Developing Pricing for Your Operating Room

The operating room (OR) is both the most expensive and profitable part of a hospital. This means that how you manage your OR pricing has a direct impact on your facility’s bottom line. Effective management and efficient operation of your OR involves a deep understanding of costs and an ability to find opportunities for growth.

Key Areas of Consideration

OR expenses are typically calculated based on fixed costs, like overhead, administration, or mortgage, as well as variable costs. While labor makes up the largest portion of variable costs, other items like materials and disposable supplies contribute as well.

• Efficient utilization of labor is a major goal in minimizing cost and maximizing revenue. Changes in technology and regulations, as well as ramifications of the COVID-19 pandemic, have exacerbated existing issues in revenue cycle management. 

• Developing surgery complexity levels and criteria allows organizations to leverage OR costs and revenues, finding where the profits are and how to utilize them to improve the bottom line.

Since the charges are based on many rules, revenue codes, and Current Procedural Terminology (CPT) codes, and commercial payors typically follow suit, it’s a good idea to have a professional in your corner. 

The Value of Chargemaster Review

Eide Bailly’s Senior Healthcare Manager Joy Krush works with healthcare facilities in their mid-revenue cycles, walking them through generating charges and progressing through their systems, all to ensure claims are processed smoothly. Krush’s 30 years of experience in the hospital industry, along with nine years of managing revenue cycles, make her an ideal consultant for assisting with chargemaster assessments, implementation, coding, and documentation reviews. 

“Our firm has a lot of experience in healthcare settings, with a strong understanding of reimbursement methodologies,” Krush explains. “We are able to assist with best charging practices to maximize our clients’ reimbursements and to make sure they are capturing their services accurately. Regardless of what method a facility uses to charge OR time, whether it’s by the minute or by the procedure, we can guide them through maximizing profits and do so within compliance.”

Chargemaster review is essential in setting OR criteria and pricing. As the backbone of your facility and its financial health, every service or product must be represented accurately and in accord with regulations and payor requirements. 

Working through procedures one by one, the Eide Bailly team can help develop criteria for your OR charger. We can also determine which supplies should be bundled into the charges while setting prices based on the current market.

“The questions we address are whether there are established levels and if the right procedures are assigned to those levels based on the resources required to perform them,” says Krush. “Especially when new technology is introduced, we need to assess whether the OR has factored that cost into the level charges.”

At a department level and from a pricing standpoint, facilities should be doing pulse checks often, Krush advises. She and her team recommend that ORs conduct an external review at least every three years and an internal review annually. An ideal timeframe to do so is November, as new CPT codes and payment policies emerge. 

If you’re looking for a trusted professional to help you review your chargemaster, you can contact Eide Bailly at eidebailly.com./healthcare.