1. Benchmark salary data against local facilities. Your center must compete in its own market, Mary Sturm, RN, director of patient care services for Surgical Management Professionals, says. This means that while national data on employee salaries can be a helpful tool, local market data is essential to ensuring competitive salaries for regional candidates. “We have several centers in the Minneapolis metropolitan market which have a very urban wage scale,” she says. “What we determined to be the [Minneapolis metropolitan] wage scale is very different from a smaller Iowa community,” she says.
She says this data can be acquired from national surveys that break down data into regions, but the best source may be the candidates themselves. “You get general information about what various categories in your community are getting paid just from the candidates in front of you,” she says. “You will find out what they’re requiring and demanding.” Set your salaries at a competitive rate to ensure employee attraction and retention. During the interview process, you will probably find out quickly if your proposed salary rate is too low.
2. Don’t be afraid to send people home. Unlike the average hospital, ASCs can set clear expectations with staff that if case volume drops, the center will close early or compress more cases onto fewer days. Sandy Berreth, administrator of Brainerd Lakes Surgery Center in Baxter, Minn., says surgery centers should take full advantage of part-time staff members who are generally paid less and can come in at the last minute to cover an unexpected schedule change. Surgery center employees should be told up-front that if case volume drops, the center may need to close one day a week, which means they cannot expect a regular 40-hour work week.
3. Manage the total life cycle of equipment. Mike Kintner, service contracts manager at TriMedx, says the costs related to supporting a piece of equipment over its entire life cycle, from the point of acquisition to disposal, may actually equal or exceed what it cost to just purchase it. To minimize life cycle service costs as much as possible, he suggests ASCs strategically analyze whether a piece of equipment requires lifetime support that is cost-effective.
“What organizations don’t look at is how much it costs over a piece of equipment’s life span to support it, and they usually only look at the capital acquisition,” he says. “They have to actively manage service costs to understand that maybe an investment in equipment with higher capital would be better because its service costs over its life span will be lower than cheaper equipment.”
4. Meet with physicians to receive individual buy-in for reducing supply costs. An ASC’s efforts to reduce medical supply costs are heavily dependent upon physicians’ involvement, as physicians control 70-80 percent of the cost of medical care. Tom Wilson, managing partner of Monterey Peninsula Surgery Centers and board member of the California Ambulatory Surgery Association, says ASCs must first show physicians and physician-owners that reductions in medical supply costs are necessary to remain financially viable in the future. “We’ll meet with our 13 orthopedic surgeons on staff and break down eight to ten very common orthopedic procedures, such as total and partial joint replacements, shoulder repairs, ACL and other knee repairs, and [assign] each physician a letter A through M,” he explains. “Then we will list by letter how much it costs each physician to perform a procedure. One physician might discover his supply costs are higher because he is the sole surgeon utilizing a $300 disposable wand. By doing peer reviews, we can discuss how to deliver quality care at a lower price.”
5. Using cost data in negotiations. Having accurate data about costs makes you a more persuasive negotiator. Demonstrating that you would lose money on the proposed rate may not impress the payor, but it could stiffen your resolve to propose a higher rate or walk away from negotiations. “A payor in one of our Symbion facilities was going to cut our rates dramatically,” Ron Brank, a group vice president for Symbion in Nashville, Tenn., recalls. “From our data, we knew that they were proposing rates that would not even cover our variable costs. We determined the proposal was financially unacceptable and informed the payor we could not continue with the contract.” The ASC team also pointed out that the payor’s cases would go to the local hospital, where payments would likely be considerably more than the ASC asked for, assuming the hospital was getting at least HOPD rates. “While you won’t always be successful in these situations, accurate data does often help us to gain fair and acceptable rates for our ASCs,” he says.
