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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

ASC Materials Coordinator

Your ASC Materials Coordinator May Be Your Greatest Asset in Controlling Medical Supply Expenses

By ASC Management No Comments

Medical supplies are one of the most significant expenses incurred by an ambulatory surgery center (ASC).  In fact, they may run as high as 10 to 20% of your net revenue.  Your ASC materials coordinator is on the front line when it comes to controlling medical supply expenses.  The more knowledge the person who fulfills this role has regarding business operations and budget expectations, the better equipped they are to serve your facility well.

Here are seven ways to actively engage your materials coordinator:

1. Include your materials coordinator in the budget process.

Their assistance can provide you with valuable insights about what to anticipate for the coming year – annual increase expectations from vendors and potential cost savings measures, for example.  Involving them in the process early affords them an opportunity to embrace your expectations, then operate within the guidelines of the budget.

2. Ensure material coordinators maintain an up-to-date item master.

Updating your item master is an ongoing process.  When new supplies are added, ask your materials coordinator to ensure they aren’t duplicating previous entries.  Have them compare the item pricing with the order confirmation and/or invoice to verify the most current price is loaded in your inventory system.  Set an expectation for consistency in nomenclature to assist with item searches and reporting.  Provide a big picture perspective – a clean, up-to-date item master provides accurate case costing reports necessary to make sound business decisions.

3. Utilize just-in-time inventory.

Ask your materials coordinator to limit stock items on your storage shelves to basics and items that can only be ordered as a case unit.  Have them check with your distributor to determine which items are sold individually.  To effectively handle order or delivery delays, plan on keeping several days of inventory for fast-moving items on hand.  Order enough supplies to cover procedures until the next delivery date but avoid overstocking your shelves.  While overstocking may meet a materials coordinator’s desire to reduce time spent placing and receiving orders, it creates an unnecessary increase in expenses that doesn’t directly correlate to case volumes.  Again, providing the big picture perspective to your materials coordinator can create buy-in to just-in time inventory methods.

4. Involve material coordinators in your preference card process.

Consider allowing them full access to physicians’ preference cards including permission to change items reflected there.  If you are uncomfortable with this, ensure they have access to a clinician authorized to make those changes on the material coordinator’s behalf.  This access ensures preference cards are updated when ‘old’ items are replaced with ‘new’ items.  Up-to-date preference cards assist your clinical team to efficiently pick supplies for the facility’s cases.

5. Provide education to your materials coordinator on payer contracts, especially those that reimburse for implants separately.

Because materials coordinators are responsible for ordering implants, they need to understand when implants are included in your facility’s procedure reimbursement and when they are reimbursed separately.  Creating a ‘cheat’ sheet of payers with implant reimbursement information can help guide them in their purchasing process.  Armed with this information, your materials coordinator can assist with surgeon education on the cost of implants and payer reimbursement.

6. Ensure your materials coordinator has a refined process for receiving and invoicing supplies.

Having the following process for your materials coordinator will provide inventory control and accurate financials –

  • Enter receipt of supplies from packing slip into inventory module.
  • Review the invoice against the purchase order (PO) and packing slip to confirm receipt of invoiced products.
  • Compare invoice pricing to the facility’s inventory item master.
  • Code the invoice for accounting.
  • Input the invoice number into the inventory or patient accounting system.
  • Close the PO once all items are received and invoiced.
  • If your facility prepares financial statements based on accrual accounting, provide an open PO accrual log report to your accountant at the end of each month. Doing so will ensure the current month’s supply costs are accrued for with the current month’s revenue and expenses.  This also helps your materials coordinator stay on top of open invoices.  Having this list provides your materials coordinator an opportunity to call vendors to request delayed invoices thereby avoiding late payment fees or account holds. 

7. Have your materials coordinator perform an annual physical count at year-end.

If inventory has been managed properly during the year, and there have been no significant changes in your business, the inventory adjustment from the previous year should be minimal.  If specialties were added, there may be an increase in on-hand inventory to cover supplies purchased for the new specialty.

Involving your materials coordinator in the ASC’s business operations and budgeting processes could contribute significantly to your center’s bottom line. The key is to provide them with clear expectations and explain how their daily activities impact your vision for the upcoming year.  Then, empower them to make decisions that positively impact your surgery center’s finances.  


Kelli McMahan – Vice President of Operations