The 3 Case Costing Levers: Implants, Supplies & Staffing

Ep. 130: Melissa Rice – The 3 Case Costing Levers: Impants, Supplies & Staffing

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

Clean data. Real decisions. Better margins.

In the latest episode of This Week in Surgery Centers, Loyola Ambulatory Surgery Center Administrator and Illinois Ambulatory Surgery Center Association President Melissa Rice shares a proven playbook for case costing that actually changes behavior: start with data hygiene, build subspecialty reporting surgeons will use, and align staff, surgeons, vendor reps, and the board with clear numbers that drive specific action. 

We get into implants, supplies, and staffing as the three biggest levers admins can pull to drive case profitability, how to spot pricing drift, and why having strong vendor partnerships matters. 

Be sure to watch the episode on YouTube or listen to the full conversation on your favorite podcast platform.

Episode Transcript

[00:00:24] Alex Larralde: Hi everyone. Here’s what you can expect on today’s episode. I’m joined by Melissa Rice, Administrator at the Loyola Ambulatory Surgery Center at Oakbrook Terrace, which is part of Trinity Health and the newly elected president of the Illinois Ambulatory Surgery Center Association. Melissa has deep experience across different ASC models and, in this conversation we dive into the topic of case costing, what levers that includes for her as a leader, why clean data has to be your first priority, how subspecialty data can sometimes reveal outliers that make or break case profitability, and then we also discuss some strategies for communicating these insights internally and driving real change at your center.

Then in our data segment, we spotlight the days to bill metric. ASCs averaged 4.4 days to bill in 2024, which is up from 3.6 days in 2023. And we see widespread variation between specialties. With specialties like spine and cardiovascular improving but still trailing the faster specialties like GI. We talk about some operational fixes for streamlining this process because improving this metric by even one day can have big cashflow implications for your center.

I hope you enjoy today’s episode and here’s what’s going on this week in surgery centers.

[00:01:44] Alex Larralde: Well, hello, Melissa. Thank you so much for joining us. I’m thrilled to have you on today to talk about case costing, but before we jump into things, I would love to start with just a quick intro from you, tell us about what you’ve been up to.

[00:01:58] Melissa Rice: Yeah, thanks so much for having me.

I’m very excited to be on this. I am currently administrator at Loyola Ambulatory Surgery Center. We are a part of Trinity Health. I’ve been here for a year, and it has been absolutely amazing. Working for a faith-based healthcare system has definitely changed my perspective on leadership and the way we really outreach our community.

Our slogan is that, you know, we also treat the human spirit and being here for a year, you see it, and you really feel it, and it’s been great. You know, I’ve worked in the private sector for many years of my career, so coming back to not only a health system, but a teaching system. It’s a little unnerving, but it’s been phenomenal.

And then, I am a part of the Illinois Ambulatory Surgery Center Association. I’ve been a board member for. Two years and just last month, my esteemed peers nominated and elected me to be the president. So very excited for that. And to get more and more ASCs in Illinois, part of the Association, really get out there and champion for surgery centers.

[00:02:52] Alex Larralde: That’s fantastic. And congratulations on your new role as president. That’s super exciting. I’m super thrilled to have the opportunity to kind of pick your brain a little bit about what it means to be data driven and to use that data to make better decisions for your center.

So, case costing. Let’s start there. When we talk about case costing, what do you include in that? What does that mean for you as a leader?

[00:03:16] Melissa Rice: Yeah. I mean, I would say it doesn’t matter where you’re at in your career, case costing’s the bane of your existence, something that you cannot not look into or have some type of touch or insight into it, it means different for everyone. I think case costing can be at the basics of just like literally, what were your fixed costs for your supplies. For me as a leader, especially coming from a private sector and having syndication in most of my centers, so we have those private, you know, provider investors and sometimes hospital investors, they really want to know what was your implant cost, what was your actual fixed cost for your supplies, and then what’s your staffing costs like? What were the providers. Your clinicians that were there that actually touched them. So, I try to focus on those three main things. And then once we get to a higher level, when you’re like in boardrooms and you’re talking about, you know, your P & Ls and your income statements, those other fixed costs in regard to all of the other things, tend to get brought up.

