Maximizing OR Utilization in Ortho ASCs

Ep. 119: Carol Hiatt – Maximizing OR Utilization in Ortho ASCs

Here’s what to expect on this week’s episode. 🎙️

In this week’s episode of This Week in Surgery Centers, we spoke with OR efficiency expert Carol Hiatt, and she shared so many insights for orthopedic ASCs looking to tighten up their operations.

Here are some of the most eye-opening takeaways:

OR Block Time Utilization: The goal is 85%, but most are often under 50%.

Hospital Case Leakage: Only 10-20% of ortho cases should go to the hospital, but most are sending 30-40%.

Accurate Case Time Estimation: Surgeons should predict case durations with 90% accuracy.

Cases Per OR Per Year: The minimum goal is 1,000, but top-performers are hitting 1,800.

Day-of-Surgery Cancellation Rate: If your ASC is experiencing higher than 2%, it’s time to form a review committee.

Carol’s advice: you don’t need to fix everything all at once. Start with block utilization and room turnover and build from there. Even improving from 32% to 41% OR utilization could mean millions in recaptured revenue.

Episode Transcript

[00:00:00] Welcome to this week in Surgery Centers. If you are in the ASC industry, then you are in the right place every week. We’ll start the episode off by sharing an interesting conversation we had with our featured guest, and then we’ll close the episode by recapping the latest news impacting surgery centers.

We’re excited to share with you what we have, so let’s get started and see what the industry’s been up to.

Hi everyone. Here’s what you can expect on today’s episode. As the founder and owner of Surgery Center Consulting Services, Carol Hiatt is an ASC industry veteran with over 30 years of firsthand experience. Carol joins us this week to share tips on how orthopedic centers can increase in maximize OR utilization.

So if you’re looking for ways to improve this metric and avoid common causes of under utilization, then you will love this episode and we’ll definitely walk away with lots of tangible tips. After my [00:01:00] conversation with Carol, we’ll switch to our data and insights segment. You’re likely familiar with our full state of the ASC industry report, but we’ve recently released 12 new benchmarking reports that are shorter and solely focused on the data.

And really take a deeper dive into one single specialty at a time. So today I want to pay some attention to dental facilities. I feel like this is a specialty that can often be overlooked sometimes, but we were able to pull data from 35 centers representing nearly 15,600 unique cases. So we’ll look at block utilization, pre-auth rates, patient deposit, collection rates, and a bunch more.

I hope everyone enjoys the episode and hears what’s going on this week in surgery centers.

Erica Palmer: Hi Carol. Welcome to the podcast. Hi, Erica. Great to be here. Can you please share a little bit about yourself with our listeners?

Carol Hiatt: Sure. So my name’s Carol Hiatt. I’m [00:02:00] a registered nurse. I’m also a certified operating room nurse, a certified ambulatory surgery center administrator and a certified professional healthcare risk manager.

I grew up in the ambulatory surgery center business. I have been in here, as you can tell, by my hair, a long time, enough time that I’ve got plenty of ASC wisdom. For the last I think it’s about, gosh, I hate to say this, but I think it’s 17 or 18 years. I’ve also been an accreditation surveyor, so I do a lot of new surgery center startups.

I spend a lot of time helping surgery centers stay in compliance and I’m also, recently there’s been a tremendous ask for help with efficiency in operating rooms, so I’m doing a lot of focusing on that right now. So I have a real broad stroke of the industry, but a lot of depth and a lot of history.

Erica Palmer: Yes.

And that is why I am very excited to have you on today because we were talking a few weeks ago and [00:03:00] you had mentioned the project you’re currently working on, which is working with the surgery center an ortho facility to help them maximize their OR utilization. And I said, I’m gonna stop you right there.

Can you please come on the podcast and tell us everything? So let’s get right into it. Why is OR utilization such a high impact metric specifically for ortho centers?

Carol Hiatt: So it’s a high impact metric for every surgery center. I was lucky enough to cut my teeth in GI and Ophthalmology. I didn’t know that was lucky.

