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Secrets to Successful Equipment Buying Come to ASCA 2019 for tips BY KELLY BARKER


Are you considering tak- ing on a new service line in your ASC? During my presentation, “Make Data- Driven Decisions: Use


Breakeven Analysis Before You Invest” at the ASCA 2019 Conference & Expo, May 15–18, in Nashville, Tennessee, I will share insight on how to make the best decisions when purchasing or leas- ing new equipment for your facility. To start, do not underestimate the importance of benchmarking—clinical and financial—with similar facilities. Benchmarking is beneficial because you need to know where you are start- ing from to determine if your busi- ness is healthy enough to take on the challenge of a new service line and to understand the potential incremental impact of any new service line. To generate accurate benchmark- ing metrics, accrual-based accounting is necessary to remove the financial “noise” that timing differences in cash flow can sometimes cause. Accrual- based accounting is defined as dollars earned—regardless of whether you have collected all the cash—minus expenses incurred, regardless of whether you have paid for those expenses. Accrual-based accounting, therefore, allows you to best match the revenue you are entitled to for the cases you performed with the expenses incurred for the same cases. Understanding your costs, both


fixed and variable, is just as critical as using accrual-based accounting. Fixed costs do not fluctuate with volume and include expenses such as building rent, salaried personnel and medical direc- tor fees. Variable costs fluctuate with volume and include expenses such as drugs and medical supplies, hourly per- sonnel and rent on certain types of med- ical equipment.


8 ASC FOCUS MARCH 2019| ascfocus.org


ADD THIS SESSION TO YOUR SCHEDULE


Kelly Barker will present “Make Data- Driven Decisions: Use Breakeven Analysis Before You Invest” on Thursday, May 16, from 4:15–5:30 pm. Learn more and see the complete schedule on the ASCA 2019 website.


ascassociation.org/ annualconference/schedule


Only with a crisp understanding of


fixed and variable expenses will you be able to accurately calculate your breakeven point through an analysis of the number of cases you will need to perform to sustain the incremental


costs you will incur as a result of the new service line. In other words, your breakeven point is the number of cases you need to perform to maintain your current level of profitability. Undergo- ing this exercise is not always easy but doing so will increase your understand- ing of your current business and high- light areas where you might need to reevaluate your overall cost structure. Clinical benchmarking and finan- cial benchmarking are equally impor- tant in this process. You will not be successful without knowing your qual- ity and patient satisfaction metrics. If your existing business is not best-in- class, the timing might not be right to add a new service line.


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