Q&A: How Can Hospitals Improve Surgical Profitability and Variation in Outcomes?

October 28, 2021

During COVID-19, profitable elective surgeries have been delayed and healthcare staff have been overworked. The pandemic has increased the pressure on hospital leaders to maintain profitability and compete more effectively.

Becker’s Hospital Review recently spoke with Dennis Kogan, co-founder and CEO of Caresyntax, about this topic.

Question: What impact has COVID-19 had on the operating room?

Dennis Kogan: At many hospitals and health systems, the OR represents at least half of the profit. The delay and deferral of elective surgeries has had a massive financial impact. Hospitals have also been hurt as patients are increasingly more selective, scrutinizing hospitals, seeing them in a different light and seeking care in other settings where they feel more safe. In addition, as health systems have sought to ramp back up their ORs, many have faced staffing challenges. It’s been a trying time on all fronts for ORs and hospitals.

Question: How are ASCs affecting the competitive landscape? What must hospitals do to compete?

Dennis Kogan: The shift from inpatient surgical care to ambulatory care (ASCs) began before COVID-19 but accelerated during the pandemic. With hospitals overwhelmed with COVID cases, some patients have viewed ASCs as safer. Simultaneously, payers see ASCs as lower-cost sites of care. As a result of this confluence of factors, ASCs have benefitted at the expense of hospitals.

Hospitals face challenges in that they frequently have more complicated cases than ASCs and must maintain costly infrastructure to prepare for and manage adverse scenarios.

To compete, hospitals need to reduce costs without decreasing quality. Hospitals face challenges in that they frequently have more complicated cases than ASCs and must maintain costly infrastructure to prepare for and manage adverse scenarios. So, the best way to compete is to lower costs while providing high-quality care and a good patient experience. A key component of the cost-quality equation is efficiency: to improve quality, efficiency of execution – scheduling, implementation of standard checklists and workflows, reducing variability in high volume procedures – needs to be honed. Many case studies demonstrate that increased efficiency results in both better quality and lower total costs of surgical care. Once efficiency tools have been implemented hospitals can then take steps to increase volume and revenue.

Question: What can hospitals and health systems do to recover from these disruptions?

Dennis Kogan: Hospitals have to be viewed by key stakeholders as an attractive destination for patients.

It is essential that patients see hospitals as safe and delivering high-quality care. This requires clear benchmarks, metrics and transparency about results. Payers have to be convinced that a health system is a preferred provider. To be preferred, payers will look at the total cost of care for an episode, which takes into account a provider’s efficiency as well as quality, complications and readmissions.

Once health systems are equipped with data demonstrating they provide high-quality care (good outcomes with few complications) at low or competitive cost per episode of care, providers must communicate these results to patients while leveraging their data to enter into more value-based contracts with payers.

Dennis Kogan: Caresyntax helps health systems compete through a comprehensive toolkit that provides actionable, data-driven insights, particularly for the operating room.

Health systems use these actionable insights to deliver care more efficiently, improve their margins, mitigate risks and provide the basis for entering into more profitable value-based contracts.

The Caresyntax Toolkit helps:

• Deliver care more efficiently
• Improve margins
• Mitigate risks
• Optimize value-based contracts

Among the data provided by Caresyntax are insights about variability of care in the surgical suite, which is often invisible. This data identifies the root causes of events and costs, which is used by surgeons and surgical teams to identify what they must fix to decrease variation, achieve fewer costly outliers, improve their outcomes and decrease their total cost of care.

For example, prior to a surgery, data about a patient’s risk factors can be used to provide greater context about each patient, determine the most appropriate surgical team for that patient and optimize all aspects of the procedure. In effect this is “precision surgery,” where each surgery is customized, based on data, to maximize the patient’s outcome while minimizing costs. Analytics on operational data also enables health systems to maximize the capacity and utilization of the OR and form the optimal team for each surgery.

Our analysis showed that in working with Caresyntax, hospitals with typical OR margins of 2-3% can boost their margins to 20%, directly impacting the bottom line.

Maximizing OR capacity and lowering the costs of care (by reducing complications) provides opportunities to attract increased volume and revenue while improving profitability. Our analysis showed that in working with Caresyntax, hospitals with typical OR margins of 2-3% can boost their margins to 20%, directly impacting the bottom line.

After increasing capacity and margins, providers are in a much better position to aggressively engage in value-based contracts, while using data-driven insights to mitigate their risk when entering into these contracts.

Sign up for our to learn more about how Caresyntax can help your hospital turn massive amounts of clinical and operational data into actionable insights, attract more volume, boost revenue, enter into more value-based contracts and dramatically improve margins and ROI.