12 Critical Concepts to Know About ASC Supplies and Contracts

Karen Lombard, RN, used to run a 21-OR ambulatory surgery center. Now she's director of contracting solutions for Amerinet, a national healthcare group purchasing organization. She identifies 12 critical concepts about ASC supplies and supply contracts and explains why they're important to surgery centers.


1. Direct from the manufacturer. Part of Ms. Lombard's work for Amerinet is verifying all of the products the GPO contracts for are not coming from third parties, and this is a good best practice for all ASC supplies.


"You want to ensure the quality of the products," she says. "If the product you get doesn't come directly from the manufacturer, how can you guarantee it will work?"


2. High fill-rate percentage. When looking at purchasing supplies, particularly soft goods, many ASCs lack room for extra storage of supplies. This means it is critical for ASCs to know suppliers are capable of getting supplies to them in a "just-in-time" fashion.


"We want to make sure they can at least fill 97 percent of the time," Ms. Lombard says. "We look to make sure the fill rates are there, they can honor those fill rates and that they're going to be able to deliver when they say they can deliver. Not everybody's perfect but we want a minimum of 97 percent because if you're in an OR and you don't have any [extra storage] room, you need know those products are coming."


3. Competitive pricing. While it may seem obvious that ASCs want to ensure they're getting competitive pricing on their products, it is an area that needs constant attention.


"We want to make sure pricing is competitive and remains competitive," Ms. Lombard says. "We internally benchmark products and go back and forth on pricing with suppliers a lot. You need to constantly keep at it."


4. Price protection. Ms. Lombard says in most cases she likes to have contracts with firm pricing for three years as it helps with budget planning, but that approach can bring sticker shock after those three years are over.


"If you hold your price firm for three years, you may get a big bump because you didn't take any for three years," she says. "You'll still want to budget a  minimum percent increase each year rather than [being unprepared] to get hit with a 6-8 percent increase in three years."


5. Surcharge clauses. There are circumstances when the prices of materials go up or down in a matter that is out of control of suppliers, and ASCs should anticipate these changes having an impact on their prices.


"For example, [the price of] cotton recently went through the roof," Ms. Lombard says. "Companies come to us and say they need to rework and make changes to the contract or else they will need to cancel the contract. We don't want them to cancel the contract but we don't want to allow them an unchecked price increase. We pay close attention to the Consumer Price Index. We make sure our pricing is within that. If they're going to propose an increase because of a certain situation, we make sure that it's relevant to what they're doing."


6. Term and termination. Amerinet looks closely at the term of the contract and how it is terminated, two concepts ASCs need to understand before agreeing to a contract.


"You need to know how long is this going to be for and what are the criteria for termination of a contract," Ms. Lombard says.


7. Return policies. ASCs need to understand the precise reasons why a supplier will accept a return and whether there could be costs incurred by the ASC for returning a product.


"We always learn what the member has to do to return a product and for what reasons they can return a product," Ms. Lombard says. "We want to make sure they can return the products and return them without cost to them. That's important, especially for shipping."


But ASCs must also understand suppliers may look to include clauses that limit returns or carry charges with returns, and sometimes these clauses are acceptable. "I just don't feel that if you ordered excess because you thought there might be a backorder that you can just return that to the supplier for free," she says. "You have to be responsible for what you're ordering."


8. Shipping. Amerinet encourages its suppliers to pay for the cost of shipping of soft goods rather than pass it on to members.


"We won't ask them to pay for overnight or special shipping, just standard ground shipping," Ms. Lombard says. "A lot of them will do that, depending on the product line. If it's heavy capital equipment, they likely won't do that."


9. Follow FDA guidelines. Ms. Lombard says Amerinet works to ensure the companies they partner with follow FDA guidelines, which she says is a good best practice for ASCs as well.


"That's very important to us as a GPO," she says.


10. Recall process. "We want to make sure that if there's a product recall, there's a mechanism in place [by the supplier] to provide that information to us and our members," Ms. Lombard says. ASCs will want to understand how their supplier partners will inform them of recalls and how these partners will help inform and educate patients on the recall, when necessary.”


11. Service after the sale. Amerinet likes to see its supplier partners provide support to its members after the sale of goods.


"That's another thing that's important to me — marketing, sales literature and samples," she says. "It's all about service after the sale, and making sure that if we're having issues, there's someone who can help us out with it."


12. New technology. Amerinet strives to work with new suppliers and identify new technology it can offer its members, and this is a practice ASCs will want to emulate, Ms. Lombard says. New technology may offer worthwhile improvements on existing technology used in the ASC, and new suppliers may offer cheaper options.


"We're always looking at new technology and new suppliers," she says. "We want to make sure we're offering the latest and greatest and we're giving suppliers opportunities to get their foot in the door."


Learn more about Amerinet.

More Articles Featuring Amerinet:

30 ASC Companies Announcing Executive Moves in 2011

Amerinet Announces New Supplier Agreements With AXIOM, H2O Applied Technologies & Paddock Laboratories

Amerinet to Offer Members Suite of GHX's Procure-to-Pay Technologies

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