Topic: [Revision] Competency-based Training Approaches for Adult Workers - Singapore

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Scenario XYZ Hospital's Ambulatory Surgery Center (ASC) decisions
XYZ Hospital is considering the operations and financial performance of its off-site Ambulatory Surgery Center
There are 4 Operating Rooms (ORs), averaging 5.25 surgeries/day with a max of 3 more per OR/Day (64%), 250 days a year, from 6 a.m. to 6 p.m.
The hospital has seen inpatient surgeries decline, largely due to technological innovations, and moving more toward ASC's.
There has been growth in minimally invasive procedures in conjunction with Home Health capabilities again shifting care to ASC's
Under Alternative Payment Models, the conversion from inpatient to outpatient surgeries has positive reimbursement implications for the ASC.
The ASC is operating at small operating profit per month.
However, after the allocation of hospital overhead/services the ASC' small profit is virtually gone.
The CEO is under the impression that there are only 3 options
1 Close the ASC
2 Operate the ASC without offering physicians ownership participation
3 Operate the ASC with Physician Participation
The Assignment
You were hired to review Financial and Operating Data to help the CEO make a decision.
Some preliminary information you were given includes the following as well as the spreadsheet.
2018 visits = 5,250 and is being used to project the average as the Base for 2020.
Staffing is grumbling Avg Staff Non-Admin Hrs Per Case 9.71 10.00 Benchmark
Lease is Long-term. Canceling it would cost $125K (3 mos)
The hospital averages 1.2 admits/day from the ASC with an ALOS of 5.4 days at $2,800/day. Added Hospital Revenue from ASC/Yr
The hospital's inpatient margin is 3.8% Added Hospital Profits from ASC/Yr
1.0 Calculate the balance of Columns B &C including Contribution Margin and Breakeven. Added Hospital Profits from ASC/Mo.
2.0 Complete the spreadsheet showing the impact of increasing surgeries per mo.
(F2,G2,H2 show the impact of 1,2,3 surgeries added per OR per day and F3,G3,H3, add these to C3
2.1 Net Revenue/Surgery D4
2.2 Project Monthly Revenues F4-H4 using D4
2.3 Projected Monthly Expenses F8-H18 and Percentage of Revenues for specified expenses in Col I.
2.4 Complete Projections for F16 to H20 of Profits with and without Physician Profit Split
3.0 Narrative, supported by above findings and any added analysis, research, benchmarks, etc.
3.01 What are the major/key items affecting the ASC's profitability before overhead?
3.02 Are there issues with the Hospital's Overhead Allocation?
3.1 What should the recommendations be to the CEO?
3.11 Regarding Operations
3.12 Regarding Financial Projections
3.13 Regarding Physician Participation
3.14 Which scenario is the most likely Base Case, Worst Case, Best Case?
3.2 Are there other values to the Hospital derived from this clinic? Can these be quantified? Consider the following:
3.21 Does the ASC compete with the hospital's inpatient surgeries?
3.22 Does the ASC compete with its other referring/admitting surgeons?
3.23 Would this help/hurt the hospital's bottom line?
3.3 Are there other ASC expense issues to be addressed that you have noticed? What would their impact be to the bottom line?
3.4 Are there any long-term considerations for the hospital, given changes in reimbursement and in the local market?

Data

XYZ HOSP - Ambulatory Surgical Care Center Added Surgeries/Mo Scenarios
2018 Data Monthly Average Per Surgery 83.2 166.4 249.6
Total Surgeries 5,250 438 Total Surg 521 604 687
Net Revenue $ 6,450,000 $ 537,500 $ 1,228.57 Total Rev
FIXED/Mo VARIABLE/ Surgery MONTHLY EXPENSE PROJECTIONS Actual % of Rev Bench
Salaries and Wages $ 1,393,536 $ 116,128 $ 50,000 $ 151.15 26.70%
Medical Director $ 170,000 $ 14,167 $ 14,167 $ (0.00)
Insurance. $ 244,600 $ 20,383 $ 7,750 $ 28.88 3.2%
Medical Supplies/Anesth $ 1,436,282 $ 119,690 $ 20,000 $ 227.86 26.0%
General Supplies $ 161,582 $ 13,465 $ 2,500 $ 25.06
Facilities $ 779,625 $ 64,969 $ 43,833 $ 48.31 6.0%
Equipment Leases/Maint $ 1,025,916 $ 85,493 $ 55,000 $ 69.70
Other Operating Expenses $ 980,009 $ 81,667 $ 6,000 $ 172.95
Total Operating Expenses $ 6,191,550 $ 515,963 $ 199,250 $ 723.91 77.6%
NO SURGEON $$$ PARTICIPATION
Net Operating Profit/ EBITDA
Operating Profit Margin
Hosp Gen & Admin OH $ 250,000 $ 20,833 $ 20,833 $ 20,833 $ 20,833
Total Net Profit
Contribution Margin SURGEON PARTICIPATE @ 40% of Profits
Breakeven Surgs/Mo. incl Hosp OH Phys Share
Breakeven Surgeries/day Hosp Net
OP Profit Margin
Other Benchmarks for ASC's from Becker's
Management Fees (most of Alloc. Expense) 50% of providers are < $200K/yr only 10% $200K-$300K
Staffing costs per Operating Room $481K/yr x 4 = $1.9M
Case Mix % Avg /Case Wtd Avg
• Gastroenterology: 29.0% $ 1,004.00 $ 291.16
• Ophthalmology: 20.0% $ 1,434.00 $ 286.80
• Orthopedics: 16.0% $ 3,133.00 $ 501.28
• Pain management: 16.0% $ 1,074.00 $ 171.84
• Otolaryngology 8.0% $ 2,591.00 $ 207.28
• General surgery: 7.0% $ 2,156.00 $ 150.92
• Oral surgery: 7.0% $ 1,217.00 $ 85.19
• Urology: 6.0% $ 2,368.00 $ 142.08
• Obstetrics and gyn 4.0% $ 2,344.00 $ 93.76
• Plastic surgery: 4.0% $ 1,797.00 $ 71.88
• Podiatry: 3.0% $ 2,506.00 $ 75.18
Total Weighted Average $ 2,077.37 OSHPD reports lowest LA ASC Revs $2,400
Average Expenses $ 1,612.00
Profit $ 465.37