and delays; the authors found that a visit to an anesthesia preoperative medicine clinic (APMC) could significantly impact case cancellations and delays on the day of surgery. ¹⁰

Medibis® provides data analysis services to ASCs; a recent product release can assist ambulatory facilities in their clinical benchmarking. “The clinical benchmarking data cube, and the data that is tied with that piece, is taken directly from the respective information systems used in the surgery centers,” says Tyler D. Strain, vice president of business development for Medibis. “It’s unique in the sense that the other benchmarking surveys or initiatives are survey-driven, meaning that the data is dependent on somebody at the other end who has to enter the data into a survey format. With Medibis, we take the data directly from the information system, so it’s clean, good data, not relying on somebody to fill out a survey tool, so there’s tremendous value there, in the fact that the data has been validated, it’s directly at the source system, and it’s what the individuals are using on a daily basis.”

The clinical cube measures many factors related to the clinical side of the facility, adds Amy Hotwagner, manager of the Medibis surgery center solution division. “They can see data by patient age; how long the geriatric patients in, and pediatric patients; surgery time; total time in the ASC; recovery time; anesthesia time; staff counts and staff time,” says Hotwagner.

One particularly intriguing measurement is staff time spent on each case. “We have seen facilities that are running 6.2 average staff hours per case but with only three people, whereas someone else may have fewer hours but more people,” she adds. “The next generation of this cube will have clinical indicators, complications, and complaints. What we see is that very few of our facilities are actually putting that information in their source systems. We can benchmark across patient age, across specialties, across CPT codes, anesthesia, and ASA status.”

The clinical cube is client-driven, Strain observes. “It’s based on the client needs; as more clients see it and spend time with it, they’ll come up with other ways to do clinical benchmarking,” he says.

M. Shane Foreman, president of Chicago, Ill.-based 3D Health Inc., notes that certain “red flags” are particularly important in both clinical and business operations. “Monitor the critical operating and performance indicators on a monthly basis — overall trend in case volume, changes in case mix, percentage of on time starts, OR turnover time, net revenue per case trend, variable expense per case trend, trend in fixed operating expenses, and overall profitability,” he says. Also, “Monitor patient and practicing physician satisfaction on an ongoing basis — either monthly or quarterly. Move the center overhead to within industry benchmarks — focus on reaching 75th percentile performance,” adds Foreman.

When change is anticipated, give employees a forewarning. “From the staff perspective, there can be a lot of fear of the unknown. Open communication and feedback venues can help address these fears,” he says. But keep in mind that implementation may not have immediate results, and goal-setting should take this into account. “Sometimes, the physicians expect rapid improvement that takes time to demonstrate and measure results. Clearly articulating and setting realistic goals is important to set expectations and timelines.”

Ergonomic Considerations

There is another way to improve clinical operations — by keeping the staff healthy, uninjured, and fully able to perform their job duties. PHS West Inc., provides an ergonomic risk assessment report that can help identify recognized workplace hazards; it also provides control strategies to reduce the risk of injury to the employees performing those tasks. Acute injury is one concern; however, a minor injury that continues recurring because of unresolved ergonomic issues can eventually result in long-term, irreversible damage.

By identifying some common risk factors, the PHS West service can provide a commonsense and cost-effective engineering control to reduce the risks of employee injury related to push/pull force. In addition, a cost analysis is provided to indicate the cost savings created by reducing the number of staff members required to safely transport. PHS West provides carts and drive systems to make transport of both patients and equipment within the ASC easier.

For example, employees may push or pull two carts weighing 550 pounds, fully loaded with equipment, eight times each week. The average distance per round trip is 1,200 feet. Sometimes, the employee duplicates the stressors within one hour with a return trip. During transport, the employee must push the cart on carpeted hallways, negotiate steering control on straight run and cornering, maneuver over elevator/doorway thresholds, move up and down ramps, and frequently stop and start. Awkward postures such as twisting, turning, and improper body mechanics are being used to maintain operational control, movement, and braking of the cart.

Upon evaluation, these various movements are thought to increase the employee’s risk of injury. The solution is to train the employee in workplace hazards and in the risks of material handling tasks, add more staff members, or take more trips with lighter loads. The engineering solution, however, is to utilize a motorized cart or drive system, which can be retrofitted to an existing cart. 

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