Reducing Costs in the ASC Supply Chain: Q&A With Richard Peters of Provista
Richard Peters, senior director of surgery services for Provista, answers questions following an April 18th webinar on "Proven Methods for Accelerating Cost Reduction." Audio for the webinar is available here and the PDF presentation is available here.
Q: What is the best way to chose the best GPO for our facility?
Richard Peters: Below are questions you can use to determine which GPO is best for you:
• How much purchasing power does the GPO represent?
• How many surgery centers does the GPO currently serve?
• Does the GPO offer options on distributors to use?
• Does the GPO offer a portfolio for surgery centers that addresses your needs?
• Does the GPO contract portfolio include:
o Medical-surgical supplies• Does the GPO have dedicated support personnel to help surgery centers or do they serve multiple classes of trade?
o Surgical equipment
o Facility maintenance supplies
o Office supplies
o Capital equipment
o Services such as cellular phones, document management, transcription, etc.
o Computers and software
• Does the GPO have a private label brand for commodity products?
• Does the GPO have a member's web site where contract details, special promotions, etc. can be found?
• Is there a fee to belong to the organization?
• Does the GPO offer any special services or products to the ASC market beyond what a traditional Group Purchasing Organization offers? (i.e. ordering or inventory management tools, procurement services, contracting support, etc.)
Q: Is it counterproductive for a clinical staff person to also do materials management?
RP: An ambulatory surgery center's clinical staff are skilled healthcare professionals and the ASC market's quality outcomes are a reflection of that expertise. However, it appears to be less productive for a clinical person to split time between materials management and clinical work. The reason for any lack of productivity is simply the level of expertise that any one person can bring to bear in the complicated world of medical supplies. To perform at a high level, one needs to have experience in contracting, negotiations and the time and resources to actively monitor and address variations in price, delivery and inventory.
Q: How do I know if I am with the GPO that is best suited for our surgery center?
RP: I would encourage you to consider the savings, the service and the other value adds that are available through your GPO. Then determine your ASC's ability to access those services to achieve the promised savings. Recently, a surgery center focus group told us that service is paramount in the ASC market. So consider which GPO might have the right level of service for your surgery center. Based on my experience, very few GPOs have dedicated resources for surgery centers. Your GPO should be a trusted advisor for all supply chain or capital purchase decisions.
Q: If I am the materials manager and also the clinical staff person, what is your best suggestion to make that scenario work? What is your recommendation to make the best out of this situation?
RP: Try to make the best of your time spent on the supply chain by creating more efficient processes. Here are some recommended best practices.
1. Connect with your group purchasing organization and perform regular audits to ensure you are receiving the best possible pricing. Let your GPO perform some of the heavy lifting to make sure you are connected to the proper pricing. Your GPO rep can also engage the supplier to resolve any pricing discrepancies discovered in this process.
2. Utilize an ordering and inventory management system to reduce the overall time you spend on ordering, receiving and tracking supplies. If you build this type of system into your proceses you will find that what normally takes hours now only takes a fraction of the time.
3. Finally, talk to your distribution partners to see what type of value added services they may offer your surgery center. Some distributors will provide high service levels but be aware that these services will cost you more but may be worth every dollar spent.
Q: What program(s) for supply chain management would you recommend an ASC use?
RP: Based on our market research, many surgery centers are using their clinical systems (i.e. Advantx, Vision, HST) to manage supplies, but these systems have limitations since their primary function is not supply focused. Others are using their distributor’s systems for ordering but often find that they can only use the distributor systems for ordering one product category like medical/surgical or pharmacy. Provista has recently brought an ordering and inventory management solution, Provista Pro, to the ASC market. Regardless of the specific tool that you use, think about the following questions to evaluate the software.
— Can you order all supplies from the system?
— Does the system work with bar-coding technology?
— How easy is it to pull reports from the system?
— Can the system alert you when stock is low?
— Does the existing system help you track back orders or open orders?
— Do you know you are paying the right price?
Whichever system you use, make sure that it works with your processes and provides you the ability to manage your entire supply chain not just submit an order or enter items for the preference cards. Invest in a system that will allow you to take control of your supply chain.
Q: Do you think there is a return on investment using an EDI?
RP: Yes; consider the amount of time your staff spends on manual processes to track down order confirmations, back orders, etc. Our focus group told us that their teams spend about two to three hours at least once per week ordering supplies manually (phone, fax, email, etc.) and then four to eight hours addressing items that may have been on back order. Therefore, if these numbers hold true, the minimum time spent on manual process is 312 hours per year. If using EDI gave you 50 percent of that time back through automatic order confirmation or a back ordered product report, as examples, your ASC could use that time for additional clinical care, other supply chain activities or administrative activities or drop the time to your bottom line.
Q: what best practice(s) do you recommend that a procurement process follows?
RP: The process requires a full discussion to provide a specific answer, so I will answer this briefly below. However, if any of you would like to have a conversation to get into more detail that is specific to you facility, please connect with me directly.
Below are a few best practices that some ASCs are using to accelerate their cost reduction:
• Explore using programs that drive additional value and price discounts (Standardization and commitment programs)
• Invest in technology to provide visibility and transparency
• Create & monitor inventory management policies and procedures
• Continually improve operational efficiencies (EDI, automation, etc.)
• Utilize supply chain experts
o Work closely with your suppliers and distributors to create mutually beneficial partnership
o Join and more importantly partner with a GPO partner to reduce costs
Q: What is your recommendation for setting PAR levels on consignments? (donor lenses for ophthalmology procedures)
RP: The best way to set PAR levels is to examine your purchase history. You will want to determine the monthly fluctuations and the drivers of the variation. You can even break this down to the physician level, set your seasonality by physician, and then roll it up to the total number. This is one of those areas that has some art involved to predict future product needs and I recommend you start with your surgery centers historical procedure volume and refine it as needed. Your distributor’s ability to meet unexpected surges in demand is another factor to consider. If they can support expedited delivery, you can get away with less inventory on hand.
Q: How often should a multi-specialty surgery center with 6 OR rooms turn their inventory over in a year?
RP: The experts on our team indicate that most surgery centers range between six to nine turns.
Q: Has anyone tried the McKesson IOS Scan Manager Plus? If so does it interface with Advantx?
RP: I checked with our technology experts and the answer is yes. Scan Manager Plus does have an optional interface into Advantx but you should check with your McKesson representative for more information.
Access a PDF version of the Provista webinar here.
Access an audio version of the Provista webinar here.
Learn more about Provista.
© Copyright ASC COMMUNICATIONS 2012. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.
- Best Tips for Launching an Infection Risk Improvement Plan
- How to Manage and Leverage Vendor Relationships
- 3 Steps to Control Labor Costs
- 10 Steps to Immediately Improve Surgery Center Profits: Cost Reduction & Benchmarking
- Former CMS Head Dr. Don Berwick Officially Running for Massachusetts Governor