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ASC data analytics Archives - Pinnacle III

Jan 25
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ASC Case-Costing: Improving the Data Collection Process

ASC Case-Costing: Improving the Data Collection Process

By ASC Management, Leadership No Comments

For an ASC leader, understanding the financial impact of each surgery performed in an ASC is critical to the facility’s success. To achieve this, you must have detailed, accurate data on surgical costs and reimbursements.

Most facilities have software that produces reports which assist with gathering and modeling data. Depending on the resources available at your facility, the difficulty in gathering and using case-costing data will vary.

Avoiding ‘bad’ data

Some management companies, like Pinnacle III, employ a data analyst to provide tools to analyze the cost and reimbursement of cases. However, even with the help of a data analyst, the analysis will only be helpful if the data collection process is accurate and thorough. A common saying among data scientists is, “Garbage in equals garbage out.” For ASCs, if the person pulling the data does not have accurate data to work with, case-costing will be inaccurate.

Here are a few ways to avoid producing bad data.

  • Ensure staff are entering valid data into your software and paying attention to details. Educating staff about the impact of their role in this process is key. Staff mistakes, such as entering equipment cost as supply, can falsely inflate the cost of the case in your analysis. These mistakes are easily avoided by focused staff members who have received adequate training on their function and impact.
  • Update staff compensation. If pay rates aren’t current in your software, the labor costs associated with a case will be incorrect.
  • Engage your materials personnel. The material personnel are vital to keeping information current and accurate. Supply pricing changes must be up-to-date in your software.
  • Keep preference cards current. Make sure hold items are not listed as open. Ensure standard items used on every surgery are correct. This will avoid waste and reduce errors when accounting for what was used during each surgery.
  • Don’t forget supplies used outside of the OR. The supplies used in pre-op and PACU for a patient can seem insignificant. However, accounting for them with the surgery ensures general supply expenses spread among all cases is reduced. Create a pre/post bundle price for each type of surgery that gets added to the supply used. And don’t forget to include anesthesia supplies and drugs, which are often overlooked.
  • Include everything with a fee. Often there will be a charge for something, such as rental for a laser or a tray drop-off, that can be easily left out. If certain items are always used and the fee is known, add them to the preference card and include the fee in your software. Educate staff to facilitate understanding about which items carry a fee to ensure those costs are added to the case.
  • Accurately capture implants and instrumentation. Avoid including reprocessed items as an expense. Ensure fees are not attached to reprocessed instruments or they could be charged to the case as a supply used. Ensure implants used are reflected in your software with the appropriate price.

Final tips for case-costing analysis

There are obvious costs to capture, however, some items may be overlooked, particularly if you are not utilizing a data analyst. Some things to remember when gathering case-costing data are:

  • Include total visit time as well as OR time. The length of time the patient spends in the facility from admission to discharge is an important factor in the overall cost of a case.
  • Use your P&L to tie-in general expenses to be allocated among all cases as an indirect expense.
  • Include the payor mix. This is very important as the payor mix can be a contributing factor to variances among surgeons.
  • There is never too much detail. The process is tedious, but the result will benefit the ASC in many ways. The more ways the data can be sorted, the easier it will be to identify inefficiencies, waste, spending variances, long recoveries, and a variety of trends.
  • Separate supplies and implants. This will allow you to compare surgeons by case and identify opportunities for savings and standardization.

Once the data is gathered, configure it in a way that will allow you to study it from multiple angles (e.g., via a spreadsheet program). Begin with a broad view – by specialty, physician, CPT, or payor, for example. Then examine the subsets – perhaps by specialty/by physician or by physician/by CPT. If you notice significant variances, dig deeper to determine the cause. As you study the data you may find errors. Rather than being frustrated by inaccuracies, use errors as an opportunity to refine your processes and/or systems. Avoid sharing data with your surgeons until you are confident it is accurate. Seek their insights when sharing the information; they may be able to point to additional areas to investigate prior to making operational decisions based on the data.

As you refine your processes and systems, keep your staff and surgeons in the feedback loop. Addressing errors as they arise will create a more seamless process that allows you to focus on other improvement opportunities.