I just thought it was a lot of hard work. But those two specialties cannot survive unless they are successful with high volume and very efficient turnover. So that’s how I learned and I learned quickly what I had to do to make those centers efficient. So as I grew up in the industry and went on to [00:04:00] Spine and Orthopedics and other specialties, I realized that even though those specialties often made a lot more money for their cases, they were leaving a lot on the table.

OR utilization is, the key to profitability. Right now in our industry, as everyone that’s listening to this, knows most ASCs are paying anesthesia subsidies, and some of them are huge, even millions a year in some of these orthopedic surgery centers. In addition, anesthesia’s got a high burnout rate right now and.

I hate to use the word hostage, but a lot of those anesthesia groups are set in their own parameters because they’re paid on a stipend and not necessarily incentivized by being an employee and making bonus through volume and things like that. So sometimes they’re limiting the length of day, the number of cases and re reimbursement for anesthesias down.

So if [00:05:00] we are not running our ORs efficiently and using them. For what they are intended for a high percent of the time, then we’re not gonna be successful and anesthesia’s not gonna be successful.

Erica Palmer: Sure. Yeah. And I think I had shared this, but in hsts state of the industry report, we had found that on average ortho ASCs specifically are only using 35% of their blocked OR time now that was for 2024.

What are some of the most common causes, in addition to what you’ve shared, that you’re seeing for under utilization?

Carol Hiatt: As I’ve mentioned to you before, I didn’t even look at your study results before I dove in on a few of my facilities to look at where they were, and 35% generous, unfortunately, and these are very large, very successful orthopedic groups whose names are very recognizable.

A couple of them. Their OR [00:06:00] utilization was even below 35. They now understand how much money they’re leaving on the table and how catastrophic it is for them. But at the time, they couldn’t quite put their finger on the pulse, first and foremost, not knowing your number and the national benchmarks you should be striving to achieve is very, that is so key and I was surprised with two of these large groups.

They didn’t know their number and they. They’re even members of Ortho Forum. So even if they knew what the benchmarks were, they didn’t yet, they hadn’t gathered their data and they didn’t know how they compared to the benchmarks. One of the things I discovered when big groups start looking at an easy metric. What percent of your surgical cases for the whole practice are going to the hospital? Well, in the groups that I’ve been looking at, I’m finding 30 to 40% of their cases are being sent to the hospital rather than captured [00:07:00] in their own ASC.

According to Ortho Forum, that number should be 10 to 20. So reserving those hospital cases for the patients that really have a higher ASA acuity or need inpatient care, that 20% or more represents a significant loss of ASC volume in revenue. One of the recommendations I give for this is that the group form a committee of surgeons and anesthesia providers that every month sit down and retrospectively review the cases that were sent to the hospital.

The first thing they have to do, I should back up and say, is they have to establish criteria. So this criteria, and they need to agree on it, anesthesia and surgeons, this is the criteria. For patients that should be sent out for the hospital and believe it or not. This doesn’t necessarily have some things in there you might expect, like I’ve been with some groups that are saying, okay, our cutoff is [00:08:00] 85.

Why there doesn’t need to be an upper end if the patient is healthy. So what they need to do is sit down and look at a lot of the published criteria that’s out there and determine criteria that they’re gonna go by. Then every month they sit down, they review the cases that went to the hospital, and if there are cases that are falling out.

That didn’t match that criteria. They need to educate their providers and continue to coach the providers until they recapture those cases that should be going to their ASC. As long as you’re not having a significant increase in transfers or other indicators like that, then there’s no reason not to keep those cases at the ASC.

Statistically, they should have a lower chance of getting an infection and patients are happier with the quality of care they get in the ASC.

Erica Palmer: Yeah, I love that you don’t have to do any extra work to, to secure those patients.

So it’s [00:09:00] not like we’re saying, okay, we wanna increase our volume or, increase the patients at the practice. They’re already there. We’re just reassigning where they’re going. So I think that’s great. Just

Carol Hiatt: capture what we already have, put them in the right bucket, so to say. Yep. Love it. Another way that ortho groups, and this is really interesting.

