Transcript Case Costing - NY Metro ASC Symposium

Effective Case Costing
for your ASC
Jason Beam, RN, BSN CASC
Sr. Vice President of Operations
Ambulatory Surgical Centers of America
Understanding Case Costing
• Case cost accounting is essential to the survival of your ASC.
• Understanding the profit margins of a procedure between
actual Total Cost vs. Reimbursement is crucial.
• Since many ASCs have surgeons that are invested, MDs are
usually more open to looking at cost saving opportunities.
• Accurate case costing educates the MD’s to these
opportunities
• Case Costing help with your negotiations with Payers and
Vendors
Benefits of Case Costing
• Budgeting and financial forecasts can have a
more accurate basis since most surgery
scheduling systems are coupled with surgeon
preference cards.
• Be careful in relying to heavily on preference
cards for your case costing, as they typically do
not reflect all supplies that are used during a
case, specifically expensive prosthetics /
implants.
Benefits of Case Costing
• The capturing of complete supply usage in the
operating room is uncommon in most facilities
around the US.
• Detailed supply usage at the case level provides
the basis for remarkable levels of detailed
costing analysis.
• If you are not currently capturing supply usage,
all is not lost.
Benefits of Case Costing
• Accurate preference cards coupled with costing
data can be an alternative tool for procedure /
case costing.
• Although subject to some deviation from actual
resources used, preference card contents can
help in quantifying the fiscal differences
between the supplies used when comparing
services, procedures, and surgeons.
Benefits of Case Costing
• With success in determining your case /
procedure costing, you will be equipped
with invaluable information in making
decisions regarding capital acquisitions,
block allocation, and physician recruitment.
• If a physician tends to use much more
expensive supplies than his peers on the
same clinical procedures, case costing will
enable you to share such details with the
physician and the ASC board.
Benefits of Case Costing
• Educate physicians and staff about the
cost of doing business.
• Modify practice patterns of physicians.
• Helps with negotiation of supply cost.
• Helps with negotiation of Implant Cost.
• Helps with negotiation of payer payment.
Getting to the Bottom-line
Case Specific Supplies plus Overhead cost
equals Total Cost
Receipts
- Total Cost
Net Revenue (Bottom-line)
Where to Start the
Essentials of Case Costing
• Inventory entry
• Correct pricing.
• Correct usage units of measure.
• Correct unit cost of items.
• Preference Cards
• Developing accurate procedure preference
cards
• Capturing as much of the cost as possible
• Continual review and updating.
• TRASH IN EQUALS TRASH OUT!!!
Essentials of Case Costing
• Accuracy of supplies used and cost
• Preference cards are printed and follow
patient through admission.
• All personnel caring for patient document
supply and medication usage, including
anesthesia.
• A reconciliation is performed after the
admission in your patient tracking software.
• If no software, then tracking must be done
manually.
Case Specific Supplies
 Disposables
 Implants
 Equipment Rental fees
 Medical Gases
 Medications
 Linens
 All miscellaneous patient supplies
 Everything used that has a cost should be
included on the preference card
Some Pitfalls
• A common mistake is translating the usage
unit of measure to the quantity per UOM
in the Inventory Module.
• Incorrect costs in the Inventory Module.
• Not capturing all supplies that are used.
• You must include supplies opened but not
used unless they can be reprocessed for
use on another case
Overhead Costs
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Salaries
Utilities
Rent
Interest
Billing Charges/ coding/transcription fees
Repair and Maintenance
Insurance
Bank fees
Cleaning
Taxes
Consultants
Legal and Professional fees
Determining Your Overhead Cost
Per Case
The Formula Step 1
• Run a P&L on an Accrual Basis for Time Period in question
• From Total Expenses, subtract the following items:
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Medical Supply Expense
Interest Expense
Depreciation (if applicable)
Amortization (if applicable)
The Result will be the Overhead Costs for
that Time Period
Determining Overhead Cost Per
Case
The Formula Step 2
• Determine your total OR minutes for the same
time period as Step 1
• Take your overhead Expenses divide by your
total OR minutes
• This will give you a per minute cost
• Multiply the per minute cost by the case specific
OR room time
Total Overhead Expenses/ Total OR minutes for the month
equals the per minute cost
Total Cost Per Case
• Total Cost for each case is simply adding
the Overhead Cost per case PLUS the
Supply Cost for Case
• The Profitability for that case will be the
Net Revenue (collections) minus the Total
Cost.
Review Your Work
• Look for supply and overhead costs that are
unusually high.
• Causes
• Incorrect data on preference cards.
• Case History module not reconciled.
• Incorrect times entered into Case History.
• Only share data that is 100% accurate with your
board
In Review
• Accurate case costing is essential to your ASC
• Educate all staff on the importance and what role
they play in ensuring we capture all associated cost.
• While it may appear time consuming, once a system
is implemented it should only require about 2-3
hours to prepare your report.
• Work with your software techs to determine the
reports you will need.
• Present a professional, accurate report to your board
each month.