Stay tuned for the second-part of my case-costing blog series. In my follow-up blog, I will further discuss best-practices for analyzing case-costing data. I will also delve into ways to utilize case-costing data, and the benefit of engaging surgeons in the process.

Lori Tamburo, Director of Operations

Apr 11
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How ASC Data Analytics Can Benefit Your Facility: Part 2 of 3

How ASC Data Analytics Can Benefit Your Facility: Part 2 of 3

By ASC Management No Comments

(Part 1 introduces the topic as it applies to ASCs, Part 2 provides examples of how analytics can be beneficial in the ASC arena, and Part 3 will walk through the evaluation process to determine when analytics is a good fit for an organization)

In this second installment of our ASC data analytics blog, we will examine specific ways an analytics program can benefit an ASC. While not every type of report mentioned here may be applicable or beneficial to every facility, the following examples will provide a broad base for understanding the potential benefits an ASC analytics program can provide.

ASC Data Analytics Report #1: Case Cost Analysis

The first category of essential ASC data analytics is case cost analysis. Simply put, case cost analysis determines the cost to complete an individual case. With this number determined, the cost of a case can be subtracted from the revenue generated by that case to obtain the associated profit (or loss). Though determining the profit/loss margin of a single case rarely tells a complete story, logically grouping cases into different “pools” can begin to reveal performance of different segments within an ASC. Grouping cases by procedure type, specialty, surgeon, or payor can reveal performance trends.

Although most ASCs likely know their cost per case at a high level already – total operating expenses divided by number of cases – the true value of adding a formal analytics component comes from the ability to drill down into the data. Going beneath the surface allows ASC leadership to identify specific, meaningful areas of concern that can be improved upon to enhance the overall performance of the facility.

Components of a Case Cost Analysis: Supply Cost

An analytics-led case costing report is driven by details. Our initial definition of case cost analysis mentioned “determining the cost to complete an individual case.” Merely examining the expenses identified on an income statement or general ledger will reveal facility-wide trends. However, that will not stratify the data to provide the level of detail needed to make a valid comparison between case types (the “pools” we noted previously). For example, a basic pain procedure shouldn’t be assigned the same case cost as a complex orthopaedic procedure. For true case costing insight, expenses need to be directly tied to individual cases.

To obtain specificity in a case cost analysis, one would typically rely on the ASC’s inventory management system to determine the per-case supply cost. Reviewing surgeon preference cards by procedure type may also be used if the inventory management process at a facility lacks per-case specificity. This should provide an accurate accounting of the various supplies used for each procedure, as well as, the total supply cost per case. Supply cost differences between surgeons or procedure types are immensely important in providing analysis points when reviewing differences in total profitability later in the process.

Components of a Case Cost Analysis: Staff Cost

In addition to supplies, staff time is an important consideration in detailed case cost analysis. Most facilities use a case log to track time individual staff members spend on a specific case. By totaling individual employee costs associated with the episode of care, direct staff cost per case can be identified.

Components of a Case Cost Analysis: Overhead Allocation

While supplies and staffing make up most of the direct costs for a case, facilities should also assess the impact overhead expenses have on their overall profitability. Overhead allocation can also be completed at the case level. This can be done by determining the total amount of fixed costs for a given period and assigning a portion of these costs to each case. Some facilities may choose to assign an equal overhead value for each case. Other facilities may choose to allocate overhead based on a formula representing the relative utilization of a fixed expense (e.g. allocation of overhead based on OR time, total case time, etc.). Using this methodology, a complex orthopaedic case is assigned a higher overhead expense per case than a quick pain procedure. This makes sense when one considers that an orthopaedic case uses relatively more of the rent, utilities, etc., than a pain case. When an ASC desires to understand the true total costs of each of their cases, providing a logical overhead value assignment is a necessary component.

For most facilities, it isn’t possible to track every staff minute and supply back to every patient with 100% accuracy. Typically, the total direct costs (supplies, staff) that can be tied back to an individual case are lower than the direct costs shown on an income statement. The difference in the two amounts is the unallocated variable expense. Unallocated variable expenses often arise from the aggregation of small expenses (pens, tissues, hand soap, etc.) that are difficult to track and attribute to individual cases. These expenses can be distributed on the case level using the same methodology as the overhead distribution.

