Healthcare is a labor-intensive industry. And for many providers, payroll expenses can really add up. According to a 2014 Becker’s Hospital Review survey, more than half of the chief financial officers surveyed said personnel costs posed the biggest operational challenge to their organizations during the previous 12 months.
When deciding what your operational business costs should be, it’s important to take many things into consideration to maximize cash flow, which should help to mitigate labor costs. To help guide decision making, outpatient surgery centers frequently turn to caseload- and volume-based benchmarks, which provide simple metrics for determining when to hire additional business office staff.
But it’s not a simple problem to solve. While benchmarks like case volume per FTE do offer some clarity, these tools often don’t tell the whole story about an ASC’s unique operation. Here’s the plain truth: There is no easy way to determine when and if a facility needs to add or reduce staff size. The issues involved are simply far too complex and dependent on a combination of variables specific to each center. Yes, benchmarks can help, but they’re only one of many factors that should be assessed when it comes to proper resource allocation. Other variables to consider include:
ASCs offer a wide range of specialty surgical care. According to data provided by the Centers for Medicare and Medicaid Services (CMS), the nation’s 5,400-plus Medicare-certified ASCs have specialized service in ten major areas: orthopedic (13 percent), ophthalmologic (13 percent), plastic/reconstructive (11 percent), podiatry (11 percent), ENT (9 percent), pain management (9 percent), OBGYN (8 percent), endoscopy (8 percent), dental (2 percent) and other (16 percent).
Specialty plays a critical role in how an ASC is staffed. For example, the billing and coding functions at a specialty spine facility are going to differ dramatically from other specialties. Complex spinal surgery can often generate numerous line items of individual procedures and implants that need to be documented. As a result, it takes billers and coders significantly longer to code and bill spine claims than it would to code and bill other specialties such as pain management and ophthalmology.
Along with benchmarks and other data, understanding such billing and coding differences across specialties can help facilities make more informed decisions as it relates to their billing staff.
While out-of-network centers typically receive higher reimbursements, they also often have much higher labor costs than in-network ASCs, which can develop and implement efficient business office processes around the standardized terms of a managed care contract.
Out-of-network cases, however, offer few opportunities for process standardization. For these cases, accounts receivable representatives typically must master the numerous terms and conditions of various health plans and then negotiate virtually every step of the reimbursement process directly with the payer or third party for every patient. Payment posting also is far more labor-intensive for out-of-network patients, as business office staff must determine the appropriate payment for each case and ensure it’s in line with a facility’s policies.
Does your facility primarily treat in-network or out-of-network patients? Answering this question—and understanding what it means from a staffing perspective¬—can prevent a facility from the costly expenses associated with under- or overstaffing. Facilities across the country are likely losing, on average, 10-20 percent of additional revenue due to insufficient staffing.
The payer breakdown for the average ASC in the United States is 25 percent Medicare, 5 percent Medicaid, 58 percent commercial, 5 percent worker’s compensation and 4 percent self-pay, according to VMG Health’s Intellimarker report.
All ASC revenue streams, however, do not look the same—and nor should their workforces. For example, facilities with high worker’s compensation volume, typically orthopedic and pain management centers, require higher staffing levels than ASCs that have a high number of Medicare cases. Worker’s compensation cases require a lot of legwork, and most carriers don’t accept electronic claims or electronic claims status tools, resulting in higher operational labor costs per case.
Similarly, facilities that have high cash per case—for example, $10,000 or more—also should scrutinize their staffing levels to determine if overstaffing or higher-paid billers could actually improve their return on investment. For these centers, quicker turnaround times, better quality and more optimized billing and coding functions often make the additional investment worthwhile.
Practice management systems are playing an increasingly important role in our industry. By utilizing the software tools appropriately, ASCs can improve efficiency, automate many repetitive tasks and optimize reimbursements.
But technology isn’t a cure-all for every operational ailment. It’s also not a suitable substitute for human judgment in all situations. For example, while these systems are very helpful at many in-network centers for auto-posting, they tend to be less so for out-of-network centers that require extensive analysis of the issues involved. And the same is true for the claims step of the revenue cycle process, which can be successfully automated and considerably lower labor costs.
Still, automating the wrong function can have disastrous financial consequences for an outpatient surgical center. As with payer mix, managed care contracting, specialty and other revenue cycle-related variables, understanding how to leverage technology around a unique set of circumstances can help a facility determine the appropriate staffing levels necessary to optimize reimbursements, provide high-quality care and deliver the best customer service.
Written by Lindsay Miller, Executive Vice President, National Medical Billing Services
Source: Becker’s ASC Review
This post was first published October 3, 2016 and was updated July 29, 2020.