Stuart Katz, FACHE, CASC, executive director of Tucson (Ariz.) Orthopaedic Surgery Center, share five ways his surgery center tracked and lowered orthopedic case costs.
1. Compare physician costs by CPT code. Comparing physician costs-per-case can help determine where to cut costs, as some physicians may be spending more money on supplies than others. However, Mr. Katz warns administrators to be careful: Unless you compare "apples to apples," your case cost comparison will be useless. To make sure you're comparing the same procedure, Mr. Katz suggests comparing like CPT codes. Certain procedures will have multiple CPT codes assigned to them, depending on specific methods of performing the procedure. Make sure you're not comparing CPT codes that involve different supplies and methodology; sometimes a small difference in technique can mean a significant difference in cost.
2. Keep information anonymous unless physicians request otherwise. Once you have collected data on each physician's costs per case, Mr. Katz recommends distributing the numbers to every physician. If physicians notice that their colleagues can perform the same procedure for significantly less money, they will likely try to decrease their costs to meet the established target. Mr. Katz says that when he distributed case costs to physicians for the first time, he labeled each physician with a letter: Physician A, physician B, physician C and so on. He let each physician know which letter he or she was assigned, but didn't tell anyone the letter of any other physician. That way, physicians could learn from the information without feeling embarrassed about the disclosure.
Once you have sent information out anonymously, you may find that physicians prefer to know which costs belong to which physician. "Every one of them told me, 'Put the names on it,'" Mr. Katz says. Providing the information anonymously will safeguard you against physician hostility, and you can always provide names the next time around.
3. Take median case cost, not average. When you calculate physician cost-per-case, Mr. Katz recommends taking the median case cost rather than the average case cost. Average may seem like the obvious choice, but numbers can become skewed very easily if the physician has even one outlier case. "Let's say for some reason, the doctor has to use a second burr because they bent the first shaver," he says. "If it costs $200 and you did 40 cases, that adds $5 to each case on average. You've got to watch out because that one item can throw off the average." To give physicians an accurate idea of their case costs, use the median, or the "middle number" in a list of numbers. If you prefer to use average case cost, make sure to watch out for outliers and remove them from the equation.
4. Eliminate medications from your case costing. Mr. Katz removes medications from case costs, as physicians may not be in control of how much medication is used. "Let's say the anesthesiologist on this one case happened to decide that the anesthesia machine needs more [of a certain anesthetic]," he says. "He writes it on the slip so he can keep track of it, and it may get charged for that patient when it's actually used for 40-50 patients." He says the choice to remove medications from the equation will depend upon the software system you use and how your materials management team accounts for certain medications.
5. Consider autografts rather than allografts. Mr. Katz's ASC saved money by showing physicians the difference in cost between allografts and autografts. "We've actually increased the number of anterior cruciate ligament repairs, and we've gone from almost 80 allografts to under 30 allografts," he says. "So you can imagine the savings there to allograft costs." Especially for younger patients, he says autografts tend to be more appropriate. The physician should ultimately make the decision about whether to use an autograft or an allograft, and only then does Mr. Katz inform them if the insurance will cover it separately.
Read more about orthopedic and spine-driven ASCs:
-Advanced Orthopedic Market Projected to Be More Than $28B in 2010
-5 Mistakes That Lead Surgery Centers to Lose Money on Spine
1. Compare physician costs by CPT code. Comparing physician costs-per-case can help determine where to cut costs, as some physicians may be spending more money on supplies than others. However, Mr. Katz warns administrators to be careful: Unless you compare "apples to apples," your case cost comparison will be useless. To make sure you're comparing the same procedure, Mr. Katz suggests comparing like CPT codes. Certain procedures will have multiple CPT codes assigned to them, depending on specific methods of performing the procedure. Make sure you're not comparing CPT codes that involve different supplies and methodology; sometimes a small difference in technique can mean a significant difference in cost.
2. Keep information anonymous unless physicians request otherwise. Once you have collected data on each physician's costs per case, Mr. Katz recommends distributing the numbers to every physician. If physicians notice that their colleagues can perform the same procedure for significantly less money, they will likely try to decrease their costs to meet the established target. Mr. Katz says that when he distributed case costs to physicians for the first time, he labeled each physician with a letter: Physician A, physician B, physician C and so on. He let each physician know which letter he or she was assigned, but didn't tell anyone the letter of any other physician. That way, physicians could learn from the information without feeling embarrassed about the disclosure.
Once you have sent information out anonymously, you may find that physicians prefer to know which costs belong to which physician. "Every one of them told me, 'Put the names on it,'" Mr. Katz says. Providing the information anonymously will safeguard you against physician hostility, and you can always provide names the next time around.
3. Take median case cost, not average. When you calculate physician cost-per-case, Mr. Katz recommends taking the median case cost rather than the average case cost. Average may seem like the obvious choice, but numbers can become skewed very easily if the physician has even one outlier case. "Let's say for some reason, the doctor has to use a second burr because they bent the first shaver," he says. "If it costs $200 and you did 40 cases, that adds $5 to each case on average. You've got to watch out because that one item can throw off the average." To give physicians an accurate idea of their case costs, use the median, or the "middle number" in a list of numbers. If you prefer to use average case cost, make sure to watch out for outliers and remove them from the equation.
4. Eliminate medications from your case costing. Mr. Katz removes medications from case costs, as physicians may not be in control of how much medication is used. "Let's say the anesthesiologist on this one case happened to decide that the anesthesia machine needs more [of a certain anesthetic]," he says. "He writes it on the slip so he can keep track of it, and it may get charged for that patient when it's actually used for 40-50 patients." He says the choice to remove medications from the equation will depend upon the software system you use and how your materials management team accounts for certain medications.
5. Consider autografts rather than allografts. Mr. Katz's ASC saved money by showing physicians the difference in cost between allografts and autografts. "We've actually increased the number of anterior cruciate ligament repairs, and we've gone from almost 80 allografts to under 30 allografts," he says. "So you can imagine the savings there to allograft costs." Especially for younger patients, he says autografts tend to be more appropriate. The physician should ultimately make the decision about whether to use an autograft or an allograft, and only then does Mr. Katz inform them if the insurance will cover it separately.
Read more about orthopedic and spine-driven ASCs:
-Advanced Orthopedic Market Projected to Be More Than $28B in 2010
-5 Mistakes That Lead Surgery Centers to Lose Money on Spine