Product standardization, an important facet of an ambulatory surgery center's supply chain and materials management, must be approached strategically and be carried out diligently. Adam Higman, manager at Soyring Consulting, a healthcare solutions company based in St. Petersburg, Fla., shares five keys to successful product standardization in ASCs.
1. Strategically set up a committee. Most ASCs know to put together a committee of staff members and physicians that would spearhead supply chain issues in order to cut down supply costs. The key is assembling a team of key players who have the experience and expertise on group purchasing organizations, pricing, the device market and other products as well as negotiating tactics in order to successfully achieve product standardization.
"What you want are key physicians from each practice area to be on that committee, the individual who handles materials management and the individual that handles vendor contracts and negotiations, though the two may be carried out by one individual," Mr. Higman says. "Usually, the committee should be comprised of individuals who are familiar with different products and the tactics needed to take on product standardization."
2. Analyze and find the biggest "spend" categories. After a team or committee is assembled, the next step in product standardization is researching and targeting the ASC's biggest "spend" categories, meaning which specific specialties or products absorb the greatest amount of money on a regular basis. Mr. Higman says once the ASC's committee determines those categories, the next crucial step is setting up goals for how to reduce the costs related to each category. Once an ASC is able to ascertain where it stands in reference to how much it wants to save on supplies, the proper measures and action steps can be taken to achieve those savings goals.
"When the committee comes together to find the biggest 'spend' categories, it's usually going to be rather clear-cut," Mr. Higman says. "For example, implants are a huge 'spend' area [for orthopedics-driven ASCs], and then there are commodity items ASCs buy in greater volumes on a regular basis, such as gowns and procedure trays."
3. Consolidate or streamline products and vendors. Whether your ASC is working through a GPO or is independently working with vendors, ASCs must ensure products and vendors are streamlined and consolidated as much as possible. Not doing so could be detrimental to your ASC's efforts and success in cutting down supply costs. Mr. Higman says there is power in contract negotiations with vendors when your ASC promises a larger volume of cases, which can only be achieved when the ASC's physicians have agreed on a fewer number of products.
"For example, if you have four orthopods all using different vendors, your ASC is most likely not getting very great pricing. If you can reduce the number of vendors down to one or two, you'll get better pricing because it's really all about volume," Mr. Higman says. "New vendors are willing to reduce their prices as long as they obtain an increase in volume. They are interested in how much money you will spend with them and, correspondingly, how much [business] they can get from your surgery center."
4. Continuously follow up with product standardization. Product standardization is an ongoing process and requires each of the aforementioned steps to be diligently followed on a regular basis. Mr. Higman says many surgery centers face this downfall. The first step to ensure ongoing product standardization is electing one staff member to follow up with the process.
"That individual then needs to make sure invoicing for contracted products are all correct, rebate checks are being properly received, physicians are uniformly using the same products and that everything a vendor promises is put down in writing," he says. "This individual also needs to track all the transactions and provide updates to the rest of the center. It's about setting up a culture and expectation that the road to savings is ongoing."
5. Maintain a high level of communication. Throughout this entire process, it is important that the key players — materials managers, administrators and the committee — maintain open communication and transparency with all affected surgeons and staff members. Not doing so could make physicians or nurses feel ostracized about the decisions that are being made about the medical supplies they use to deliver patient care.
"ASCs need to absolutely keep every physicians and staff member in the loop as they go through this process," Mr. Higman says. "If the committee suggests using a new intraocular lens because it is going to reap huge savings, the committee needs to ensure that decision is being communicated to all affected surgeons. Otherwise, you run into a common problem where the facility ends up operating in a vacuum because all the physicians are back to using different products."
Learn more about Soyring Consulting.
1. Strategically set up a committee. Most ASCs know to put together a committee of staff members and physicians that would spearhead supply chain issues in order to cut down supply costs. The key is assembling a team of key players who have the experience and expertise on group purchasing organizations, pricing, the device market and other products as well as negotiating tactics in order to successfully achieve product standardization.
"What you want are key physicians from each practice area to be on that committee, the individual who handles materials management and the individual that handles vendor contracts and negotiations, though the two may be carried out by one individual," Mr. Higman says. "Usually, the committee should be comprised of individuals who are familiar with different products and the tactics needed to take on product standardization."
2. Analyze and find the biggest "spend" categories. After a team or committee is assembled, the next step in product standardization is researching and targeting the ASC's biggest "spend" categories, meaning which specific specialties or products absorb the greatest amount of money on a regular basis. Mr. Higman says once the ASC's committee determines those categories, the next crucial step is setting up goals for how to reduce the costs related to each category. Once an ASC is able to ascertain where it stands in reference to how much it wants to save on supplies, the proper measures and action steps can be taken to achieve those savings goals.
"When the committee comes together to find the biggest 'spend' categories, it's usually going to be rather clear-cut," Mr. Higman says. "For example, implants are a huge 'spend' area [for orthopedics-driven ASCs], and then there are commodity items ASCs buy in greater volumes on a regular basis, such as gowns and procedure trays."
3. Consolidate or streamline products and vendors. Whether your ASC is working through a GPO or is independently working with vendors, ASCs must ensure products and vendors are streamlined and consolidated as much as possible. Not doing so could be detrimental to your ASC's efforts and success in cutting down supply costs. Mr. Higman says there is power in contract negotiations with vendors when your ASC promises a larger volume of cases, which can only be achieved when the ASC's physicians have agreed on a fewer number of products.
"For example, if you have four orthopods all using different vendors, your ASC is most likely not getting very great pricing. If you can reduce the number of vendors down to one or two, you'll get better pricing because it's really all about volume," Mr. Higman says. "New vendors are willing to reduce their prices as long as they obtain an increase in volume. They are interested in how much money you will spend with them and, correspondingly, how much [business] they can get from your surgery center."
4. Continuously follow up with product standardization. Product standardization is an ongoing process and requires each of the aforementioned steps to be diligently followed on a regular basis. Mr. Higman says many surgery centers face this downfall. The first step to ensure ongoing product standardization is electing one staff member to follow up with the process.
"That individual then needs to make sure invoicing for contracted products are all correct, rebate checks are being properly received, physicians are uniformly using the same products and that everything a vendor promises is put down in writing," he says. "This individual also needs to track all the transactions and provide updates to the rest of the center. It's about setting up a culture and expectation that the road to savings is ongoing."
5. Maintain a high level of communication. Throughout this entire process, it is important that the key players — materials managers, administrators and the committee — maintain open communication and transparency with all affected surgeons and staff members. Not doing so could make physicians or nurses feel ostracized about the decisions that are being made about the medical supplies they use to deliver patient care.
"ASCs need to absolutely keep every physicians and staff member in the loop as they go through this process," Mr. Higman says. "If the committee suggests using a new intraocular lens because it is going to reap huge savings, the committee needs to ensure that decision is being communicated to all affected surgeons. Otherwise, you run into a common problem where the facility ends up operating in a vacuum because all the physicians are back to using different products."
Learn more about Soyring Consulting.