So in the last few years, ortho groups, a lot of them as they’ve developed their own ASCs, have stopped taking ER call or have been pushed out of ER call because the hospitals are hiring their own hospitalists to capture and maintain those encounters of care. A lot of ortho groups have realized, hey, we need to find our way into that urgent care market.

But with, in the case of a few of these groups that I’m working with, I’ve worked with another group whose marketing was excellent and I’m not gonna use their name here, but they do a excellent job. Their message is [00:10:00] clear. I flew to go see them. By the time I got out of the airport, I had already seen two billboards.

That had I torn my rotator cuff on that trip, I would’ve known where to go to get urgent care for my rotator cuff. They had signs in the airport and their message was clear. It wasn’t fuzzy, it wasn’t acute care injury. It was really clear. It was for urgent care, for urgent orthopedic type injuries.

And that particular group keeps 18 ORs in a mid-market area full to capacity near. Wow. Because they’re driving their own volume by capturing that first encounter of care. They’re capturing that road warrior that’s traveling around or that’s out running after work. But the way they’ve done it is they just develop a clear, urgent care market and then they extend some hours at the office so that they have some evening hours and some [00:11:00] weekend hours and they’re capturing that first injury, getting them even into conservative care in their own practice, like physical therapy and things like that. And then ultimately, if they need surgery, they retain that patient.

And they get into their OR. That’s exactly what the hospitals are doing and they’re pushing those groups out. So if the groups don’t make their own direct to consumer marketing program and do it well, they’re not gonna be able to compete and they can continue to lose market share to those hospitals. And that’s a really powerful tool.

Erica Palmer: You’re speaking my language, Carol.

Carol Hiatt: Okay. So there are a lot of measures of OR efficiency that I’ve been surprised to see that these ASCs don’t even know. So we talk about a number and everybody’s heard block utilization, but they don’t really even know what their number is and they’re not comparing it to anything meaningful.

So block utilization [00:12:00] means if you have Dr. Smith and he’s blocked eight full days a month, what percent of those full days is he actually using for scheduling cases? According to Ortho Forum, that number should be 85%. So in my experience the OR block time utilization is really low, less than 50% a lot of times, and nobody’s monitoring and doing anything about it.

There can be a lot of causes for that. There can be that the doctor’s not accurately estimating his case time. Doctors should be able to accurately estimate their case time. 90% of the time, what does that mean? That means it’s plus or minus 20% of the time that they predict it will take. So if a case should take 60 minutes, that means it’s plus or minus 12 minutes.

That’s accurate case time. And if he’s not consistently accurate. Then someone should be going to [00:13:00] him and saying, we need to adjust your cases and your projected times. Now there he can always schedule exceptions. A lot of times what I find is someone in the practice is determining how long they think those cases will take, and that’s how long they’re scheduling them for.

That’s a very inefficient way to do it rather than. Someone at the surgery center saying, okay, historically this is how long it takes. That’s a really important place to start is block utilization because that time that’s unused needs to be given away. The next important metric is the one you already talked about and that’s, or utilization.

So that means of the percentage of time that the OR is available. What percent is it actually being utilized for surgery and direct patient care according to Ortho Forum, as well as other best in class benchmarks? That number should be 75 to 85% of the time, and as you already mentioned, [00:14:00] y’all found it to be 35.

I found it to be even less most of the time. That has a lot of ramifications because then you get into staff efficiency and there are a lot of things that can affect that. But one of the most important indicators is how many case like, so a lot of times I talk to doctors, I told you I do a lot of new surgery center start-ups. I say, how many ORs do you plan to start out with? And they’ll tell me, oh, four to six. And I’ll say, how many cases do you plan to bring? And they say, oh, 2000. So they should be opening two ORs max instead, they’re open in four, so they’re never gonna be efficient. None of these benchmarks are ever gonna be met because they’ve got too many ORs open.