That’s when I work with our accounting team and our finance team because I don’t have a finance background. I enjoy understanding the numbers, but I don’t, you know, so that’s where their, stuff comes into. But for simple, you know, looking at it, I, I would say, focus on those three silos of what were your actual supply costs, your implants, and then your staffing.

[00:04:26] Alex Larralde: If a leader had to boil down their goal here, what are they trying to accomplish? Is it to contain costs, staff more efficiently? What would you say the big goal is ultimately?

[00:04:37] Melissa Rice: I would say all the above. I have used case costing to really look at specialties and to look at like-minded primary CPT codes and what the other providers are doing against each other.

It’s a great way to start chatting in regard to implant costs, that’s a very high one. As we see reimbursements are getting tighter and tighter for us, you know, and our costs are going up. I always look at implants right away. Go to your big ones, Total Joints, Spine, your ACLs, that type of stuff, and really start looking at what is your cost?

Is there an outlier? Is half of your group spending $3,500 on a Total Knee and someone’s got a $6,000? So, a really good way to put it out there and they’re their own numbers, not your number, to then have those really good, informative conversations with them to say, hey, I cannot tell you what to use. I am not, you know, an MD or provider like yourself, but here are the numbers.

How can we dial this back so that we’re all on the same playing field so that one person’s not hitting everyone’s pocketbook in a different situation. I also use it like you said, for staffing. Why would one specialty be way more in regard to how many people are covering the case versus other ones?

And then is there a way to start looking at how staffing is used in the center?

[00:05:46] Alex Larralde: So, backing it up and thinking about those inputs that you even need to begin with to start having these conversations with providers. I’m sure when you were starting you probably looked at your data and found some things that needed to be cleaned up or better tracked.

What’d you have to do in terms of data hygiene and even just measurement to get these inputs to be able to derive these types of insights to share with your team?

[00:06:10] Melissa Rice: Whether you’re a part of an ASC that’s been around for a while, or a de novo center, you know what you get out is what you put in. So, if you don’t have good data hygiene, you’re not going to get good data reporting back.

So, you’re actually not going to be able to report what you really need to report. There are a couple tools and tricks that I’ve used in my career. One being, reach out to your vendors. They work with you. Ask them for your 12 months rear spend. Get that information there and see that’s the way that you can upload information.

We here at Loyola, um, went through a transition of different software. And we just partnered with one of the ASC specific softwares out there, and that’s what I did as they were saying, oh, you know, let’s move data over. I said, absolutely not. Let’s just grab what we used in the past 12 months. We could always add more.

It’s harder to take out stuff because you need that than to build physician preference card, which are then attached to the cases, and that’s where your bread and butter’s at. That’s where you’re going to get all your information from. So, you know, I always say pull your information, start looking at stuff.

Do comparative, you know, from an invoice to what’s actually in your operating system, you’re going to be probably surprised that there is definitely not communication unless you are using an ASC specific software that is talking to both ends of it. Some of us don’t have that luxury. I personally don’t, so I do have to do a lot more scrubbing, and I do it quarterly just because let’s be real, we all have other to do than be looking at invoices.

So, I do take some time to look at it. But like you said, if you don’t have good data, you’re not going to get good reporting back.

[00:07:32] Alex Larralde: That’s a great point. Going to your vendors and figuring out how can I get this data, how can I take it out, use it somewhere else potentially. That’s good advice for sure. And then for someone who’s getting through that process?

So, they’ve implemented an EHR, they’re starting to bring in software. What advice do you have for them from a change management perspective? How do you go from, or how have you gone from doing things maybe more manually to more automated and bringing in tools and systems? What does that look like for you?

[00:08:01] Melissa Rice: We use a third-party integration that is very hospital based, meaning that it’s way bigger bulk ordering is what they do. So, when they took on our ASC and they also have an ASC at the hospital, an HOPD, they were having a hard time trying to map how to associate our orders with how they do stuff. because ours were on a smaller scale.

You know, I’m not ordering pallets of gowns and gloves to procure off to, you know, areas of the hospital. So, it was a very interesting process to get their data versus what our actual vendors were able to, you know, the Henry Scheins, the Owens & Minors, the McKessons, the Cardinal Health, those types of people, they have ASC divisions that’ll really help you market that.