Interpreting the Case Cost Data

At this point, all the expenses for the facility – clinical supplies, staff, overhead, and unallocated variable expenses – are now linked back to individual cases. Instead of one generic cost per case, each case has its own unique, true cost. When the costs per case are subtracted from the revenue generated by each case, the actual profitability of that case is revealed.

All this data can be sorted, grouped, and filtered in a myriad of ways. With each new view of the data, analytical insights begin to jump off the page.

Cases previously thought to be highly profitably may prove the opposite due to high supply, staff, or overhead costs. Physicians who have been historically viewed as producers of low revenue per case may actually be contributing significantly to the facility’s profit due to lower-than-expected expenses. Entire specialties and payors may be viewed in a new light. The data may reveal that improvement in just a few key procedure types could have a dramatic impact on the overall profitability of a center. The list of potential findings is limitless.

ASC Data Analytics Report #2: Facility Financial Analysis

An ASC data analytics program should be able to provide a routine, comprehensive analysis of a facility’s financial performance. This should include not only reporting current financial metrics, but also comparisons to the same period during the previous year(s), the most recent periods (often called “trailing reports”), and to ASC-specific regional and national benchmarks.

Often, the facility financial analysis can be tied to case cost data. Case cost data can be reported in a combined suite of reports (a dashboard) that provides quick insight into the ASC’s performance. For example, a decrease in overall facility profit may be identified as the result of an increase in lower-profit types of procedures over the same period. Likewise, a decrease in revenue per case but an increase in total ASC profitability – which could be perplexing – may be identified as an increase in procedures with low revenue per case (which dilute the overall facility revenue per case) but a strong profit margin. Adding a data analytics component to standard ASC financial analysis should increase awareness and understanding of the factors influencing an ASC’s financial performance.

ASC Data Analytics Report #3: Clinical Analysis

Adding an ASC data analytics program can also provide benefits to clinical efficiency and patient safety efforts. Case time log data can help paint a picture of efficiency within the OR, as well as provide a workflow analysis of the activities in registration, pre-op, and PACU. An example is a block-utilization report, which details how well a specific surgeon or specialty fills their allotted OR block time. Identifying trends and tweaking block time allocation as necessary can lead to a more efficient, profitable center.

Patient safety data can be gleaned to identify trends that can prevent a bad outcome before it happens. Staffing data is a wonderful resource an analytics program can use to ensure optimal levels of staffing are being utilized. Medication log data is another database that can be tapped into to add to the clinical safety reporting tapestry. For example, analysis of the medication log data may reveal cases where drugs are being prescribed at different stages in the delivery of care that may create unsafe conditions, such as hazardous drug interactions or over-prescription of narcotics. A dedicated analytics program should be able to drive facility profitability, efficiency, and patient safety through enhanced analysis and amalgamation of clinical data.

Investing in an ASC Data Analytics Program

Attaining highly detailed case cost, financial, and clinical efficiency/patient safety insights is a lot of work. Parsing out valuable insights from scattered databases, case logs, and financial reports requires a specialized skillset and experience tailored to the ASC setting for maximum return on investment. The available data often needs to be “scrubbed” (a time-consuming process) to avoid the dreaded “garbage in-garbage out” phenomenon.

As discussed in Part 1 of this series, dedicated analytics programs and personnel are not currently common in many ASCs. Committing the resources necessary to obtain a quality ASC data analytics program must be carefully weighed against the potential benefits. The next part of this series will discuss strategies to help make this determination. As the ASC industry becomes more competitive and pressures from payors continue to rise, the decision to invest in an analytics program is increasingly becoming the correct choice for many ASCs.

Cody Carlin, Director of Data Analytics

Dec 06
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Overcoming ASC Management Nightmares: Physician Engagement

Overcoming ASC Management Nightmares: Physician Engagement

By ASC Management, Leadership No Comments

Third installment in the “Overcoming ASC Management Nightmares” blog series. Click here for Part 1 and Part 2.

