Minimizing the Impact and Cost of Inefficient O.R. Utilization Michael Monea moneamj@hotmail.com Joe Laden joeladen@aal

1. Minimizing the Impact and Cost of Inefficient O.R. Utilization Michael Monea moneamj@hotmail.com Joe Laden joeladen@aalouisville.com

2. Take Home Message Anesthesia Billing Data can be used to: • Analyze OR Utilization • Suggest Alternative Scenarios: • Obtain Financial Support • Change OR Allocation

3. The OR Utilization Spreadsheet ASA Newsletter Practice Management Department June 2004 “How Many Rooms Do We Need” September 2004 “The Cost of Inefficient O.R. Utilization”

4. Why use Anesthesia Billing Data? • OR Data From Hospital Not Available • OR Data From Hospital Not Useable • Group Covers Multiple Facilities • More Control Over Use of Data

5. Source of Anesthesia Billing Data • Practice Management System Reports • Billing Company Reports • Custom Report May be Necessary

6. Sample Reports From Anesthesia Billing Data

8. OR Time By Hour Of Day 01/26/05 01/26/05 Wednesday Inter- Max val ORs Hours %Util Hours In This Time Intverval 0:00 1 1.0 7% *** 1:00 1 1.0 7% *** 2:00 1 1.0 7% *** 3:00 1 0.9 7% *** 4:00 0 0.0 0% 5:00 0 0.0 0% 6:00 0 0.0 0% 7:00 8 3.1 22% *********** 8:00 12 9.6 68% ************************************ 9:00 14 12.5 89% *********************************************** 10:00 14 13.1 94% ************************************************** 11:00 15 12.5 89% *********************************************** 12:00 14 11.2 80% ****************************************** 13:00 11 9.4 67% *********************************** 14:00 12 10.3 74% *************************************** 15:00 8 6.9 49% ************************** 16:00 6 5.1 37% ******************* 17:00 5 3.3 23% ************ 18:00 2 2.0 14% ******* 19:00 2 2.0 14% ******* 20:00 2 1.1 8% **** 21:00 1 0.1 1% 22:00 1 1.0 7% *** 23:00 1 1.0 7% *** OR Hours,Total : 108.10 OR Hours Before 3:00: 85.75 79.3% OR Hours After 3:00: 22.35 20.7% OR Utilizaton 14 OR's from 7:30-3:00 81.7%

9. HISTORICAL UTILIZATION Total Before Before 3:00 Date Cases Hours 3:00 pm Utilization 01/08/04 25 53.02 45.10 43.0% 01/09/04 42 95.03 73.55 70.0% 01/12/04 27 74.78 56.83 58.0% 01/13/04 39 105.03 75.32 71.7% 01/14/04 43 96.55 81.13 77.3%███ 01/15/04 35 94.10 76.11 72.5% 01/16/04 39 82.21 61.94 59.0% 01/19/04 28 88.55 72.74 74.2% 01/20/04 26 58.99 52.08 49.6% 01/21/04 42 88.74 72.09 68.7% 01/22/04 28 78.82 63.34 60.3% 01/23/04 43 92.03 68.33 65.1% 01/26/04 41 101.75 80.17 81.8% 01/27/04 41 112.28 76.81 73.2% 01/28/04 38 86.44 68.04 64.8% 01/29/04 43 107.44 83.17 79.2% --------------------------------------------------------- HIGHEST UTILIZATION DAYS: 03/02/04 85.9 05/05/04 90.2 08/18/04 91.8

10. Definition of OR Utilization O.R Utilization = Case Duration + Turnover Time ▬▬▬▬▬▬▬ Available time

11. Case Duration Anesthesia Stop End Time – Anesthesia Start Time ( ≈Surgical time)

12. Turnover Time Time Between Cases to Prepare Operating Room and Equipment ● May need to be estimated

13. Available Time Normally Scheduled Prime Shift Hours Example: 8 O.R.’s – 7:00 a.m. – 3:00 p.m. 2 O.R.’s - 7:00 a.m. – 5:00 p.m. Total = 84 Hours Avaliable Time

14. Utilization Example, 1 OR OR Available 7:00 – 3:00 Case 1: 7:00-9:00 Turnover 9:00-9:30 Case 2: 9:30-12:30 Turnover 12:30-1:00 Case 3: 2:00-2:30 Total Turnover: 1.0 Total Case Time: 4.5

15. Example -Utilization Calculation, 1 OR (Case Time + Turnover) / Available Time (4.5 + 1.0) / 8 = 68.85% 4.5/8 = 56.25% without turnover

16. Annual Utilization at Facility Total Annual Prime Shift OR Hours Billed minus Total Turnover Time divided by Total Available OR Hours

17. Example • 20 OR’s covered • Prime Shift – 8 hours/day; 7:00-3:00 • 12,500 cases / year • Anesthesia bills 20,000 hours / year during Prime Shift • Anesthesia bills 25,000 total hours /year • Turnover time averages 30 minutes • Total OR Revenue - $7,500,000