So, if you’re even new, a new de novo center, sit down and talk to them. They have in a sense, a preference card or even like an upload system that they can start you off with that have like your basic gowns, your basic gloves, those types of things to get you started. I would say your reps and your companies that you’re doing business with; they are your partner.

Sure, they work for you in a sense as you’re procuring their stuff, but they really do want to partner with you to make things better. I have meetings with our main supplier every other week we talk about backorders and data, and they’re giving me real-time information, pricing changes that I might not catch on an invoice from a month ago.

So, partner with who you’re going to work with because down the road, it’s going to just make everything so much easier.

[00:09:20] Alex Larralde: Yeah, for sure. That’s great advice. Thinking about case costing and action, do you have a concrete example or a story of a time when you’ve actually changed something on the floor or made a decision based on case costing data? Once you finally had that insight?

[00:09:35] Melissa Rice: We sat down as a group and just started looking at everything by subspecialties. It was a little bit easier than having this huge, broad spectrum of all the different specialties. Um, mumble, jumbled together. I took my Trauma, Sports med, kept them separate, did Hand and Elbow separate, you know, and then did Foot & Ankle, Total Joint, Pain, Spine, ENT, you know, they’re their own specialty, but it’s like in the Ortho world, you kind of have to like separate them out by what they actually do.

During that, we did find out that some of our construct pricing that we had specifically for Loyola itself had expired. Then now off just out into the la la land of the market of the wild west, as I like to call it.

So, they were all over the place in regards to what they were charging us per our total joints in our spine. So, it was a great way to like open the eyes of being like, we really need to be more consistent of working with our vendors to talk about do we have specialized construct pricing? Are we using something from, you know, a whole healthcare system?

So, for me, at my center, we had construct pricing for our total joints. So, it was just for meat — our acronym is LASCO — at LASCO versus what the um, main campus used. And unfortunately, that lapsed just due to, no one’s, just, it just happened. So, we ended up being able to go back, show them our numbers and be like, we would like to go back as much as we can close to these numbers.

But then I was also able to then take it a step further and bring it to the board for Alaska and also through the board for Loyola and show them from a payer contracting perspective of like where we were at. because sure, we’re all part of the Loyola system as well as the Trinity system, but we still do all have our own payer contracts.

So, I would sit down and sit down with the providers themselves and just say, hey listen, here’s where we’re at. Here is the scale of where you guys are all at. Well, do you think that we could come to a communal agreement that like we would like to use these types of products and then I’d be able to try to get some type of tiered pricing or something else?

You know, here’s where our knees are, here’s where our unit knees are, here’s where our hips are, those types of situations. And there’s a bunch of meetings, but it all came together so beautifully, which I was so happy about. And we were able to then drive down our costs as our center, but then also be able to still provide the same patient care, so we didn’t have to change the physician’s wants of what they wanted to do for their vendor management.

So, it was really great.

[00:11:43] Alex Larralde: Oh, that is awesome. And that actually leads me into, another question I have for you in terms of communicating these types of findings and data back to the relevant stakeholders. I’m curious who reviews this data? Who’s interested in asking questions, and then what is your process for distilling down these insights that you’re finding and making sure that they’re communicated in a way that people pay attention and they know that there’s something to be done.

Tell me a little bit about that.

[00:12:11] Melissa Rice: I would say most ASC leaders do work in a space where they do have physician owners. I do not. So, my approach had to be a little different because trying to explain to them, you know, case costing and based off payer contracting was a little bit foreign to them. As you know, they worked for an educational system, so we are all colleagues together because we’re all employed.

So I did have to think long and hard about my approach because, like you said, communicating it the correct way is more effective than just giving information and not explaining the why, because it’s going to either fall on deaf ears or then cause a little bit of disruption in what your whole morale is type of stuff.

So, for me personally, it was interesting because I was able to sit down, look at the numbers, because the numbers don’t lie. They’re numbers, they’re information. Take a step back, talk to the reps to start, be like, hey, listen, here’s where we’re at. How did we get here? As you know, as someone being newer in this role for this organization, and then talk about what could be the process, how can we work together?

Then I’ve had the reps, because they’re friendly with the providers, they understand, they work together. They rely on each other. Then have them be part of the really important conversation. Once the doctors understood that I then took them to our medical executive team as well as our board. We meet together because we’re all working together.

