Susan Thornton, RN

St ream I i n i ng OR cost accounting

In response to escalating inflation, increased operating costs of the hospi- tal, and the need for sophisticated and expensive equipment, the Depart- ment of Operating Room Services a t Tucson (Ariz) Medical Center set goals to refine its system of cost accounting.

Investigating the current system. The first step toward refining the system was to review current practice. The director and assistant director of the OR found the old system cumber- some and ineffective. Patient charges were calculated by the formula:

Time used x staff used x a set dollar amount + charges for some supplies and some equipment. Supplies and equipment used for

surgical procedures were recorded on

Susan Thornton, RN, CNOR, is coordinator, research and development, at Tucson (Ariz) Medical Center. She received a diploma from St Luke’s Hospital School of Nursing, St Louis, and a BSN from the University of Ari- zona College of Nursing, Tucson.

the operative report and on a separate charge slip. The circulating nurse was responsible for documenting charges on both records. The OR secretary then recopied much of the informa- tion and added data processing code numbers for the charted items. Some supplies had charge slips attached, so the circulating nurse had to gather them from the items and place patient information (name, hospital numbers, physician’s name) on them.

In practice, there were deficiencies in the system.

1. There was unnecessary hand copy- ing and recopying of information.

2. Before investigation, it was com- monly believed that physicians’ selec- tion of supplies and equipment varied greatly. Review revealed much more standardization of supplies and equip- ment than had been expected. Numer- ous items were routinely used by all surgeons on all cases. Selection of suture type and size varied the most.

3. For each surgical procedure, there were multiple pieces of paper. Some came with the patient, some were in the room, some were on the item to be charged. Many times, these papers were discarded or lost.

4. Charges were not being recorded by the circulating nurses for a variety of reasons. Paper work was not seen as a nursing function; direct patient care always came first. Emergency activities might interrupt the flow of

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the procedure. There was pressure to reduce the time between procedures. Some nurses just said, “I forgot.”

5. Data numbers were miscopied. Transposition of numbers, copying of the data code number immediately above or below the correct number, and the selection of the wrong product code number by the secretary added to the problems for data processing.

6. For special charge items, the OR director had to obtain code numbers from data processing.

7. The system was inequitable for the patient. For example, suction equip- ment was included in the “room charge,” but not all patients used suction, and other patients might re- quire three suction bottles or more.

8. Some judgments about what to charge were left in the control of the circulating nurse. Consequently, one might charge for items not used but opened, and another might charge only for items used.

Creation of n new system. The first task in refining the system was to revise the “room charges” for OR procedures. A new charge scale was designed based on a detailed cost analysis done by the OR director, the assistant director, the assistant ad- ministrator for the OR, and the direc- tor of data processing. Factors in the cost analysis included number and kind of personnel involved in the pro- cedures, length of the procedure, prep- aration time, supply costs, and equip- ment costs. Maintenance costs for equipment were included.

Several techniques were used to gather the information. Time and motion studies were done, past pro- cedures were reviewed, and repair and maintenance costs were tallied. Pro- jections were made for future price increases, salaries, and overhead costs.

An analysis of preparation of in- struments and the associated costs resulted in several new developments. Instruments that had been previously ly cleaned, wrapped, and sterilized within the OR department were sent to the central supply department, which had more space and already had the equipment to process instru- ments used in the other areas of the hospital. Personnel hours were redis- tributed with central supply to allow for changes in work responsibilities.

Prior to the transfer of instrument processing, an extensive inventory of the operating room instruments was done. In addition, the operating room’s sterile supply inventory was reviewed. Many items that did not have to be kept sterile were eliminated from the sterile stock. Because of the transfer of processing, storage facilities with the operating room department in. creased. This was a bonus of the revised processing activities.

