Same-Day Surgery Manager

Cost containment — what things really cost

By Stephen W. Earnhart, MS
President and CEO
Earnhart & Associates, Dallas

What a great Same-Day Surgery 2001 conference we just had in Orlando. I did a talk on Cost Containment — No Longer an Option, and for the past two weeks, I have received more than 50 requests for some of the information I presented. Because that many people requested it, I thought it might be helpful information to share with you as well.

We do a lot of work with hospitals and surgery centers on controlling cost, and the overwhelming, absolutely No. 1 thing that we find everywhere is that people don’t know what things cost — even everyday, every case items! For most of us, that is like going to a restaurant with $15 in our pocket and ordering from a menu where no prices are listed. Clearly, you can order anything you want and eat it, but you might not have enough to pay for it.

The two largest expenses in your center are staffing and supplies. Forget staffing; we’ve focused on that until we’re sick of it. Concentrate on the disposable supple costs. Take it down one level and concentrate on the waste associated with those supplies. If your staff and surgeons don’t know what it costs, how can they help you? You don’t go down the aisle in a grocery store and just pull things off the shelves. You look at the prices and make your decision on your purchase. The majority of your staff or surgeons don’t know — nor do they really care — the cost of what they are pulling off the shelf. They just need it for their case, and they need it now. Who can blame them? While we say cost control is everyone’s responsibility, it’s really the person in charge’s plight.

Do this: Price your supply room shelves with the cost of the unit price of just your disposable items, if nothing else. Then when your staff run in to grab something, they might think twice before grabbing the large towel pack when they could pick an individual towel.

Steve Gunderson, MD, gave a presentation on ambulatory payment classifications some time ago at the SDS Conference and laid out some disposable items his center used on all cases. I have modified his list and used our pricing for that list. (See price lists, courtesy of Earnhart & Associates, below.)

Clearly, you need to add or delete from this list yourself to match your center, and your prices will be different, but who is going to know if you just use this one without really checking your prices? Your prices are probably close enough to get away with it until you can update it. If nothing else, the range of prices is probably close. Bottom line: Stick them in your supply room. Don’t just post a list in the room; no one is ever going to look at it. Tape the prices under the items on the shelves, like grocery stores do. You’ll be surprised at how your staff will begin to respond.

[Earnhart and Associates is an ambulatory surgery consulting firm specializing in all aspects of surgery center development and management. Earnhart can be reached at 5905 Tree Shadow Place, Suite 1200, Dallas, TX 75252. E-mail: [email protected]. Web: www.earnhart.com.]