And then here’s the issues that I found. Here’s where I think we could do better. Here’s the plan that I have in place, and here’s where I think that we can do the approach. I kind of almost did a whole pro forma, before I even had it, just so that I had hopefully answers to questions that they would have in their mind as I was discussing with them.

Then once that was done, I was able to then take it to the Loyola board and be like, here’s the big changes that you’re probably going to hear about with the board. A lot of the executive directors and leaders that oversee these subspecialties are part of it, and those are the people that I have really close direct communication with, so I wanted them to also be aware that you might hear some chatter in the break room or at one of your subspecialty meetings. Here’s the why and here’s how we’re going to make it better for us as an organization without touching the patient care aspect, and the provider still gets to use the product that they want to, but in a way better ways for the organization.

[00:14:08] Alex Larralde: Oh, that’s great and really smart to anticipate the questions you’re going to be asked before you go into the meeting. You are going to have an idea of how you’re going to get ahead of them and also getting ahead of any potential rumors. People are going to start wondering, how is this going to impact me? But recognizing that that’s a dynamic in any workplace and being able to say, hey, no, this is great, we’re approaching this thoughtfully and with data, is really sage advice,

[00:14:34] Melissa Rice: Yeah. And then I would say for leaders who do have physician ownership, where they do look really heavily at every penny that’s spent. I would take a similar approach, but with that, obviously with the board’s approval, I would actually show them the factual dollar amounts.

[00:14:48] Alex Larralde: Mm-hmm.

[00:14:48] Melissa Rice: Based off like, here are the three different areas that I look at in regard to what takes away the potential profit that case could be brought to us based off your three things of implant, supplies, and staff crossing based off our particular payer contract. And I’ve done that, and it is.

Definitely eye-opening to see some of the newer providers that are there, and then also for your champion providers that are there, you know every day. Showing them those actual physical pennies does really help.

[00:15:15] Alex Larralde: I bet, and I imagine there’s probably some competition it inspires too, between physicians. We all know that that profession tends to attract go-getters, and so they see, oh, somebody’s doing, you know, these procedures in a much more cost-efficient way.

I’m sure there’s probably some instinct to want to get on that train also.

[00:15:36] Melissa Rice: Yeah, I think as you start getting into your case costing, I would do a monthly report that I would send out that would show, you know, where we are as a whole for the whole month, what we billed, whatever costs were, what our potential profit is, and then I would silo it into the subspecialties and then show like what percentage of that subspecialty is going to bring that potential profit to us.

And then, I mean, they would have everything outside of PHI, but I would, yeah, I would call it public shaming. You know, you have all the information for all of the providers that were there for the month. I noticed, especially in syndicated surgery centers, that like you start hearing way and way more conversations.

The doctors are going to be in your office more asking you questions like, hey, I’m going to do such and such and use this particular, um, you know, product. Do you think that would be a good financial decision? And sure, you’re not going to have all those right, your fingertips and stuff, but it made me feel way more comfortable to then have the personal conversations that I needed to, once I started producing those reports and stuff, to be like, hey, you know, there, there’s no way that we could do this case. These cases are going to be upside down, or whatever it may be.

But as they were getting data, month to month, those conversations became so free flowing. You’d have them in the hallway or didn’t feel like you were going to the principal’s office to be, you know, put on the naughty list.

[00:16:47] Alex Larralde: Absolutely. Because you’re right and you said it before, it’s information, right? It’s neutral. It’s not saying you’ve done bad, it’s simply telling us, this is what’s been done. And then the decisions that you make from there are really what are going to drive your success, your growth, your revenue, your profit. It sounds like you’ve really been intentional about creating a culture where everybody is looking at data and becoming comfortable with data, which I think is so important in the world that we live in today.

[00:17:15] Melissa Rice: No, definitely, and I make sure that I share it with my staff too, especially if there are big changes that are happening and for them to understand the why as well. You know, this is why we needed to change. In order for us to be sustainable and to keep moving forward and be able to live on our mission, we really need to make conscious decisions financially for that kind of stuff.

And some get it and some are just like, well, that’s okay. It’s another part of the day type of stuff. But I try to be as transparent as I can because I feel like once you have transparency, you’re all on the same team. You’re all making the same decisions.

