Want to save a million dollars? You're halfway there with these changes
Standardization, streamlining, better pricing are key to cataract savings
In this time of low reimbursement, saving money may at times be the only way to make money. With that caveat in mind, same-day surgery managers have revamped their cataract procedures, with one hospital-based program saving more than $500,000 a year.
At St. Joseph's Hospital of Atlanta, eliminating pre-op testing, standardizing drugs, and improving utilization of the OR did even more than add half a million dollars to the bottom line. The changes made the physicians happy and reversed a decline in cataract case volume, which now stands at about 1,200 cases per year, says Penny Dykstra, RN, director of emergency, observation, and outpatient surgical services and co-director of continuum of care services.
"There was surgeon dissatisfaction, and there was some lack of hospital responsiveness to their concerns," says Dykstra. "We had the potential to lose physician loyalty."
Instead, the Cataract Project made St. Joseph's competitive again. In 1995, the quality improvement project received a certificate of merit from the Society for Ambulatory Care Professionals in Chicago.
Other same-day surgery managers have improved their cataract profitability by analyzing -- and reducing -- their cost per case and turnaround time.
Some same-day surgery programs are actually losing money on cataracts, says Steve Earnhart, MS, president and CEO of Earnhart and Associates, a Dallas-based consulting firm that specializes in same-day surgery. With standardizing supplies and asking vendors to provide better pricing, those same programs could be profitable, Earnhart maintains.
"A lot of the hospitals and surgery centers that don't do a great deal of volume don't know how to bring their cost per case down," he says. "They fall into the trap of thinking they don't have enough volume to get the best prices. But they can if they try."
Here are some ways same-day surgery managers have curbed costs and improved efficiency and profitability in cataract surgery:
* Eliminated pre-op testing. Savings: $250,000.
Before implementing its cataract redesign, St. Joseph's required all cataract patients to come in for pre-op testing. "The [patient] population is older, so they have some health problems that would throw them into having lots of workup," says Dykstra.
The patients would be referred to a physician to check on abnormal EKGs or blood tests. Yet, when anesthesiologists conducted a retrospective study of 100 cataract patients, they found that none had his or her surgery canceled because of abnormal test results.
Meanwhile, St. Joseph's received no additional reimbursement from Medicare to cover the extensive testing because it was within 72 hours of the procedure, she says.
Now, a determination about testing is based on patient history rather than patient age, Dykstra says. For example, a patient on a diuretic medication would need his or her potassium level tested within a week of surgery, she says. That test could take place in the physician's office, Dykstra says.
"A critical factor is education of physicians, whether it's an internist or surgeon, about pre-op lab work," she says. "They know we're not going to be ordering routine labs so they have to get it if they want it."
Elimination of pre-op testing has had no adverse effect on patient outcomes, according to a St. Joseph's outcomes assessment.
* Made timely pre-op phone calls. Savings: $875 per patient who would otherwise cancel surgery.
El Camino Surgery Center in Mountain View, CA, had a day-of-surgery cancellation rate of 2% for cataract patients. While that figure seems low, it was still costly for the center, which performs about 1,700 cataract cases a year.
Each case that was cancelled at the last minute cost the surgery center $875 in opened but unused supplies, lost revenue, and labor, says Pam Aggerbeck, RN, ophthalmology team leader.
Last-minute cancellations
One culprit: nurses were finding out too late that patients were not suitable for cataract surgery because of complicating health problems, Aggerbeck says. "Sometimes we didn't find out a patient was unsuitable until we opened the pack and had the room totally set up," she says.
El Camino revised its preanesthesia checklist and moved pre-op calls from the day before surgery to three days before surgery.
"Before you really get involved in the process of doing a history and physical and taking them into pre-op, you can get ahold of the internist and find out that this is really a suitable patient," she says.
For example, some heart patients may be able to proceed with cataract surgery. Others may need further tests, or the surgery center may need to cancel the surgery, she says. The canceled patients are then rescheduled for surgery at the nearby El Camino Hospital, where they can receive care appropriate to their condition, Aggerbeck says.
* Standardized anesthetic agents and medications. Savings: $54,000.
The method of administering anesthetic eye blocks before surgery once varied. Sometimes, the ophthalmologist administered it in the OR. Other times, an anesthesiologist administered the block in a pre-op holding area.
All eye blocks are now performed by anesthesiologists before the patient is brought into the OR, Dykstra says. The anesthesiologists arranged a trial of medications used for sedation and agreed to standardize with one medication that they would all use, she says.
Meanwhile, pharmacists identified less costly alternatives to eye drops used in the procedure, and ophthalmologists agreed to standardize. A prepackaged drug kit, created by the hospital's pharmacy department, specially designed for cataract surgery, follows patients through the pre-op and intraoperative phases.
