Mason City (Iowa) Surgery Center experienced a volume decline of 4.5 percent last year as the economy took a dive. However, the multispecialty ASC, a joint venture between 25 physician investors and Mercy Medical Center of North Iowa that is managed by Surgical Management Professionals, did not see its profit margin take a hit. Executive Director Chuck Kelch explains why.
1. Review resource utilization. As with most centers, managing costs is always a priority, Mr. Kelch says. This attention to resources was even more important in 2009. The center's management examined OR use and staff utilization, making sure schedules were as compact as possible. That included closing operating rooms more frequently than in years past to save resources. "Sometimes when times are a little easy, you get a little lax," Mr. Kelch says. "We just went back and took a real focus and tried to line up our blocks a little better and look for any ways we could to make the most efficient use of our staff."
2. Open dialogue with employees. When times are tough and volumes are down, employees need to understand the situation. In Mason City's case, employees were asked to take some days off without pay. On the other hand, the center did not at any time amend its employee bonus program, educational spending or other investments in employees. "We never gave them the impression that we felt they were overhead," Mr. Kelch says. When the physician partners receive a quarterly distribution, staff members receive a bonus, and that did not change last year. "That always keeps your employees engaged in finding ways to reduce costs," Mr. Kelch says, "because they know if they do, that will be their reward." Distribution of the bonuses quarterly, rather than annually, allows for more immediate feedback to employees, he says.
3. Be aggressive about supply contracts. The center had an expiring supply contract for a service line that represented about 20 percent of its gross revenue and about 6 percent of its supply cost. The center initiated a bidding process that turned very competitive and ultimately resulted in switching vendors. "The vendors know what the environment is too," Mr. Kelch says. They're often ready to strike a deal if they think a major contract is at stake.
4. Examine each payor contract. The surgery center dropped a few managed-care contracts in 2009 that were underperforming. Iowa is not a huge managed-care market, and the contracts at issue were "fringe players" and unwilling to negotiate, so they were not worth keeping, Mr. Kelch says.
Mr. Kelch's message to ASCs trying to ride out the rough economy is to continue to engage their staffs and physicians. "They have ideas," he says. "They will help you come up with ways to save costs or cut out unnecessary steps and processes. It's a tough time to manage, but it usually brings out the best in people when things are a little topsy turvey."
Thanks to Surgical Management Professionals for arranging this story.
1. Review resource utilization. As with most centers, managing costs is always a priority, Mr. Kelch says. This attention to resources was even more important in 2009. The center's management examined OR use and staff utilization, making sure schedules were as compact as possible. That included closing operating rooms more frequently than in years past to save resources. "Sometimes when times are a little easy, you get a little lax," Mr. Kelch says. "We just went back and took a real focus and tried to line up our blocks a little better and look for any ways we could to make the most efficient use of our staff."
2. Open dialogue with employees. When times are tough and volumes are down, employees need to understand the situation. In Mason City's case, employees were asked to take some days off without pay. On the other hand, the center did not at any time amend its employee bonus program, educational spending or other investments in employees. "We never gave them the impression that we felt they were overhead," Mr. Kelch says. When the physician partners receive a quarterly distribution, staff members receive a bonus, and that did not change last year. "That always keeps your employees engaged in finding ways to reduce costs," Mr. Kelch says, "because they know if they do, that will be their reward." Distribution of the bonuses quarterly, rather than annually, allows for more immediate feedback to employees, he says.
3. Be aggressive about supply contracts. The center had an expiring supply contract for a service line that represented about 20 percent of its gross revenue and about 6 percent of its supply cost. The center initiated a bidding process that turned very competitive and ultimately resulted in switching vendors. "The vendors know what the environment is too," Mr. Kelch says. They're often ready to strike a deal if they think a major contract is at stake.
4. Examine each payor contract. The surgery center dropped a few managed-care contracts in 2009 that were underperforming. Iowa is not a huge managed-care market, and the contracts at issue were "fringe players" and unwilling to negotiate, so they were not worth keeping, Mr. Kelch says.
Mr. Kelch's message to ASCs trying to ride out the rough economy is to continue to engage their staffs and physicians. "They have ideas," he says. "They will help you come up with ways to save costs or cut out unnecessary steps and processes. It's a tough time to manage, but it usually brings out the best in people when things are a little topsy turvey."
Thanks to Surgical Management Professionals for arranging this story.