While lower reimbursement for the exact same procedures done at hospitals is a reality for ambulatory surgery centers (ASCs), superior operating efficiency and meticulous accounting make continued sector growth possible. Case costing is one such accounting method, focusing on capturing the costs of supplies used but indirect costs could be rolled in as well.
But corralling of those costs is far from easy.
“Many organizations have a hard time wrapping arms around what it actually costs to deliver care,” explains Stephanie Martin, Regent’s vice president of operations. “But understanding exactly what we use to deliver care to the patients is incredibly critical and enlightening to spend time figuring out. It’s about knowing what’s common for every patient that undergoes the same type of procedure, what isn’t, and what we can do to streamline that while giving patients the absolute best care.”
Martin cites cataract surgery to underscore the reimbursement dilemma and need to get serious about case costing. She says the difference in reimbursement between having cataract replacement surgery in a hospital outpatient department versus an ambulatory surgery center today is startling: A surgery center gets paid about 52 cents for every dollar the hospital gets paid for the same procedure, a practice largely driven by Medicare’s use of different formulas for calculating reimbursement.
To survive and thrive in today’s marketplace, ASCs simply must keep a tight rein on costs.
“One of the things we find incredibly important is to be able to track every item used for a particular patient,” Martin says. “From the booties we put on their feet, to the drugs that go into their IVs, to the back table cover used in the operating room, to the drugs they get to make them more comfortable in the recovery room. Every item gets tracked, and it gets tracked for each patient. And then we remove the patient’s identifiers for reporting according to the type of procedure.” And provide comparisons to the surgeons to help them better understand the expenses as well.
Martin says items like overhead and staffing and less direct supplies used like piped-in oxygen are more difficult to track but are included as a percentage based on surgical time to understand the overall costs.
One key benefit of case costing is negotiating power: knowing what and how many items are actually being used for a procedure puts the ASC in a stronger position to drive better pricing. According to Martin, case costing often brings cost-saving ideas to light. It also provides an educational component for staff to know what items they use cost.
Within Regent’s network, ASCs adopt a number of best practices for case costing, including keeping physicians’ preference cards up to date and in the system and revising them based on actual data at least every six months, especially for high-volume, high-dollar procedures. Second, Regent urges ASCs to ensure that every case is being reviewed and tracked.
“For the most common procedures, that review is fairly simple. For the more complex procedures, we need to make sure we capture things like the implants and it takes a little bit longer to ensure that preference card is up to date,” Martin says. “But it is critical. It doesn’t take long to lose track and overspend.”
“The third critical piece of this is running those reports and sharing them with the staff to help underscore that there’s real impact in the information they’re putting in the system, and how it makes such a difference to what we do. Like anything else, people want to know how it ends – we’re better, more profitable, and even delivering a higher quality of care.”