Maintaining profitability for hospitals requires a complex calculation that combines the need for improved outcomes, improved quality, and favorable patient satisfaction scores. At the same time reducing cost is a higher priority than ever before. Value-based care and bundled payments all contribute to reduced reimbursements that have resulted in smaller margins for hospitals.
A Navigant survey published in 2018 found that U.S. hospitals and health systems experienced an average 39% reduction in their operating margins from 2015 to 2017 because their expenses grew faster than their revenues.
In the operating room and other procedural areas, reducing costs is especially critical due the high cost of care in those environments. Operating rooms are the most resource intensive part of the hospital per square foot and the staff resources are among the most highly paid.
In a study published in 2011,1 hospitalizations that involved operating room procedures constituted 29 percent of the total 38.6 million hospital stays in the United States and 48 percent of the total $387 billion in hospital costs. In addition, the study found that on average, hospital stays that involve an OR procedure have been reported to be 2.5 times costlier than stays that do not involve an OR procedure. In California, 1 minute of operating room (OR) time costs an average $36 to $37 per minute, according to a study published in JAMA Surgery.2
To remain in business and provide the best care for their patients, hospitals must scrutinize all expenses and ensure that any new process or products will result in a measurable ROI that pays for itself with efficiency or improved processes.
What are the most common problems that generate the most revenue leakage?
According to a study published in NCBI/NIH. Delays in procedure start times represent the most common type of problem in the OR and more than half of all cases had at least one delay.3 A delay in the first case of the day will impact subsequent procedures which creates a ripple effect across the entire day's schedule.
What causes delays?
One of the biggest challenges is unpredictable patient behavior. Patients who arrive late or cancel at the last minute can create significant scheduling bottlenecks. In addition, everything from inaccurate scheduling per procedure type, room turnover time and patient, staff and equipment availability can impact the cost of procedures. Some elements are unpredictable, such as an unexpected complication during a procedure that extends the planned OR scheduled time. In the end, while hospitals can’t plan around the unpredictable, they can improve process problems that occur regularly in the clinical environment.
When valuable clinical resources get delayed or interrupted with administrative tasks, such as managing a delayed schedule or finding a missing patient, costs increase and revenue decreases. The impact to the schedule is felt across multiple functional areas that represent high dollar resources, such as surgeons, anesthesiologists, and surgical nursing staff. Every minute counts when the costs of a delay are so high.
Any delays can negatively affect the quality of care and can significantly impact patient satisfaction regarding their treatment experience which can reduce satisfaction scores. Lowered satisfaction score can negatively impact reimbursements, It’s a vicious cycle.