The costs incurred by surgery centers include raw materials, labor and overhead. Fixed costs are also important to recognize and leave out of the total labor costs. There are several factors in the market that affect an ASC’s profitability, including:
• The local payor landscape (managed care or out-of-network payor prevalence)
• The existence of one dominant payor or many payors in the community
• Negotiation power (whether you are alone or partner with a hospital)
• Local area demographics (whether most patients are young or retirement age)
ASCs should know the contracts they have with each payor and produce updated data on the profitability of each case before submitting the bill to the insurance company. If the case isn’t profitable, surgeons should consider taking similar cases out of the ASC in the future. Surgeons should also understand the materials costs associated with their procedures so they don’t overuse supplies and can chose to update preference cards with less expensive but equally effective implant choices.
Administrators can perform case costing analyses on their surgeons by taking the cost of the cases divided by the minutes a case takes from beginning to end.
Related Articles on Profitability:
5 Streamlining Techniques for Orthopedic Surgeon Profitability
6 Ways to Increase Profitability of Your Orthopedics-Driven ASC
4 Key Factors for Maintaining Orthopedic Surgery Center Profitability
