Three Metrics to Drive Your ASC’s Growth Strategy

ASCs face the critical challenge of continuously adapting and growing in a competitive market. To navigate this dynamic environment effectively, it’s essential for ASC leaders and administrators to focus on key performance indicators (KPIs) that truly drive growth and operational efficiency.

There are endless KPIs that you can track, but focusing on these three fundamental metrics will help you identify opportunities, overcome challenges, and propel your center toward sustained success and growth.

• Operating Room Utilization
• Revenue Per OR Minute
• Average Net Revenue Per Case

Step 1: Identify Total Missed Revenue by OR Usage & Revenue

Key Calculations

• Operating Room Utilization Definition (ORU): This metric is calculated as the ratio of the time the operating room is in use for surgeries to the total available time. It reflects how efficiently the OR time is being utilized, which impacts revenue generation, patient satisfaction, and surgeon satisfaction.
• Revenue Per OR Per Minute Definition (RPM): This represents the average revenue generated for each minute the OR is in use. It impacts financial projections and also gives insight into revenue potential.

Step-by-Step Calculation

While it’s possible to perform these calculations manually, this data should be pulled from your practice management systems’ reports, such as HST, to make the process faster and more accurate.

1. Calculate Total Available OR Time: Determine the total number of hours the OR is available for use each day. Convert this time into minutes for consistency with RPM. If your OR time changes frequently, either keep track of that in your software or input an average availability.
2. Determine Operating Room Utilization % (ORU%): Calculate ORU% using actual surgery time and total available OR time. You can choose whether you want to include pre- and post- OR time, but if you would like to compare your results to HST’s State of the Industry Report, only include OR duration in your calculations.
3. Identify Revenue Per OR Per Minute (RPM): This is typically an established metric based on historical revenue data.
4. Calculate Total Revenue Opportunity: Multiply the total available OR time (in minutes) by the ORU% to get the actual utilized OR time. Then, multiply the utilized OR time by RPM to estimate the total revenue opportunity. This helps identify the additional revenue you could make if you utilized your ORs more.
5. Calculate Total Missed Revenue: Multiply the total available OR time (in minutes) by the % of non-utilized OR time. Then, multiply the non-utilized OR time by RPM to estimate the total missed revenue.

Example

Let’s say an ASC has the following data:

• Total Available OR Time: 540 minutes/day
• OR Utilization %: 75%
• Revenue Per OR Per Minute: $75

Using the equation:

• Total Revenue = (540 x .75) x $75 = $30,375/day
• Total Missed Revenue = (540 × .25) × $75 = $10,125/day

Step 2: Identify Highest Average Net Revenue Per Case

Key Calculations

Average Net Revenue Per Case Definition: You can calculate the average net revenue by identifying the contract fee per case. If your ASC has multiple specialties, you will also want to categorize each primary CPT code by specialty so that it’s simpler to analyze. This metric can be leveraged during negotiations with insurance providers, incorporated into performance reviews, and used to project future revenue. After calculating, head to HST’s State of the Industry Report to see how you compare to your peers.

Step-by-Step Calculation

While it’s possible to perform these calculations manually, this data should be pulled from your practice management systems’ reports, such as HST, to make the process faster and more accurate.

1. Contract Fee Per Case: Record the contract fee based on the procedure and payor.
2. Sum Total Revenue: Add up the contract fees for all cases in a given period.
3. Count Total Cases: Count the total number of cases performed during the same period.
4. Calculate Average Net Revenue Per Case: Divide your Total Revenue by the Total Cases.

Example

Let’s say an ASC has the following data for each specialty:

• Total Revenue = $380,000
• Total Number of Cases = 200

Using the equation:

• Average Net Revenue Per Case = $380,000 / 200 = $1,900

Step 3: Create a Strategy to Bring in More Cases

In Step 1 of our strategic analysis, we leveraged two key metrics: Operating Room Utilization Percentage (ORU%) and Revenue Per Operating Room Minute. This helps us to understand the scope of the revenue opportunity that remains untapped.

In Step 2, we did a deep dive into the Average Net Revenue Per Case. This metric is instrumental in pinpointing which specialties and procedures are the most lucrative. Armed with this data, you are now poised to craft a robust, data-driven strategy that aims to maximize revenue.

The cornerstone of this strategy is to align scheduling habits with the identified high-revenue-generating procedures. This means prioritizing these procedures and actively seeking partnerships or referrals in these specialties. You can engage in targeted marketing efforts aimed at referring physicians and patients to increase awareness for your high-revenue services. This could include educational campaigns or outreach programs, all tailored to highlight your center as the premier option in your community. Data like this is also perfect to share in your quarterly board meetings to showcase your strategic efforts and mindset, while also tapping into your board’s expertise and ideas for how you can lean in.

Ultimately, this approach is not just about filling operating rooms; it’s about strategically aligning resources and capabilities to focus on the most profitable avenues. By doing so, you will enhance your financial sustainability while continuing to provide exceptional care and value to patients.