The drug kits and standardization reduced pharmacy costs by 90%, Dykstra says.
* Demanded lower prices for intraocular lenses (IOL). Savings: $90,000.
Depending on the brand and type of IOL that physicians use, cost should range from $37.50 to $70 per lens, says Earnhart. But not everyone gets the best price.
"I know some [same-day surgery programs] that are paying $350," he says. "It just shocks me."
Your total cost per case, including the lens, shouldn't be more than $300, he says.
How can you get a better deal? "It's a simple matter of calling and talking to the vendor," says Earnhart. Some same-day surgery managers pay too much because they assume they can't get a better price, he says. (For more information on cost comparison and price negotiation, see story, p. 88.)
A vendor representative who suspects you may take your IOL business elsewhere will find a way to work with you, he says. "These representatives work on commission," he says. "The loss of revenue from even 100 IOLs a year can be significant."
When Earnhart ran surgery centers as a part of Professional Surgery Corp. in Dallas, his average supply cost per case was $175, including lenses. His profit margin on cataracts was 50% to 63%.
St. Joseph's Hospital of Atlanta expects to save at least $90,000 by standardizing and negotiating for a better price for IOLs, Dykstra says.
One vendor representative pointed out that the cost savings wouldn't go to the hospital's bottom line, since Medicare reimburses hospitals based on a blended rate that takes into account cost and charges.
Still, Dykstra notes that the savings will help with cash flow. Besides, she says, "Why shouldn't we save Medicare money? We're all paying for that, aren't we?"
* Provided high-volume surgeons with two rooms. Savings: Two hours per day in surgeon time.
St. Joseph's allowed the two surgeons with the highest volume of cataract cases to use two ORs, eliminating their downtime between cases.
"They can switch back and forth between rooms," Dykstra says. "He's not waiting for the room to be cleaned and the patient to be brought in."
That change improved physician satisfaction as well as added efficiency, she says. Allowing high-volume surgeons to use two ORs also saves on nursing labor costs by keeping the cases running continually, Earnhart notes.
"Turnaround time should be eight minutes or under," he says. "The goal is to get the procedures done and out as quickly as possible to save on labor."
* Streamlined patient prep, reduced drug costs. Savings: Two hours in patient time; $243,000 in labor and supplies.
St. Joseph's analyzed its process and found numerous ways to make it more patient-friendly and efficient. For example, the outpatient center added free valet parking so the elderly patients wouldn't have to walk from their cars in the parking lot.
That change made St. Joseph's cataract program more attractive to patients, says Dykstra. "If you go to a freestanding surgery center, you can pull right up to the building and have easy access," she says.
Instead of going from admissions check-in, to a pre-op area, then to preanesthesia, patients now complete admission forms before they arrive for surgery and register quickly. They are escorted directly to preanesthesia. One nurse -- instead of three -- provides their eye care.
Patients are allowed to remain clothed from the waist down, she says.
Ophthalmology nurses created a 10-minute instruction video, which was filmed by the hospital's audiovisual department. That allows nurses to focus on answering questions postoperatively, rather than repeating discharge instructions, Dykstra says.
In all, St. Joseph's reduced patient time spent at the hospital from five or six hours to three.
* Eliminated unnecessary supply costs. Savings: $38,000.
St. Joseph's found that small changes could produce big results. For example, when anesthesiologists doing the eye blocks switched from sterile to nonsterile gloves, the hospital saved $8,000.
By switching from single-use vials for eye drops to multiuse vials, the hospital saved $30,000. The hospital was careful to ensure the change didn't increase the risk of infection, Dykstra says.
"We checked with our physicians, and they all use multiuse [vials] in their offices," she says. "We did a literature search, and we ran it by the [hospital's] infection control committee for their review."
A committee of ophthalmologists also reviewed the change, and lab testing of an open vial showed no bacterial growth.
These successful efforts to curb costs in cataract surgery prove one thing, says Earnhart. You can make money, even with low Medicare reimbursements.
"There is a gold mine in ophthalmology if you know how to structure it," he says. *
For more information on cutting costs in cataract surgery, contact:
* Penny Dykstra, Director of Emergency, Observation, and Outpatient Surgical Services and Co-director of Ambulatory and Continuum of Care Services, St. Joseph's Hospital of Atlanta, 5665 Peachtree Dunwoody Road NE, Atlanta, GA 30342-1764. Telephone: (404) 851-7798.
* Steve Earnhart, President and CEO, Earnhart and Associates, 5905 Tree Shadow Place, Suite 1200, Dallas, TX 75252. Telephone: (800) 759-9517. E-mail:[email protected].
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