[00:17:43] Alex Larralde: Absolutely. And data can be that great unifier in that way. Level setting, everybody for sure. So, as you started getting into your case costing data, have you ever come across something absolutely wild that may have been missed or an outlier that you wouldn’t have seen if you hadn’t been looking at that data? I’m curious if there’s ever been like a big ‘aha’ moment like that.

[00:18:04] Melissa Rice: Yeah, I was looking at data and they really weren’t data-driven, which surprised me being physician investors. But some of them don’t really, not that they don’t care, and I don’t like saying they don’t care, but they’re not as driven to like, look at the data. I had in our Total Joint world. I had some providers that they were all using the same company and similar items, and majority of them were in a particular range.

We had one outlier that his implant costs were $8,000 per case. When I was able to like silo and put this information together again, it was because it was bad information put into the system that didn’t have all of the costs attached to them. So, when we were pulling the reports, I was like, this doesn’t make sense to me.

And then you like, go down the rabbit hole, like going into the item master, doing that kind of stuff. And then finally I just reached out to the rep and I was like, I need your, I call them rep sheets, day sheets, day of sheets, case cover sheets. You know, we all call them some different. I was like, can you provide those for me for like, for the past six months if you’ve got them?

I got them back and I was like, wow. Oh, okay. Well, this one particular provider did a bunch of cases and just kind of took that entire subspecialty and just tanked it for the month in regard to potential profits. I was shocked that nowhere caught that because the dollar amount was on paper that passed through a lot of people’s hands, but I just don’t think they were either empowered enough to be able to feel comfortable to speak about it or really didn’t understand what that dollar amount meant for the rest of the whole case costing from top to bottom. So, it was an aha moment for myself, but it also was a teaching moment for the entire center. At that point, I wasn’t shaming anyone. I was just like, here’s why we have to look at what we spend and how can we do better for ourselves, you know, type of stuff.

So, I will say when that information was brought to the board, there were a lot of. What is going on with this? So it was, it was nice to like, be able to have that conversation and then, you know, have the conversation with the rep to be like, so we need to make some changes here because this is not going to work for us.

[00:19:59] Alex Larralde: And it’s something that can absolutely happen if you’re not looking at data and it could be going on for who knows how long until you intervene. Looking at your data and eyeballing for those outliers at a minimum is key to containing costs for sure.

I guess you could say that as much as it is an actual formula and something that you can calculate, it’s also a bit of a philosophy. It’s about being aware and engaged with what you’re spending and caring about the details regardless of where you sit within that surgical journey. Having surgeons that are aware and engaged on this, it, it just allows them to be thoughtful when they’re making decisions in a way that impacts the business overall, right?

[00:20:38] Melissa Rice: Absolutely. Yeah. When I say I give the data out and what they choose to do with it is up to them, but it’s there for them if they need, you know, to refer back to it. Or if they do have questions, you know, I’d have providers I didn’t hear from for months. And then they’d be like, well, I really want to sit down and talk about the last three months about what I personally have been spending.

Or do you see anything that I can do better? And that type of stuff. Sometimes it’s a slow grow process for the provider to want to understand, but like you said, then it does bring out some competition. And then that’s when you start seeing like, well, they’re doing X amount more cases and you know, they’re using less and less.

How do I become something similar to that type of stuff? But like I said, it made me feel like the subspecialties really started banding together more and having, you know, deeper conversations. About how they can do better and offer better services to patients.

[00:21:23] Alex Larralde: That’s great. That’s the goal, right?

Alright, well that brings me to our final question and it’s a question everybody gets asked, which is, what is one thing that our listeners can do this week to improve their surgery centers?

[00:21:35] Melissa Rice: Being a part of an association, being able to go to Becker’s and ASCA and OR Manager and you know, the AAA stuff and Joint Commission. Network. And don’t stop. Network, the more you reach out to your colleagues, the more you’re not going to feel like you’re on an island by yourself because some of us do. It is a very, uh, specialized role that we take on.

But I would say network, whether it is to subscribe to podcasts, because they’re all amazing, including this one. Or be able to go to the conferences or be a part of state leaderships or be part of the ASCA, you know, stuff.

