How to Craft a Comprehensive Business Plan for Your OR

The cost dynamics at play in operating rooms and perioperative departments are distinct from the rest of the hospital. In most hospitals, the labor-to-supplies cost ratio for perioperative departments hovers around 35:65. In stark contrast, labor expenses account for roughly 80% of costs in nearly every other hospital department.

Given the unique pressures of high costs and high revenues, ORs must plan meticulously and allocate resources efficiently. They can’t afford to indulge in fleeting trends or untested solutions. They can’t buy a robot unless it will unequivocally make them more profitable. Every investment must seamlessly align with the organization’s overarching growth strategy.

Whenever your OR is considering making a significant change to operations, or an investment in equipment or facilities, it’s imperative to underpin your approach with an evidence-based business plan. Sullivan Healthcare Consulting’s team has helped hospitals and ORs develop sustainable and profitable business plans for over 40 years. Our team has identified three pivotal elements of a successful business plan when your OR is considering changes. Here, we’ll dig into those elements and shed light on the value experienced consultants can bring to the process.

Identify the Fundamental Problem

Before making any investment or operational change, it’s critical that your OR pinpoints the problem to be solved. Note that the problem should not merely be a matter of surgeon convenience.

An example of a problem could be that your OR department is cramped and outdated. There is demand for more cases, but your current facilities are capping the volume your hospital can currently handle.

Crucially, data-driven metrics should substantiate the stated issues. Concentrating on utilization rates, demand, quality data, and financial data is essential for identifying the root of the problem. Without this verification, any solution risks addressing only superficial symptoms.

Consider Solutions and Alternatives

Once you have identified the core problem, the next step entails finding the most fitting solution. For instance, if the problem revolves around OR capacity, both expanding the existing OR and creating an ASC should be explored and meticulously documented. ASCs are profitable and efficient. However, they aren’t a silver bullet that solves all of the problems your OR is facing. 

An objective study of all available solutions and alternatives is crucial for financial sustainability. Your gut reaction may be to build more space, but managing blocks differently may be just as effective.

When you’re considering solutions, connect with a healthcare consultant. As honest brokers representing your organization’s best interests, consultants with expertise in the entire perioperative care process can help you identify solutions or alternatives that may have been left out of the conversation. Whether the solution ultimately ends up being the development of an ASC, expanding existing infrastructure, or making improvements to other interdependencies in your organization’s perioperative services, skilled consultants can guide you the entire way.

Comprehend the Implications of Your Solution

Once you’ve identified a solution to the problem your perioperative department is facing, the task of understanding its potential impacts comes to the forefront. To gain an accurate perspective of those potential impacts, it’s imperative to consider the following.

What are the Solution’s Cost Implications?

Identifying and evaluating every cost associated with expanding space, purchasing a robot, or establishing an ASC is paramount to making the best decision. These costs may include:

  • Capital expenses linked with purchases or construction.
  • Establishment of maintenance contracts or revisions to existing ones.
  • Increased staffing requirements and the associated recruitment costs.
  • Implications for case lengths and outcomes.

Importantly, your cost assessment should also factor in the costs of maintaining the status quo. Will you lose market share if you don’t improve your robotic surgery program? In some scenarios, this may provide the most compelling argument for your solution. In others, it might reveal that it’s not the most prudent decision. Again, a healthcare consultant can help your organization benchmark existing perioperative interdependencies. From there, they can identify the anticipated costs of making no changes.

What are the Benefits of The Solution?

Your solution, be it a robot, an additional C-arm, building additional space, or the establishment of an ASC, must promise substantial benefits. However, just as the problem must be measurable, the benefits should similarly be rooted in quantifiable outcomes.

  • Increased Revenue: Will your solution contribute to patient throughput? And if it increases throughput, is there a sustainable demand for the procedures it assists with? You can utilize a case contribution margin to determine how much each case would contribute to (or cost) your organization.
  • Enhanced Quality: Will a robot reduce risk? Will you be able to convert inpatient procedures to outpatient procedures? Will recovery times be improved? While trickier to measure, qualitative benefits are key factors to consider and will play an essential role in reaching an informed decision.
  • Cost Reduction: Investigate the specific areas and methods to curtail costs and assess the sustainability of these reductions. Furthermore, if cost-reduction measures necessitate changes to existing processes, account for what downstream consequences could come up as a result of these changes.

What are the Risks Associated with Your Solution?

Just as assessing the benefits is critical, it’s equally crucial to evaluate the risks involved with your solution. Assess a vendor’s claims and literature critically. What’s being left out? Does a solution force you to make any trade-offs? Concealing or disregarding these risks could jeopardize your organization and perioperative department’s future. Any proposals must align with the broader organizational goals and growth strategy. Bringing in a perioperative consultant can help identify risks that your organization may be missing. 

Offer a Clear Recommendation

Lastly, after identifying the problem, exploring potential solutions, and analyzing the benefits and risks, it’s time to draw a decisive recommendation. As with the problem, your recommendation should be precise and explicit. Clearly outline the equipment or infrastructure that you recommend your OR should acquire or construct, or an alternative action plan.

Once again, rely on the data you and your consultant have diligently gathered to substantiate these conclusions. Patient outcomes, financial stability or increased margins, and safety considerations should combine to form a compelling final recommendation.

Sullivan Healthcare Consultants Can Help You Develop a Compelling Business Plan

The business plan process is vital for making the best decisions when optimizing your OR’s revenue, performance, and safety. This comprehensive analysis process should serve as a guideline for every significant financial decision. Whether you’re purchasing new equipment, building additional capacity, or investing in new technology, it’s both prudent and beneficial to assess your plan in comparison to your organization’s broader financial strategies.

When considering major investments, one of the best decisions you can make is to engage a consultant. Sullivan Healthcare Consulting’s team has been helping healthcare organizations optimize their surgical services for over 40 years. We’ve seen enough to know what pitfalls your organization can avoid, and what you can do to manage higher margins.

If you’re considering making a major change to your perioperative department, get an expert’s second opinion. Contact the team at Sullivan Healthcare Consulting today.

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