Thursday, July 8, 2010

Ten Practices for Increasing Hospital Profitability: Tip #3

I have been commenting this week on the 10 practices for increasing hospital productivity published by Becker's Hospital Review and adding my take on them based on my experiences as a CEO and as a consultant helping other hospitals improve operating metrics. Today I want to comment on effective OR utilization. This is a challenge faced by almost every hospital I know of.

Tip #3: Ensure that your OR is used by physicians efficiently

Boy, that seems easy enough to say yet every hospital struggles making this happen. The OR should be a profit center for the hospital and surgical patients should make up 40% of the hospital's total patient mix. But we often see that this is not the case anymore because of several factors at play.

First of all, the more profitable outpatient surgeries are now funneled off to a separate ambulatory surgery center. Only very small hospitals still do all inpatient and outpatient surgeries in one location. In most instances, the outpatient business goes to a for profit physician owned center from which the surgeons get very nice financial returns. But as one surgeon told me, the real financial benefit to him is that he can do twice as many surgeries in the same amount of time at the center versus the hospital. Time is money and OR turnaround time is key. We helped one hospital reduce its room turnaround time to 13 minutes. Now that rivals an ASC and did a lot to promote physician loyalty.

The loss of the outpatient surgery business impacts hospitals negatively in two ways. First they are losing the most profitable surgeries and second, the reduction in overall business makes many hospital ORs less efficient. It is critical that hospitals adjust to the current volume of business and do what they do efficiently. That surgeon may be taking his best business away from you, but his satisfaction with your OR for the cases he brings is critical to the hospital's success. Here are some steps to take:

1) Start your cases on time. At least 75% of first cases should be on time
2) Reduce cancelled cases. Better and timely preadmission testing can get this near 0%.
3) Reduce room turnaround time. I like 13 minutes as a goal.
4) Reduce PACU time to under 1 hour. This really saves overtime at the end of the day.
5) Improve block utilization. 70% should be you goal
6) Track and improve surgeon and surgical patient satisfaction. We have seen a hospital with a 95% satisfaction rating from their surgeons and patient satisfaction at the 94th percentile.

OR is a critical for your hospital's bottom line and is sometimes challenging to address. We at Compirion have had some significant success assisting hospitals to help themselves in this area.

More profitability tips tomorrow.

Mark Brodeur

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