The first step to containing operating room costs is simple: Make cost containment a top priority.
“Make it something the entire facility wants to attain,” says Jennifer Butterfield, RN, CNOR, CASC, administrator at Lakes Surgery Center in West Bloomfield, MI.
Butterfield offers the following tips on how ASCs can make cost containment a top priority:
1. Make everyone accountable.
Cost containment goals can be built into employees’ performance improvement goals, annual merit pay, and bonuses, Butterfield says.
“Make sure employees don’t spend if they don’t have to, avoiding costs and reducing costs,” she says.
“We have benchmarks in place so the cost containment and eliminating expense reduction initiatives are part of their annual merit and bonus pay,” she says. “Each individual person has a few goals in their department that are aligned with cost containment.”
2. Know your expenses.
“The two highest costs are staffing and supplies,” Butterfield says. “For staffing, we pick productivity initiatives, and there might be 50 initiatives for which to set goals for staff.”
For example, an initiative involving payroll would be to ensure everyone is punching in on time and not rounding up, she notes.
Or there might be an initiative to create a morning huddle. People can plan their day, and the leadership team can make sure each case is staffed adequately and efficiently, she says.
Another staffing strategy is to stagger start times. If there are late cases, then an ASC can bring in some staff at 9 a.m., instead of 7 a.m. This will prevent overtime pay when employees have to stay until 5 p.m., she suggests.
3. Make staff aware of costs.
“Staff has to be aware of costs, and having a culture of being aware of costs is important,” Butterfield says. “One way to avoid cost is to have knowledge.”
For example, if a sales rep meets with staff to sell a name-brand stainless steel pin for orthopedic and other surgical procedures, the staff should know the cost is almost three times the off-brand version that the facility has stocked, she explains.
“The job of the OR staff in the room is to keep costs in check by saying, ‘We’re not opening your product. We have our own,’” Butterfield says.
The same is true for surgeons. “Surgeons focus on patients; the sales rep’s job is to talk the physician into that special magic wand,” she says. “They see what the physician is struggling with, and their job is to say, ‘I have this item that would be perfect for you to use where you’re struggling.’”
When that happens, a nurse or tech in the operating room should be empowered to say, “We’re not going to use that special magic wand because this one we’re using works just as well,” Butterfield says.
One way to empower staff to speak out is to teach them how to do so. For instance, they could ask sales reps how much the item costs.
“That puts sales reps on the spot,” she says. “And then, they can say, ‘Did the materials manager approve that?’”
It’s not that an ASC cannot use the latest and greatest product, but sales reps should at least be made aware that there isn’t an open checkbook when they visit the facility, Butterfield says.
4. Include physicians in purchasing decisions.
Most ASCs have group purchasing organizations (GPOs) that help reduce the cost of standard products, but their cost containment is less effective with the more expensive items, such as implants, Butterfield notes.
“The way to avoid high costs in implants is to develop a program where you get physicians together to talk about what types of implants they want to use and the type of volume they think they’ll have,” she suggests. “Then you can develop a contract with the vendor of that implant.”
The decision could include a physician, administrator, and a materials/business office manager.
The key is to know the ASC’s volume and types of surgeries. And ASCs should negotiate with different vendors. It can be cheaper to negotiate a price with one vendor than to use multiple vendors in buying similar items, she adds.
5. Hire a materials manager.
“There’s a huge cost savings in having a materials manager,” Butterfield says. “They can pay for themselves, and their only job is to manage all the products that come into the facility.”
Small surgery centers sometimes make the mistake of placing a nurse or scrub tech in charge of ordering products, wearing a different hat after 1:30 p.m., she says.
“But those people are basically paying retail for products because they’re not sophisticated enough in purchasing to make sure they have contracts,” she adds. “It’s not their full-time job to look at materials, look at shipping to make sure you’re not spending extra for overnight shipping.”
Without a materials manager, an ASC could end up with too much inventory on the shelves. Also, surgeons are more susceptible to sales pitches without a gatekeeper.
“The materials manager is the gatekeeper to having that vendor come in and say the doctor said we’re going to use this product today,” Butterfield explains. “The materials manager can say, ‘I know the doctor said that, but you have to go through me, and we need to do a pre-cost verification.”
6. Predict case-by-case costs.
The materials manager, the revenue cycle coordinator, and the administrator complete a form with cost and reimbursement information about a case. Based on the CPT code, the patient’s insurance, and the requested items to be used in the case, the materials manager estimates the cost of the case, Butterfield says.
Then, the materials manager hands the estimate to the administrator, who determines whether the ASC can afford to take the case, she adds.
“A lot of times, I’ll say, ‘Go see if you can do it with a different implant,’” she says. “We know there are certain payers who don’t pay well on certain things, and we’re not here to take cases that don’t make any money.”
Not every case is red-flagged for scrutiny.
“We look at specific procedures that we know were based on historical data that you have to watch the margin on, and orthopedics is one because the implants are expensive,” Butterfield says. “We also look at procedures where there are multiple things happening that might require [costly] disposables.”
7. Regularly review custom packs.
Specialty packs should be reviewed every six months or once a year because habits change over time, Butterfield suggests.
“Make sure staff is not wasting items in the specialty pack,” she says. “Make sure what we’re putting in those packs is being used and not put aside. We tell staff to put anything they don’t use in the pack into a box.”
Regularly, someone checks the box to see what hasn’t been used, and then these items can be taken out of the packs, she adds.
“A while ago, we found out that we were not using these towels,” Butterfield explains. “On the very first case, they do a five-minute scrub, but after that they use an alcohol-based product for their second scrub of the day, so they only need the towel for the first scrub of the day.”
A cost-effective solution was to take towels out of the packs and make towels available separately, so they could be pulled out only when they were going to be used.
That saved six cents per pack on 6,000 cases a year, she notes.
8. Use trial periods with new products.
Surgeons’ gowns are important for comfort and other reasons, including movability, heat, and whether the gown withstands water.
When a surgery center wants to change to a new product for cost-cutting reasons, they can give the gowns or other product to staff to try and ask for their feedback, Butterfield says.
“We let them know there will be a three-week trial period, and then we get their feedback on whether they liked the gown or experienced breakthrough or felt overly warm.”
9. Ask management for productivity initiative advice.
“Management has to pick different productivity initiatives,” Butterfield says. “Make sure each department picks out an initiative from time clocks to a huddle to staggering start times to cross-training. They need to pick a few, master those, and then take another.”
The first step to containing operating room costs is simple: Make cost containment a top priority.
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