OR Manager Conference session sheds light on profitability, revenue integrity

Editor's Note

OR Manager sat down with Jessica Gruendler, DNP, senior director of nursing, perioperative services at Dignity Health in San Francisco, California, to shed light on the topic she will be presenting at the 2023 OR Manager Conference in Nashville, TN, this September. Gruendler will present her session, “Profitability in the OR—Benchmark Your OR’s Performance,” on the first day of the conference, Monday, September 18, at 9:45 am.

Q: You’ll be presenting on profitability in the OR. What are some of highlights that attendees can expect from your presentation?

We’ll be looking at maintaining profitability, which is top of mind for any perioperative leader. Just recently, I met with the CFO [chief financial officer] to review processes that drive actionable change in contribution margin. This is complex ask for any leader to tackle—my presentation will offer a high-level overview of what contribution margin is and a better understanding of what CFOs look for in EBITDA (earnings before interest, taxes, depreciation, and amortization).

Then, I’ll list some of the things that drive actionable change and contribution margin. For example, procedure coding, cost versus charge, and waste. I was actually interviewed recently by OR Manager on the topic of measuring productivity, and that article will be published either in September or October. I'm not a fan of productivity. I think hyper-focusing on it is a waste of time and effort, especially in the OR. Let’s say you're working with a nurse but you’ll need an extra nurse in a tech role because you’re short-staffed and you have 25 trays to open that day. How do you measure productivity in such a scenario when staffing skews metrics in ways you can’t predict or avoid?

I hope attendees who view my presentation walk away with this lesson: focus less on potentially irrelevant productivity data and focus on partnerships. Different mechanisms of team leading and staffing go a long way toward process improvement and achieving some of the metrics your CFO wants to see out of the surgical department.

Q: Is there one thing that affects profitability more than others?

Cost, revenue, and profit margins are different from facility to facility, and from health system to health system. But there are factors that every department have in common, and some do affect profitability more obviously than others. For instance, a bit contributor to net revenue is registration status. What I've seen at multiple hospitals is that physicians will schedule patients to be admitted as observation. Where does that leave the inpatient-only list? This is one of many examples of status mislabeling that affects patient access and revenue integrity.

Q: What do leaders need to know to avoid such mistakes?

What I’ve learned over the years is that I need to know every single factor that affects revenue integrity. Then, in my role working with the finance people in healthcare facilities, I help them find what they should prioritize. It’s the same principle with the patient access people, for instance. I partner with them so they’ll learn what to look for and prioritize in terms of inpatient/outpatient status, documenting everything correctly, and ultimately staying compliant. That’s why I said before—good partnerships go a long way towards maintaining revenue integrity, more than simply monitoring productivity, in my experience.

Q: Speaking of compliance, what role does that play in revenue integrity?

Compliance is essential in cutting down waste and limiting lost revenue. Depending on the facility where you work, there may even be a whole department dedicated to compliance. The people in that department will painstakingly review the fine print—anything from materials and preference card management to costs and charges. The difference between costs and charges, for instance, is huge, and a big knowledge gap for most leaders. It impacts your reimbursements and your bottom line. Another thing I discussed with my CFO was that we’ve seen a total reversal of our payer mix in one of our burn centers in San Francisco, which brought down our net revenue from some $25 million to like $17 million in one year. The lesson there was, we can charge anything we want, but if we’re not well-informed on what we are charging, we won’t get reimbursed for certain costs and will have to absorb them ourselves.

But even if your facility has a compliance department, as a perioperative leader, you still need to understand that these are all components that comprise your revenue cycles. I can’t teach you everything there is to know about finances and compliance in one presentation, but I can inform you of everything you need to know so you can return to your facility better informed and hopefully continue your education. Once you truly understand the basic concepts, you can then figure out what your priorities are and get more efficient at meeting your goals. Again, every organization is different, but there are ‘universal truths’ of which every leader needs to be informed.

Q: What is one last nugget of wisdom you can share before your presentation in September?

The last thing I’ll emphasize is the importance of not only understanding data, but also knowing how to present data. There are terms that you should have in your vocabulary when speaking to C-suite that will help you speak their language. It’s imperative for perioperative leaders to have good partnerships with their CFOs and CNOs (chief nursing officers), as well as your OR governance committee—they are resources from whom you can learn. Once you know what is important to your CFO or your CNO, then you know exactly what you need to present to make your case succinctly and get their attention. And hopefully their support.

The 2023 OR Manager Conference will be held September 18–20, 2023, at Music City Center in Nashville, Tennessee. To learn more about the conference, review the agenda, and register to attend, visit www.ORManagerConference.com.