Eroding Profits, Compromised Benchmarks
January 1, 2018
Is your profit margin not what it used to be? Has your turnaround time increased? You are not alone. It happens to the best facilities, both hospitals and freestanding surgery centers. The reasons vary, but the leading cause is usually one reason: No one monitors trends.
Hospitals are better at spotting trends than surgery centers, but hospitals employ more personnel that make the task easier. Surgery centers are more cognizant of the numbers but don’t maintain the software or personnel to track these numbers over time.
So, how does one monitor numbers and trends? Over the summer we completed the homework for five hospitals and five surgery centers in different geographic areas. It’s not enough facilities to be considered an accurate portrayal of the industry, but for our internal purposes, it is enough.
The following is what we monitored:
• EBITDA, an accounting term that means Earnings Before Interest, Taxes, Depreciation, and Amortization. We were unable to monitor this for hospital due to software restraints;
• personnel cost per case;
• supply cost per case;
• pre-incision time (time patient in suite to incision time);
• time from one patient out of the surgical suite and new patient into room (to follow cases only with same surgeon).
We studied five years’ worth of data and found enough information to demonstrate some trends. It’s important to note that the hospital software does not roll up the financial picture as easily as ASCs, so we were unable to obtain the EBITDA we were seeking for them.
The actual numbers are not all that important for this illustration since we were not trying to compare the two — just the trends. (See trending charts, below.)
Again, there is the caveat that these results are not very scientific. They are used only to show trends that every facility should monitor (and facilities can add more than we listed here) and to find ways to improve or reverse them. Some results potentially are positive, such as the pre-incision times increase. That could show increased attention to time-outs and vigilance for patient safety. Also, we duplicated like procedure “To Follows” for the turnover time listed.
Trending your facility makes a difference. It can either make you look really good or you will need to spend more time to understand what it all means. As a nurse in both the hospital operating room environment and ASC, I rarely looked at or cared much for the “numbers.” I certainly do now since so much is at stake.
Earnhart & Associates is a consulting firm specializing in all aspects of outpatient surgery development and management. Earnhart & Associates can be reached at 5114 Balcones Woods Drive, Suite 307-203, Austin, TX 78759. Phone: (512) 297-7575. Fax: (512) 233-2979. Email: [email protected] Web: www.earnhart.com.
Is your profit margin not what it used to be? Has your turnaround time increased? You are not alone. It happens to the best facilities, both hospitals and freestanding surgery centers.
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