Unit coordinator. Establishment of the position of unit coordinator Wafs

the single element that was to have the greatest impact on streamlining the system. The rationale for creating this position was based on a decision to separate the management of sup- plies so that nursing managers could concentrate on the management of people. The unit coordinator would report directly to the director of the operating room. Qualifications were determined by the director and as- sistant director of the OR with assis- tance from the hospital personnel de- partment. Input about the qualificn- tions was solicited from all levels of staff. Experience with similar poai- tions in other hospitals was reviewcd through personal contacts and a has- pita1 literature review.

For Tucson Medical Center, the qualifications included being a high

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school graduate and having at least five years of experience in a similar position, a thorough knowledge of operating room equipment and sup- plies, and the ability to work effec- tively with all levels of personnel and medical staff. The unit coordinator w a s to be responsible for inventory control, cost containment, equipment and operating room maintenance, safe- ty, required record keeping, physi- cians’ requests for supplies and equip- ment, and inservice education about new equipment. He was also to be the operating room representative to manu- facturer’s representatives.

One of the unit coordinator’s initial assignments was to assist in the de- sign of a form to display items for patient charges. The staff was sur- veyed about which items should be on the charge sheet, and several staff members actually helped to design the tool. The items were grouped under such headings as general supplies, dressing materials, cardiovascular sup- plies, and miscellaneous. The form was printed on “carbonized” paper, and data processing code numbers were preprinted on it.

When the patient was admitted to the preoperative holding room, the new surgery charge slip was stenciled with the patient’s name, hospital num- bers, and physician’s name. The cir- culating nurse was responsible for listing the number of items used dur- ing the procedure. Supplies not listed on the slip were written in under the miscellaneous category. The OR clerk needed only to add code numbers to the miscellaneous items and tally the total quantity.

Implementation. In 1977, inservice meetings were held about the new form. Because the staff had been in- volved in the design of the tool, and because it reduced the time needed for

paper work, the form was well re- ceived. Charges that had once been missed were more readily made. It was much easier for the circulating nurse to check off items used, even when the pace was hectic. The time to process the new forms was found to be less than one half of that required previously. The error rate decreased significantly. The unit coordinator w a s able to report price changes di- rectly to the data processing depart- ment, saving the operating room di- rector time. Patients were charged for what they actually used rather than an average price.

Eualuation. In 1978, the system was challenged during a pilot chart audit of charges. I t was apparent that some important charges were being missed for expensive items such as pacemakers and vascular grafts. An experienced operating room techni- cian was chosen as a volunteer to do a complete audit. The chart audit was designed by the tedious task of re- viewing and compiling a list of equip- ment and supplies used by each sur- geon. For a two-week period, all charts were audited. A total of 350 charts was analyzed. In the first audit, over $1,600 in uncharged items was found.

Some important charges were being missed.

The audit also confirmed the suspi- cion that particular specialties and specific personnel were more likely than others to have missed charging.

Due to this impressive recovery of money, the OR director was able to

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justify the need for the position of assistant unit coordinator, and the qualifications for unit coordinator were upgraded. Qualifications for the assistant position were a n associate degree with a business major; two years of experience; a knowledge of hospital supplies and equipment; the ability to work with others; and dem- onstrated skills in planning, organiz- ing, and problem solving. Duties in- cluded the establishment and main- tenance of patient charge systems, assistance with inventory control, cost containment, and materials manage- ment. Within six months after the position was established, over $20,000 in missed charges had been recovered.

In 1979, the charging system was refined further because the use of spe- cialized equipment had increased. To continue the philosophy of charging use to the individual patient, a second charge sheet was developed entitled “surgery facilities and equipment charges.” The format was similar to the surgery charge slip. The circulat- ing nurse would simply check off the equipment used. At the same time, a form was designed to charge for phar- macy items. Drugs, intravenous solu- tions, and supplies kept in the OR department but supplied by the phar- macy were organized on one sheet, with a similar format.

As the job responsibilities of the assistant unit coordinator expanded, a system was established so the cleri- cal staff would audit charts as they processed them. Routine items used on all cases were listed as a reference. Items commonly used on specialty surgeries were listed. As the clerk completed the processing of the chart, she would note lacking items and con- tact the circulator for verification.

