Tom O'Bannon, director western alliance value optimization at Amerinet, discusses seven out-of-the-box ideas for ambulatory surgery centers to cut costs on supplies.
1. Centralize supply ordering. Many ASCs lose out on potential savings by spreading supply chain duties among two or more people. A scrub tech might do the surgical supply ordering, a post-op nurse might order the pharmaceuticals and an executive assistant might be in charge of office supplies. Each person simply orders what is needed, rather than crafting a coordinated strategy where products are standardized and savings are identified with distributors or group purchasing organizations. "Supply ordering is too important an activity to be left uncoordinated," Mr. O'Bannon says. "This work should be overseen by one person at the ASC."
At smaller centers, the person doing this work would still retain her original duties, such as working as a scrub tech, but must be given sufficient time to do her supplies work. Also appoint a backup supply person and give both of them training on the basics of supply chain management. "The people ordering supplies do not need to have a complete knowledge of the products they are ordering, but they do need to be good facilitators," Mr. O'Bannon says.
2. Use supply ordering software. Many ASCs are just paying the supply bills and not inputting their order data into a software system to help automate ordering and keep tabs on spending. "Without supply data, you have no history to track," Mr. O'Bannon says. "You don't know how you're doing." Most of the major distributors offer customers free software using bar codes and a hand-held device to read them. This information is downloaded onto a PC and then sent to the distributor.
ASCs can also buy their own software to manage inventory. "Prices for this technology have dropped significantly over the past few years," Mr. O'Bannon says. "This requires a relatively small investment and there are unlimited benefits, from paying invoices to tracking what you are ordering." The ASC might already have inventory management software, as part of a larger financial software package, and simply not be aware of it.
3. Partner with a distributor. A surgery center can save money by developing a close partnership with one distributor. Hoping to get the best price on one particular item, some centers work with several distributors at once, but multiple distributors dilute the potential volume discount and are more difficult to keep track of. "Talk with people at the distributor and get their advice, in coordination with GPO," Mr. O'Bannon advises.
A representative at the distributor can help the center get a better price. He can say, "We offer five different brands for this particular product and you use the highest-priced one. Do you have to use that one?" Also, the distributor rep might review the ASC's orders to see if anything jumps out, such as mistakenly ordering too many items. "If you hit the wrong button and ordered 100 items instead of 10, this person would be reviewing your order and could give you the heads up," Mr. O'Bannon says.
4. Keep working with physicians on new items. Identify surgical items where lower prices can be obtained and ask physicians to trial these lower-cost items. "Basically anything going into the physician's hands needs to be trialed by them first," Mr. O'Bannon says. "The trialing can take time, but it's worth it."
Before starting trials, make sure the physicians are on board. "They have to truly want cost savings," Mr. O'Bannon says. Ask them to sign-off on a cost-savings strategy and remind them of it later if they balk at trialing new products. When a physician wants to stay with a higher-cost item, be prepared to show him just how much more it will be costing the ASC. The distributor or GPO can provide data on potential savings. "You can hold your physicians accountable in a subtle way," Mr. O'Bannon says. "Pitch it back them. Tell them, 'You want us to be more cost effective and here's a great opportunity to actually do it.' "
5. Don't overcustomize packs. Stocking a custom pack to meet all the needs of just one physician is convenient for him or her but not economical for the ASC. The most economical way to use custom packs is to have them stocked so they almost meet the needs of at least several physicians, then add the missing items. For example, if a custom pack is stocked for gynecological procedures, "you might need to pull just one item for a particular physician rather than make 20 pulls," Mr. O'Bannon says.
6. Utilize regional purchasing alliances. To qualify for higher-volume savings at GPOs, it helps to join regional or statewide buying alliances. In many cases these purchasing groups are organized by state ASC alliances or GPOs. Mr. O'Bannon says there is a lot of activity around purchasing alliances, particularly on the West Coast.
7. Review purchase history with GPO and distributor. ASCs should review all purchase history with the GPO and the distributor. "Look at what you are buying that is not on contracts for discounts," Mr. O'Bannon says. Can any of these products be substituted with a contracted item? Also, be on the lookout for pricing discrepancies. "It's good to check," Mr. O'Bannon says. "Sometimes the distributor forgets to charge the contracted price and is charging you the full price." These reviews should be done at least twice annually, but they could even be done monthly, he says.
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