So one of the benchmarks you should be looking at is a thousand cases per OR per year. [00:15:00] Some surgery centers, Orthopedic and Spine, believe it or not, are hitting benchmarks as high as 1800 cases per year. Per OR, wow. So that’s astounding. That’s astounding. If you’re not hitting at least a thousand, you should be closing ORs until you are operating efficiently at a fewer ORs.

Then increase your ORs as your volume increases. Another important indicator is cancellations. Your cancellations day of surgery should be less than 2%. If they’re more than that. Again, the recommendation that I gave for the anesthesia group review or the hospital case review. Have that same committee.

Take a look at day of surgery cancellations and see could this have been prevented? How could we do this until you get your number below 2%. Another number that you need to know is what your staff costs per case. I’m not talking about anesthesia [00:16:00] right now, I’m just talking about your total payroll plus total benefits for employees of the ASC.

What does it cost you per case right now to do your cases? So according to all the studies, Ortho Forum benchmarks, ASCA did a study that they published in 2017 that they said it should be $500 per case. So we all know it. Salaries have gone up exponentially. So even if it’s 40% higher and it’s $700 per case, I’m seeing twice that at most centers because they have too many ORs and they’re underutilized block time and things like that.

You gotta know those numbers. Going into a lot of these efficiency studies, these centers don’t even know their numbers. Even though they have the ability to calculate a lot of these things out of something like HST, they don’t know how to use it or they haven’t fully utilized it, [00:17:00] or just frankly don’t have the time to get granular and figure this out to help them figure out where they are.

As far as simple things centers can start with. One of the things that really shocked me is one of the first efficiency studies I did at a really big orthopedic group in Wisconsin. I went in and I said, so what’s your cut time? And they looked at me like, what? I said when do you start? They said, oh, we roll in at, I said, no, not, what are you aiming for?

What is. And I was surprised out of a large number of surgeons, no one had a cut time. I said, that’s like trying to shoot for a goal that you don’t even know what it is. So you need to establish your cut time. The surgeon. You go to the surgeon and say, doc, we’d like to see you cut at seven 30. Is that okay?

He says [00:18:00] Yes, that means you want his belly to the table at seven 30. So it’s the team’s responsibility to determine how do we get there? Do we have to get in there 45 minutes early? Do we need to get in there 30 minutes early? What is it gonna take us to get ready? That’s a simple place to start and then monitor those first case on time starts.

That’s when you start measuring things and then giving feedback to the providers and the surgeons. It changes everything. By nature. Surgeons are super competitive. When they see their numbers up in front of everybody and compared to everybody else, oh, everything’s on the table at that point. That number first case on time starts according to Ortho Forum and Rothman Institute and several other very reputable places should be greater than 95%.

First case, what does that mean? That means that first case [00:19:00] starts within five to 10 minutes of the scheduled cut time. So if it’s seven 30 within five to 10 minutes before or after that time, either way can be fine. And then on time, case starts through the rest of the day should be greater than 90% and that’s a formidable goal. A lot of times when I talked about the surgeon estimate of how long it would take him to do his case, if their estimates are off, you’ll never have a on-time case start of 90% because they’re missing the mark all day long. So you’ve gotta make sure that they’re estimating their time accurately.

Another thing they can do is I find a lot of centers, the doctors are doing half days, which they come in, they wanna come in, do surgery first thing in the morning, and then go to clinic in the afternoon. I’m seeing at one center I was at [00:20:00] recently, I. Just in the morning from the end of cases till the afternoon cases started, they spent $4,500 on staff salaries while the OR sat idle.

If you do that five days a week, 52 weeks out, out of the year, you’re losing millions of dollars million. The most effective way is almost always full surgical days. It’s, there’s the rare exceptions, but it should be the exception, not the rule. And then, like I said before, keep looking at those block times.

So if you give them three full days and they can’t fill ’em up, give them two full days. Now I haven’t even talked about things like, whether you want to do flipped rooms or surgeons following it themselves in one room, I haven’t talked about specifically turnover times. That’s another really important indicator, but it’s a little bit more than the scope of our talk for today.[00:21:00]

I could get into more, but those are also things you need to know. You need to measure, you need to monitor, and you need to tell the staff what the goal is. So one of the things that I ha have my centers do is develop a facility scorecard that tracks all these things that I’m talking about, and initially you have to do it every month.