ASC Management Nightmare #3: Physician Engagement

There’s no denying the importance of physicians performing procedures in ASCs. After all, without procedures, there is no ASC business. When physicians view performing procedures as their primary purpose in supporting an ASC, they may overlook the importance of physician engagement – a vital component of ASC operations.

Regulatory bodies expect to see ASC physicians – specifically owners – involved in all aspects of the organization. Compliance issues may arise when physicians fail to take an active role.

In addition, when physician engagement is lacking, financial problems can quickly arise. For example, in the absence of physician oversight, an individual’s desire to perform more procedures may lead to the addition of cases or purchasing of equipment that does not deliver a positive return on investment.

When physicians hire ASC management staff, they often intend to pass off the responsibility of running the ASC business. Managers must ensure physicians understand their required role in operations and its critical importance to the ASC’s success. This task is typically easier said than done.

Solution

Data is naturally attractive to physicians. Many of them likely chose to pursue a career in health care because it is a data-driven business. Consider statistics like life expectancy, death expectancy, surgical success rate, percentage of risk – physicians are used to sharing this type of information with patients.

To improve our ASC’s physician engagement, we’re working to cater to their love of empirical decision-making. In the past, we often relied on providing hand-collected and anecdotal data to help physicians make informed decisions regarding business operations. But since this data was not scientifically objective, it was not always effective in achieving our desired results.

To combat this perception, we are implementing computer programs that allow us to refine that data so it’s “hard and true.” These programs measure numerous data points in areas such as quality, volume, and case costing. We have used this concrete data in presentations to physicians and witnessed an emotional change. They are more willing to accept, assess and respond to the information. Physician engagement in ASC management is shifting from passive to active.

Lisa Austin, VP, Facility Development

Nov 28
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Introduction to ASC Data Analytics

Introduction to ASC Data Analytics

By ASC Management, Uncategorized No Comments

Part 1: Introduction to ASC Data Analytics

In this three-part series, I will explore the topic of ASC data analytics. Part 1 introduces the topic of data analytics as it applies to ASCs. Part 2 provides examples of how analytics can benefit ASCs. Part 3 walks through the evaluation process to determine if data analytics is a good fit for your surgery center. Let’s dive in!

To succeed in today’s competitive business environment, every organization requires knowledge and understanding of its performance. This fact is especially true in the rapidly evolving world of healthcare, perhaps even more so for ambulatory surgery centers (ASCs). For some, a simple informal review of monthly financial statements may present a sufficient picture of the overall health of the organization. A review of standard accounting reports can provide the information necessary to guide general decision making. However, basic reporting and analysis may not provide sufficient insight to maintain pace with the constantly changing, fast-paced ASC market.

To gain a competitive market advantage, a deeper understanding of an ASC’s performance may be required. The emerging field of ASC data analytics focuses on providing nuanced introspections that surgery center leaders can rely upon as critical tools for decision making.

If you’re not familiar with ASC data analytics, don’t worry. You are not alone. While utilized extensively in financial and retail sectors, ASC data analytics has only recently gained traction. While many factors play into this rapid growth, they all essentially boil down to rising costs, tightening reimbursement, and the influx of integrated health networks. ASC data analytics is increasingly utilized to identify actionable areas of improvement and model the impact of potential changes before they are implemented. As the ASC arena continues to become more competitive internally, along with growing outside pressure – an aging population, payment model shifts, and fluctuating legislation, for example – the ability to identify core problems and predict the success of proposed solutions is an essential tool for organizations looking to gain a competitive edge.

Utilizing data analytics may sound like a panacea for struggling ASCs looking to get back on track or for successful ASCs seeking to further strengthen their position. However, before jumping on the ASC data analytics bandwagon, it’s important to fully understand what analytics entails in the ASC world. Once a basic comprehension is achieved, only then can one ascertain whether implementing an ASC data analytics program is likely to produce a suitable return on investment.

Stay tuned to gain additional understanding of ASC data analytics! My next post in this series will provide examples of how data analytics can be leveraged by ASCs. I will wrap-up the series in my third post by delving into how to determine if an ASC data analytics program is a good fit for your organization.

Cody Carlin, Director, Data Analytics