Since the system was initiated, the success of the process has been im-

pressive. In 1978-1979, $3,700 w a s re- covered per month. The total in 1979- 1980 was $4,000 per month, and in 1980-1981, it was $4,200 per month. It is ironic that recovered costs have increased as the system has become more efficient. We believe the reason is inflation. Although more costs were recovered, the costs of items lost were higher due to inflation. In addition, new supplies and equipment had not been added to the preprinted forms, and these items were more easily for- gotten.

The standardized forms have re- duced the time required for their com- pletion. The forms remind the em- ployee of items that might be used. The circulating nurse is free to attend to patient care, and clerical time is more efficiently used.

The chart audit has affected cost containment. The hospital has been saved over $140,000 in missed charges in the last three years. Knowledge that their charts will be audited has improved the nursing s taffs record keeping. The central problem remains of the nursing staff not always record- ing items for charging. The nursing management staff believes the sys- tem is a cost-effective method to ensure

Forms remind employees of items that might be used.

proper charging of supplies and equip- ment. The circulating nurse is still the primary person responsible for initiat- ing charges, but this system allows for instances when her rightful con- cern for patient care causes items to be missed. When audits reveal that a

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circulating nurse has increased fre- quency of missed charges, she is coun- seled about the problem.

Establishing the roles of unit coor- dinator and assistant unit coordina- tor h a s improved the efficiency of the management of the operating room. The nursing director is able to devote more time to the management of peo- ple. Supplies and equipment are under tighter control, and the manufactur- er’s representatives have easier ac- cess to the department. The systems developed by the unit coordinator and assistant unit coordinator have saved a significant amount of money for the hospital.

Our hospital has ten operating room suites. We believe the system can be adapted to larger or smaller hospitals.

Future directions. Within the next few months, specialty charge sheets will be initiated. These sheets repre- sent a further refinement of the charg- ing system. Each specialty, such as open heart, vascular, and ear, nose, and throat surgery, will have a com- plete form for use in t h a t area. The sheet will be designed in the same format as the surgery charge slip. The amount of hand copying and data code assignment will again be reduced significantly.

Installation of a computer i s also forthcoming. Initially, the computer will be used for collecting and storing statistics, processing charges , assis- ting in operating room scheduling, and maintaining the permanent OR log. I,ater, other functions may be added.

The refined system h a s improved the fiscal management of our OR department. Changes have been intro- duced gradually so t h a t staff mem- bers could adapt before further refine- ments were added. We believe we have developed a method for controlling costs and assigning charges to pa- tients efficiently and equitably 0

ANA to offer certification exam The American Nurses’ Association (ANA) will give certification examinations for registered nurses in 15 nursing practice areas and two nursing administration areas. The test will be given Oct 8 in at least one location in every state, in Washington DC, Guam, and the Virgin Islands. The deadline for application is June 30.

The 17 programs are: 0 community health nurse 0 adult nurse practitioner 0 family nurse practitioner 0 school nurse practitioner 0 gerontological nurse 0 gerontological nurse practitioner 0 child and adolescent nurse 0 maternal and child health nurse 0 high-risk perinatal nurse 0 pediatric nurse practitioner

medical-surgical nurse clinical specialist in medical-surgical

psychiatric and mental health nurse 0 clinical specialist in adult psychiatric

and mental health nursing clinical specialist in child and adolescent psychiatric and mental health nursing

nursing

nursing administration 0 nursing administration, advanced. Certification by ANA is a voluntary

program, giving nurses a way to show advanced knowledge and skill in a specialty nursing area. Certification involves both peer review and a written examination. To sit for the written examination, applicants must have a specific education or practice background depending on the specialty.

Interested nurses should request information by calling toll free (800) 821 -5834, or writing marketing department, American Nurses’ Association, 2420 Pershing Rd. Kansas City, Mo 64108.

ANA began certifying nurses in 1974, and by the end of 1982, 15.000 registered nurses had been certified.