Keep putting the data in front of ’em and saying, this is where we are. This is the goal. This is where we are. This is the goal. Eventually you’ll get to where you can look at it every quarter, and then eventually you will have to monitor that frequently. But that’s a crucial piece of how you get from where you are to where you need to be.

And then finally, I would say that if you do all these things and you still have underutilized rooms, like one center I’m working with, they, I don’t wanna say arbitrarily, but they’re set up on half days, five hours in the morning, five hours in the [00:22:00] afternoon. So they have 10 hour days. They need to go to full day blocks right now and they need to decrease the length of their days to eight or nine hours because they’re not utilizing their block time.

But less than, like I said, 32%. So there’s a lot of tools in your tool belt that you can do to improve your or efficiency, but you really have to study it and get in and know your numbers.

Erica Palmer: That’s amazing that all of that advice, I think even if someone could walk away and do two or three of those suggestions to start it, and ’cause that’s what, especially when it comes to data, we’re always trying to tell people you don’t have to do it all, all at once, because if you’re not doing it right now, it can seem so intimidating and taking.

One step. Okay. Let’s start tracking one of the metrics you shared. Okay. Next month or next quarter, we’re gonna start tracking two and just those incremental improvements. Even going from 32% to 35 to [00:23:00] 38 to 41 could be millions of dollars. So

Carol Hiatt: A hundred percent Erica. A hundred percent. And you’re right, it does.

It will feel daunting. This isn’t a one month project, right? It’s not a six month project. This is a year long project at best, and that is looking at it every month, every quarter. And you’re always gonna be tweaking it. You may even find you need to tweak these things seasonally. You may find that the summer months are really slow, so you need to close another or, and those are things that youre really have to look at.

How can I do this? And you’d be surprised, a lot of times. For the summer, if you offer staff additional time off without pay, they’ll jump at the opportunity. ’cause they really wanna be off with their kids for the summer. So everybody’s situation is different and everyone is staffed differently.

Once you start measuring even a [00:24:00] few things, it will drive your hunger to know more, and then you’ll want to measure more things. And as you master certain areas, then you can move on to the next. I hope this is helpful. I hope I didn’t give you so much that everybody’s so overwhelmed they don’t do anything. At least, if you don’t have cut times, established cut times, if all you do is establish cut times and start monitoring your block utilization and maybe your room turnover, which I’ll go ahead and say out there.

Room turnover should be 20 minutes or less, and it does matter whether you’re following in one room or flipping. If you’re flipping it, you better be able to get that doctor’s belly to the next table in under 15 minutes or you’re not, there’s no reason to flip. If you can’t do that — a recent client I’ve been looking at, they weren’t even rolling in the next patient till the surgeon was closing. That’s way too late. They need to be ready with the next patient. If they’re flipping rooms. When he [00:25:00] closes, he needs to be able to walk out, do his five minutes worth of things and be ready to go to the next case. But there are a few, if that’s all, if you only focus on those things, room turnover, first cuts, block utilization, you’ll vastly improve the efficiency of your surgery center.

Erica Palmer: Perfect. You have already given us so much advice, but we do this every week with our guests. What is one thing our listeners can do this week to improve their surgery centers? I.

Carol Hiatt: Start measuring where you are against where you should be. Learn what your numbers are and learn where you need to go. Because if you don’t have a goal and you don’t know where you are, then it’s gonna be a frustrating thing.

That’s the most important thing I believe that our listeners can do. Start measuring where you are, comparing to where you wanna go and start taking incremental steps.

Erica Palmer: Perfect. Thank you so much for coming on today. We really [00:26:00] appreciate it.

Carol Hiatt: Thank you for having me, Erica. It was great. I always love working with you.

I enjoyed this opportunity. Thank you.

Erica Palmer: Feelings are mutual. Thank you.

