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Calculate Your ASC’s OR Cost Per Minute ASCs that do can reduce expenses and improve contracts BY ROBERT KURTZ


D


o you know what it costs when pa- tients are in your ASC’s operating


room (OR), asks Ann Geier, RN, CASC, chief nursing officer for SourceMed, a Birmingham, Alabama-based provider of software and ASC advisory services for ASCs and other organizations. Since the OR is where an ASC generates rev- enue, she says, understanding the costs incurred there is an essential manage- ment tool for an ASC. An ASC that knows its OR costs can


make informed decisions that support the overall success of the facility, sug- gests Caryl Serbin, RN, owner and chief executive officer of Serbin Medical Bill- ing, a Florida-based provider of reve- nue management services for ASCs and anesthesiology providers. Understanding the cost of OR time and other expenses is also fundamental in educating third- party payers and negotiating equitable managed care contracts, she adds. To calculate your ASC’s OR cost per minute, a figure also known as overhead cost per OR minute, Geier advises the following: 1. Choose an accounting period, such as the prior month, to analyze.


2. Identify the costs incurred dur- ing that period of time from your ASC’s profit and loss (P&L) state- ment. (Do not include medical supply costs. All other costs, such as staffing, utilities, rent and jani- torial services, comprise overhead costs.) Divide the overhead cost by the number of OR minutes for the same period to determine your overhead cost per OR minute.


The OR cost formula By accounting period, e.g., one month: Overhead costs identified in your P&L (do not include the cost of medical


26 ASC FOCUS MARCH 2017


The case cost formula By primary CPT/surgeon: (OR minutes x overhead per OR minute) + medical supplies = case cost


Geier also suggests using your


ASC’s OR cost per minute as an opportunity to initiate discussions with physicians concerning their sup- ply use. “If you have multiple physi- cians performing the same procedure but one physician has a much higher OR cost per minute, see if the sup- plies he or she uses are a cause of that increased expense. If they are, you can share the preference cards of physi- cians with lower costs per OR minute and explore whether changing supplies is an opportunity to reduce costs with- out sacrificing quality.”


Practicing routine case costing can be instrumental in achieving your revenue goals and even surpassing them.”


— Caryl Serbin, RN Serbin Medical Billing


supplies) ÷ OR minutes = overhead cost per OR minute


Once you determine your ASC’s


overhead cost per OR minute, you can use this figure to determine case costs. Choose a primary Current Procedural Terminology (CPT) code for one (or more) of your surgeons and identify the OR time and cost of the supplies associated with that CPT code. Take the figure you determined earlier— overhead cost per OR minute—and multiply it by the patient time in the OR. Add this figure to the supply costs to determine your case cost.


Serbin advises meeting with phy- sicians to offer cost-saving solutions, such as standardization of supplies and implants, purchasing instead of renting equipment and adjusting the fee struc- ture if it is not appropriate for the cost of each procedure.


While the OR-cost-per-minute sta- tistic places an emphasis on time, Geier advises against trying to influence the time physicians spend on a case. “If you try to push them to go faster than they are accustomed to, mistakes are more likely to be made.” An ASC can maximize the value of calculating OR cost per minute by running the numbers on a regu- lar


basis, Serbin says. “This will


allow you to benchmark changes you make to see if they brought about an improvement. Practicing routine case costing can be instrumental in achiev- ing your revenue goals and even sur- passing them. However, remember that the primary goal must always be to provide quality care.”


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