18. Example – 20 OR’s - Available Hours 20 OR’s x 8 hrs/day x 250 days = 40,000 Available Hours

19. Example – 20 OR’s Cases/Day 10,417 Prime Shift Cases / 250 days / 20 OR/s = 2.08 Cases / OR / Day

20. Example – 20 OR’s Turnover Total Turnover Time = (daily cases – 1) x Days x OR’s Covered x Average Turnover Time

21. Example – 20 OR’s Turnover (2.08 cases/day – 1) x 250 days X 30 minutes X 20 OR’s = 2,700 hours Turnover Time

22. Example – 20 OR’s Utilization (20,000 Annual OR Hours + 2,70 0 Turnover Hours) / 40,000 Available Hours = 56.75% Average Annual Utilization

23. Hourly OR RevenueExample Hourly Revenue = OR Revenue / OR Hours $7,500,000 / 25,000 OR Hours Billed = $300/hr.

24. Lost Revenue (Desired Utilization - Actual Utilization ) x Available Hours x Hourly Revenue Rate

25. (80% - 58.75%) x 40,000 Available Hours x $300/hr. = $2,544,000 Lost 21.25% 8,480 hours Actually $2,248,436 when accounting for turnover between additional cases Lost Revenue- Example

26. Unused OR’s Another view of underutilization 80% - 58.75% = 21.25.3% unused time Equals 21.25% x 20 OR’s = 4.25 average unused OR’s

27. Desired Utilization • Literature = 75%-85% possible • Analyze Busiest Days • 10 days of year with largest number of cases • Analyze Busiest OR’s

28. HISTORICAL UTILIZATION Total Before Before 3:00 Date Cases Hours 3:00 pm Utilization 01/08/04 25 53.02 45.10 43.0% 01/09/04 42 95.03 73.55 70.0% 01/12/04 27 74.78 56.83 58.0% 01/13/04 39 105.03 75.32 71.7% 01/14/04 43 96.55 81.13 77.3%███ 01/15/04 35 94.10 76.11 72.5% 01/16/04 39 82.21 61.94 59.0% 01/19/04 28 88.55 72.74 74.2% 01/20/04 26 58.99 52.08 49.6% 01/21/04 42 88.74 72.09 68.7% 01/22/04 28 78.82 63.34 60.3% 01/23/04 43 92.03 68.33 65.1% 01/26/04 41 101.75 80.17 81.8% 01/27/04 41 112.28 76.81 73.2% 01/28/04 38 86.44 68.04 64.8% 01/29/04 43 107.44 83.17 79.2% --------------------------------------------------------- HIGHEST UTILIZATION DAYS: 03/02/04 85.9 05/05/04 90.2 08/18/04 91.8

29. Problem Suboptimal Utilization Represents Lost Opportunity for Anesthesiologists to Work and Bill. Because . . . .

30. Problem . . . . Anesthesia personnel costs are directly related to number of operating rooms covered, not number of hours billed.

31. Methods to Increase Utilization • Acquire more cases • Move late cases to prime shift • More efficient scheduling • Limits on unused block time • Close operating rooms

32. Some Reasons for Low Utilization • Surgeon Preference • Hospital Policy/Problems

33. Reasons for Low Utilization- Surgeon Preference • Block Time that is underused and not released • Ability to Schedule without delay • Want to work late • Want to work early • Habitually late

34. Reasons for Low Utilization-Hospital Policy • Hospitals should want high utilization to minimize personnel and other costs. • But . . . . . .

35. Reasons for Low Utilization-Hospital Policy In a competitive local environment: • Attract Surgeons with: • Plenty of available OR time • Liberal Block Scheduling • Early and Late Starts • Concern with Market Share and Loss of Surgeons to Other Facilities

36. Reasons for Low Utilization-Other Hospital Reasons • Some procedures are so profitable that low utilization is irrelevant to hospital. • Poor OR Management • Personnel Problems • Bad Scheduling/Information Management Systems

37. Bottom Line for Anesthesiologists • OR Utilization is largely not controllable by anesthesiologists. • But, anesthesiologists suffer financially for low OR utilization

38. Bottom Line for Anesthesiologists Because the costs to staff the OR suite during the prime shift is fixed, revenue lost by OR underutilization comes directly from the anesthesiologists’ W-2 compensation.

39. If Underutilization is a Financial Problem, The Next Steps . . .

40. Present the situation to members of the anesthesiology group. • Present the case to hospital administration. • Analyze Alternative Scenarios: • Obtain Financial Support • Change OR Allocation

41. The OR Utilization Spreadsheet ASA Newsletter Practice Management Department June 2004 • September 2004 Download Spreadsheet from ASA Web Site: http://www.asahq.org/Newsletters/2004/09_04/pracMgmt09_04.html

42. To receive this PowerPoint presentation: email: joeladen@aalouisville.com