Erica Palmer: HSC Pathways released 12 benchmarking reports with each report, taking a deep dive into one single specialty at a time, comparing data from 2023 to 2024. Using our own unique data set from our clients, we were able to extract data points so that anyone in the industry could compare themselves to their peers.

Two quick disclaimers. We only pulled data from clients who gave us permission, and we omitted any extreme outliers. So today I wanna take a look at 10 metrics for dental cases and facilities. The data I’m going to share next represents 15,610 unique dental cases across 35 centers. So the first metric is, OR block utilization operating room [00:27:00] utilization, held steady dipping just slightly from 56 to 55% from 2023 to 2024.

Now, that may not sound like much, but there’s still a big opportunity here as a well utilized OR should be hitting at least 70% usage. The second metric is pre-authorization rates, so those dropped from 37% to 31% from 2023 to 2024, which is definitely a huge red flag. Performing a case without proper auth is one of the fastest ways to delay or lose reimbursement.

So even if the doctor’s office says they’ve handled it, the ASC really needs to double check. And the best way to do that is by using integrated payer tools. The third metric is insurance verification rates, so rates dipped from 94% to 85% from 2023 to 2024. The silver lining is that it’s still above the industry average, but unfortunately heading in the wrong direction.

Now [00:28:00] 94% insurance verification rate in 2023 is insanely good. So there definitely was a little wiggle room there. But you really wanna rerun checks at least twice, once at case acceptance, and again, the morning of surgery. And if you have, a fully automated system, which you definitely should you also can run insurance verification checks again on the first of every month, and of course, the first of the year as well.

The fourth and fifth metrics I wanna look at focus on case cancellations. So great news here. Cancellations did drop year over year from 25% to 23%. It’s still high, but definitely moving in the right direction. And when we look at why cancellations are happening, about 30% were patient driven. There’s only so much you can do there.

And another 25% were health related.

The rest though. Were often preventable. So we’re talking missing labs, scheduling errors or internal missteps. So track those reasons closely as they’re one of your best [00:29:00] levers to improve utilization and reduce revenue loss. Alright, the sixth metric is patient deposit collection rates.

So upfront collections improved, which is awesome. Jumping from 70% to 74%, which is of course a solid win. If this is a metric you’re working to improve, keep in mind that patients are more likely to pay when they know exactly what to expect. So send those accurate, easy to read estimates one to two weeks before the procedure and using text or email.

And making it super easy for patients to pay online and installments will also help. The seventh metric is days to Bill, so billing turnaround got faster, which is fantastic. Dropping from 12 days in 2023 to eight days in 2024, that is a major efficiency gain. So to keep this up, just make sure your EHR and billing systems are integrated, coders are well-trained, and that you’re tracking denials closely.

And speaking of denials, let’s talk about [00:30:00] claim denial rates. So here’s where we saw the biggest concern. Unfortunately, claim denials jumped from 6% to 13%, and without that clean claim process, you will experience tons of issues trying to get paid. Relying on connected systems for charge entry and claim submission does reduce errors.

But you also need a regular denial review process to catch incorrect patterns quickly. And this can definitely be one that you can review in your quarterly board meetings as well. If you do see it trending in a direction you don’t want it to go. Speaking of metrics you should be reporting on in your quarterly board meetings.

Net revenue per case, so net revenue per case for dental procedures rose from $1,566 to $1,696, which is an 8% increase, which we always love to see. So in order to keep this trending positively, you wanna use analytics to review those financial performance [00:31:00] monthly track trends and identify where costs can be controlled.

And lastly, let’s talk about case volume. So case volume went up from 59 to 69, average monthly case, which is awesome, and definitely a meaningful jump in demand. So there you have it, 10 metrics specific to dental surgery centers. Now, if you’re a visual learner or you wanna see the same data for 11 other specialties, head to the link in the podcast episode notes to see the data itself and the written explanation as well.

And that officially wraps up this week’s podcast. Thank you as always for spending a few minutes of your week with us. Make sure to subscribe or leave a review on whichever platform you’re listening from. I hope you have a great day, and we’ll see you again next week.