Control Ancillary Services Costs Negotiate better contracts and minimize expenses BY DAN SCHNEIDER

Most ASC administra- tors wear multiple hats and

manage myriad

tasks. One of those hats is to keep a close eye on

the recurring monthly expenses that keep the lights on and the business running in their ASC. Because these expense categories—such as tele- com, waste hauling, property tax, bank fees, utilities and maintenance contracts—often cross departments, we sometimes see an underlying, unintentional mindset that should be addressed before the spend can be properly managed.

The mindset I am talking about is that of “it’s not my job,” which, in many cases, stems from a lack of inter-departmental communi- cation. Don’t get me wrong—it is not necessarily that the administra- tors don’t want to properly manage these areas, they simply assume that someone else from another depart- ment is handling them. For exam- ple, somebody in the IT department might negotiate a new phone and Internet contract but then neglect to communicate the new lower rates to the accounting department. Then, when the bill comes, the new rates that the IT team worked so hard to contract don’t show up, and as a result, the company continues to pay the higher rates. No one has been told to make sure the new rates go into effect. Culturally,

if you uncover and

address this kind of inter-depart- mental non-communication, you

Contracts often hide annual rate changes and terms and conditions that significantly drive up the pricing. Unfortunately, many people get so hung up on the rates that they ignore all the other hidden charges.”

—Dan Schneider SIB Fixed Cost Reduction

can begin to control the unmanaged spends of the bottom 10 to 20 per- cent of your general ledger (GL) expenses—like phone and inter- net, printer-copier leases, waste removal, utilities, payroll service, document storage and shredding— more effectively. Addressing

pricing. Unfortunately, many people get so hung up on the rates that they ignore all the other hidden charges. The actual rate, no matter how com- petitive, is only a small piece of the overall cost and the rest can usually be negotiated. When reviewing your contracts pay attention to: ■■

auto-renew clauses

■■ signatures at manager levels price escalators

■■ ■■ hyperlinks

■■ companywide contract term policies ■■

this communication

issue is just the first step. You can further reduce costs on many of these ancillary services that are not neces- sarily part of your core business but add up to a large part of your oper- ating budget. For example, look at your contract language. It’s the lan- guage in the contract and the addi- tional charges that make the biggest difference in your overall invoice. The added taxes, fees and surcharges can grossly inflate your bill, mak- ing even the greatest rate insignifi- cant. Contracts often hide annual rate changes and terms and condi- tions that significantly drive up the

fuel charges. Auto-renew clauses or evergreen clauses mean that your agreements automatically renew for an equal term. This can lock you into another year or more of service with less than ideal terms. Instead, negotiate your contracts to auto-renew month-to- month after the initial term. Make sure that the contract sign- ers are from the senior level man- agement of your organization. Some vendors and service providers might use deceptive practices to get low- level employees to make contract changes and sign renewals. Desig- nate official signers and communi- cate who they are to all employees who interact with vendors. Train your employees not to sign agree- ments at all and to be careful not to commit to verbal agreements dur- ing phone calls or when vendors are onsite.

Price escalators are a percent- age or a fixed dollar amount that a vendor can raise your rate when

The advice and opinions expressed in this column are those of the author and do not represent official Ambulatory Surgery Center Association policy or opinion. 22 ASC FOCUS SEPTEMBER 2019 |

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