Networking is key. It’s really going to open your doors to being able to have these really great conversations that we’re having together. You know, the way I do things might do an aha moment to someone or me listening to one of your other podcasters I’d be like, oh, maybe I could take that perspective as well and it might help me out.

I just feel like networking is key right now in our space, particularly for ASCs, but just healthcare in general. So that would be my one thing I’d say to do.

[00:22:32] Alex Larralde: Fantastic. Well thank you so much for that and thank you again for joining me, for talking case costing, sharing your experience and insights. I’m sure everybody listening has learned a lot from you and I really appreciate you taking the time.

[00:22:44] Melissa Rice: Thank you for the invite. I look forward to, uh, working together soon.

[00:22:55] Alex Larralde: Alright. Today we’re diving into a performance metric that often flies under the radar for ASCs, but it has a huge impact on financial health and that’s the number of days it takes to bill after a case is performed. Now, when we talk about operational benchmarks in surgery centers, we usually hear about or utilization, cancellation rates, case volume, maybe patient satisfaction scores, but one of the most direct ways to improve your center’s cash flow is often hiding in plain sight.

That’s how quickly you get your charges out the door. Let’s start with the benchmark. According to the latest State of the Industry Report from HST Pathways, surgery centers in 2024 averaged 4.4 days to bill, and that’s up slightly from the year before where we saw 3.6 days to bill in 2023.

Now at first glance, four days might not sound like much, but across hundreds of cases, that lag can push out a lot of revenue. When you start looking at this data by specialty, you see some interesting trends and some real opportunities.

Let’s take spine procedures as one example. In 2023, spine centers took an average of 10 days to bill, and in 2024, that improved to eight days. And while that’s still double the industry average, it’s a pretty meaningful improvement in a high-complexity specialty.

In cardiovascular, we saw a similar pattern. The average time to bill drop from 11 days to eight, and for GI it improved from six to five. So, across the board, we’re seeing centers getting faster, but there’s still a big spread depending on your specialty and how well your team is aligned. So why does this metric matter?

There are really three big reasons. First, cashflow. The faster you bill, the faster you get paid, and that’s money back into your center for payroll supplies, equipment, or even expansion. Every day you wait is the day that you delay revenue that you’ve already earned.

Second, billing delays can lead to denials or underpayments. Claims submitted late are more likely to get rejected, especially if documentation is incomplete or the coding isn’t finalized. And once a claim is denied, the time it takes to appeal that claim can certainly eat into your margin as well.

And third, this metric is a window into how well your internal processes are working. If your days to Bill are too long, that means that your charts aren’t being closed in time. Coding is backlogged, or that supply and implant data isn’t getting entered quickly enough. It’s a canary in the coal mine for process gaps you may not have realized that you had.

Now, here’s a thought experiment for your ASC. Let’s say you perform around 300 cases a month and your average case brings in $5,000. That’s about $1.5 million in monthly revenue. If you cut your billing time in half, say from eight days to four, that’s accelerating about $200,000 a week in cash flow. That doesn’t just help with liquidity, it helps with forecasting, staffing, and planning.

So, what can you do about it?

Start with tracking the number. You can’t fix what you don’t measure. Measure your average days to bill both overall and by specialty and get clear on where your bottlenecks are. maybe it’s op notes aren’t being signed quickly enough, coders are overwhelmed with volume or there’s a delay in getting implant and supply charges entered.

Then align your expectations. Set realistic service goals for each step. That might mean op notes completed within 24 hours, charges entered within 48 hours and then claims submitted within one business day after that.

And finally make it visible. Dashboards, reminders, task lists, whatever your team uses, put that number front and center. Celebrate improvements. Set a target because even a one-day gain here can really translate into meaningful cash.

Before we wrap, I’ll leave you with this. You can’t control how fast a payer processes your claim, but you can control how fast you submit it.

And in an industry where margins are getting tighter and patients are paying more out of pocket, speeding up your billing cycle is one of the most effective levers you have to strengthen your bottom line.

And that wraps our show for this week. As always, I hope you enjoyed the episode, and if you did find today’s content helpful, do us a favor and leave us a rating or a review on your favorite podcast platform to help others find our show. Thanks for taking a few minutes out of your week to spend some time with us. We really appreciate it, and we hope to see you again next time.