4 Target Areas for ASC Supply Chain Savings

Here are four areas ASC administrators, owners or materials managers should target for greater savings at their facilities.

1. Generic brands of ASC supplies. Shawn Lunney, vice president of sales and marketing for Gig Harbor, Wash.-based GMD, a company that develops generic medical device products, says ASCs can yield enormous savings just by considering alternative, generic brand supplies. Although the last 20-30 years have been marked by tremendous advancements in medical technology, much of that has been tied to high costs. However, the healthcare industry is now coming into an age where medical supplies may be coming out in generic forms, which will give ASCs the opportunity to consider alternatives at a lower cost, says Mr. Lunney.

"What has happened in the pharmaceutical market is now being carried out in the medical devices market," he says. "In the pharmaceutical market, it used to be all about the new expensive blockbuster drug, but now 70-80 percent of prescriptions have some generic variation."

For example, companies, such as GMD and Gold Standard Orthopaedics in Louisville, Ky., respectively offer devices such as slings for female urinary incontinence and orthopedic screws for approximately half the price of brand-name versions of similar medical devices.

Approximately 250,000 slings are performed each year, most of which were performed in hospital outpatient departments due to economic reasons. "Reimbursement was too low and cost of slings too high for surgery centers to do these procedures. With the much lower price of the generic sling and rising Medicare reimbursement, it now makes economic sense for surgery centers add this service," Mr. Lunney says.

2. Free trials of equipment/supplies. Jaime Wilber, who is the director of nursing at Ashtabula (Ohio) Surgery Center, encourages surgery centers to more actively pursue free trials of equipment and supplies before committing to a big purchase.

"We're always open to hearing what new product a vendor may have, especially if it's at a lower cost than one we're already using," Ms. Wilber says. "One time, we had a vendor come in with a new product for rotator cuff repair, and we asked to try [it] for free. After one of our orthopedic physicians tried [it] out, we agreed to purchase the implant from that vendor."

In aggressively pursuing better deals with different vendors, Ms. Wilber says there may at times be an added incentive in the form of free accompanying equipment to go with the purchase. "There's equipment a physician needs to drill holes to put the shoulder cuff implant into place," she says. "After we purchased the new implants for rotator cuff repair, [the vendors] gave us the accompanying equipment for free."

3. Cheaper or generic alternatives for medications. Using generic versions of medication can help cut supply costs, which can make a huge difference to ASC supply expenditures and eventually profit margins. However, Charles Friedman, MD, an anesthesiologist at West Park Surgery Center in Pinellas County, Fla., says ASCs should also consider compounding pharmacies when purchasing pharmaceutical drugs. Although West Park works with vendors to purchase some of the drugs the ASC needs, it also visits compounding shops to find better deals on certain pharmaceutical drugs.

"To decrease the cost of pharmacy items, we may go to a compounding pharmacy," Dr. Friedman says. "The benefit of buying from a compounding pharmacy is that some of the drugs may be cheaper to purchase, but not all of their items will be. This way, we can get a few items from a compounding pharmacy that are cheaper, and some drugs that are not cheaper we'll get from our vendor."

4. Refurbished equipment. When considering used equipment, it is important to note that refurbished equipment is not simply used equipment, which is resold without being inspected and warrantied for performance. Rather, it is equipment that has been remanufactured and reconditioned by the manufacturer. "It is a process of converting it into like-new condition," says Russ Ede, vice president of non-acute contracting for Amerinet, a national group purchasing organization.

In addition, refurbished equipment can carry with it a warranty and certification that used equipment may not. "It's like a certified pre-owned car," Mr. Ede says. "You are paying less money, but someone guarantees the equipment."

After bringing on the new spine physician in late 2009, Midlands Orthopaedics in Columbia, S.C., faced the challenge of researching and buying new equipment and supplies the new physician would need in order to perform spine procedures. Belinda Rutledge, administrator of Midlands Orthopaedics, says she worked closely with the physician for several months before he officially joined the surgery center so they could jointly agree on the least expensive options without compromising on the quality of the instruments.

"We didn't want to spend a lot of money on a spine table, and it took about eight months just to find a quality used spine table because a brand new one will cost you around $160,000," she says. "We finally purchased a used spine table for half that price after working with three vendors and working out the best deal. The key is that we worked with that surgeon to develop and bring in all the equipment he would need to build his practice."

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