COVID-19 RESPONSE: Recent developments are impacting our valued clients. Read these helpful resources for navigating this crisis in your business.
The Cost of Compliance: COVID and Ophthalmic ASCs
Wednesday, October 14, 2020 9:00 AM
When the COVID-19 pandemic arrived in March of this year, ambulatory surgery center (ASC) operations changed abruptly and drastically. By late April, 35 states had issued executive orders to curtail elective surgery. While many ASCs ceased operations indefinitely, others remained open, albeit with a severely restricted surgery schedule. ASC leaders responded by going into survival mode, becoming laser-focused on stretching cash flow to cover the slowdown, shutdown, and/or reopening of their centers.
At the same time, government agencies and professional societies were providing rapid-fire guidance regarding clinical protocols necessary to continue operations. Surgery centers worked tirelessly to keep up with the latest directives, which were being issued weekly and then daily, sometimes multiple times a day. Limited access, universal masking, social distancing, rigorous screening, and thorough cleaning/disinfecting became the new normal. ASC leaders focused on the implementation of these new guidelines without regard to the associated expense.
Assessing the Impact
Now, months later, COVID-related precautions have been accepted and fully integrated into surgery centers. In an effort to gauge their financial impact, Progressive Surgical Solutions (PSS) invited ASCs across the country to participate in a personal protective equipment (PPE) COVID cost study and is thankful to all who participated. As part of the study's research, we asked each client to capture the PPE costs related to COVID-19 for the first six months of 2020 — two months of pre-COVID data (January and February) and four months of post-COVID data (March through June). All participating clients confirmed they could provide their pre-COVID case costs, allowing for a comparison with costs incurred as a result of new protocols.
Using a tracking tool provided by PSS, ASCs were asked to report all costs related to PPE. Besides supplies (e.g., masks, caps, gloves, disinfectant, and thermometers), ASCs also captured labor costs (e.g., staff taking temperatures and screening pre-op calls) and COVID-related structural fees (e.g., barriers, plexiglass, and signage). Additionally, participating ASCs captured their surgical volume per month, allowing them to calculate their total costs on a per case basis.
According to study results, pre-COVID PPE costs for ophthalmic ASCs across the United States averaged $3.69 to $4.16. Meanwhile, post-COVID PPE costs, which included supplies and labor-related safety precautions, averaged $14.06 to $17.99 — an increase of roughly $12.32 per case and 313 percent in costs per case. More specifically, with all staff in the ASC wearing caps and masks, supply orders escalated to an average of 1,200 percent. Meanwhile, orders for disinfectant wipes averaged a 238 percent increase.
Besides supplies, labor costs also increased. With a need for additional personnel to take temperatures at the front door and more time to screen patients for COVID symptoms pre-op, the cost of labor increased by an average of $4,025 per month. If these practices are sustained, the typical ASC could lose approximately $50,000 per year. In addition to the incremental labor costs, these new positions are proving quite challenging to fill — in some states, medical assistants are acceptable, while in others, more advanced credentials are required.
While the results of this study were not shocking, they hold valuable insight for ASC owners seeking to understand the true financial impact of COVID-19. It is clear that the implementation of COVID-related infection controls has significantly impacted labor and supply expenses, adding further financial strain to centers. As they continue to monitor these ongoing expenses, ASC leaders and owners must remain aware of their impact and be proactively evaluating all other controllable costs. Once the overall financial results of the past six months are confirmed, owners will likely see the inevitable reductions on net income and available cash.
We are all doing our best to survive in this “new normal.” By sharing the study results, we hope that more ASCs see the value in tracking costs per case data and profitability by case type. The sooner an ASC can get a handle on its costs, the sooner it can effect changes that will positively impact the bottom line.
WE CAN HELP. For our ASC clients who would like to get a handle on case costing, we would love to support you. Contact PSS to get help navigating the waters and back on the right track!