Recovering From Revenue Shortfalls
Hospitals and health systems have been facing common challenges since the onset of COVID, leading to low margins for the past few years. According to Deloitte’s 2023 Outlook for Health Care, hospitals and health systems experienced consistent negative operating margins in 2022, resulting in low patient volumes, revenue decreases, and high expenses. While health systems are still recovering from low patient volume and revenue shortfalls tied to the pandemic, improving the efficiency of surgical services is critical in the current healthcare environment. Since surgical services can contribute up to 60% of the hospital’s operating margin, addressing root problems in organization and processes can boost top-line revenue, as many hospitals and ambulatory surgery centers (ASC) commonly experience operating room inefficiencies.
Improving Operating Room Efficiency
Establishing a fundamental operational groundwork to address core problems starts with the development of data-driven process improvement activities that align with both short- and long-term organizational goals. Focus on the operational opportunities that will deliver the desired net impact, effectively align resources and processes, and drive change. A few key areas that can help improve operating room (OR) efficiency include the development of efficient scheduling processes, process and workflow improvements, and performing cases in the right setting.
Maintaining an Efficient OR Scheduling Process
While process and workflow improvements contribute to overall efficiency, an efficient schedule represents the most challenging but impactful driver. An efficient scheduling process can aid in minimizing inefficiencies, increasing utilization, and increasing case review. The development of an efficient block time scheduling system should include basic components, such as:
· a minimum block length with longer blocks that allow for higher utilization per hour and therefore minimize inefficiencies,
· a utilization threshold of at least 75% utilization to maintain the block,
· room flexibility by keeping approximately 20% as open time for urgent and emergent cases,
· voluntary and specialty-specific block release protocols, and
· individual block ownership, not specialty or group ownership.
Operating Room Workflow
Process and workflow enhancements also contribute to the overall efficiency of the department. Variabilities in workflow, such as first-case starts and room turnover, not only impact patients but impact surgeons and staff as well. The metrics used to optimize OR performance are diverse, but by adopting an approach that balances all aspects of process and workflow metrics, a sustainable impact on efficiency can be achieved.
Determining the Right Setting of Care
Performing cases in the right setting, OR versus Ambulatory Surgery Center (ASC), is essential to fully maximize surgery costs and procedural efficiencies while providing a balance of conserving hospital surgical revenues. While shifts from the inpatient setting to outpatient in the past have been predominantly driven by advances in technology and minimally invasive techniques, current trends are driven by purchasers, primarily payers, consumers, and physicians.
ASCs have financial and practical benefits over the traditional OR setting. Financial benefits include the reduction of unnecessary costs, which is attractive to payors, and moving certain procedures to an ASC can help eliminate postoperative hospital stays and maximize reimbursement opportunities. A practical benefit of shifting cases frees up OR availability to accommodate higher-acuity cases and diminishes disruptions when procedures take longer than expected to complete.
Corazon’s Solution to Surgical Service Optimization
As patients have become increasingly more selective, administrators are focused on making surgical services more productive and efficient as they continue to face challenges. Improving efficiencies can provide results such as increased OR capacity, improved workflow and performance metrics, and appropriately shifting outpatient volume from inpatient ORs to ASCs. By implementing improvements and best practices, efficiencies can be achieved, and costs can be decreased.
Have you identified an efficiency issue in your surgery suites? Corazon, Inc. knows that surgical services are the greatest source of revenue within a hospital/system and has helped clients manage higher margins by optimizing surgical services. Contact Corazon for an onsite assessment and workflow redesigns that can not only improve quality but improve efficiency. For more information on improving operating room efficiency and operations, register and listen to Corazon’s webinar on April 19, 2023, “Optimizing Efficiency & Workflow: Surgical Services
Author: Carol Wesley
Advisory Board, ASC Services Outlook: A guide to opportune ASC services – now and in the future, July 2022. Accessed online at: https://www.advisory.com/
Wheeler, Tina, December 2022; 2023 Outlook for Health Care. Accessed online at: https://www2.deloitte.com/us/en/blog/health-care-blog/2022/2023-outlook-for-health-care-could-margins-staffing-stall-progress-to-future-of-health.html