8 Areas of Low-Hanging Fruit in ASC Supply Chain Management

Charles DaileyCharles Dailey, vice president, business development of ASD Management discusses eight areas where ambulatory surgery centers could easily save money in supply chain management.

1. Review and standardize GPO contracts. The more products and services aligned with a group purchasing organization contract, the better rates an ASC achieves. Individual ASCs can review GPO contracts and make sure all products and services are included, especially if they recently added procedures or specialties. Administrators can also compare the contract to rates received and make sure they match.

At the management and develop company level, executives also review GPO contracts to ensure all centers are included.

"We looked at our materials management GPO contracting and did a review," says Mr. Dailey. "We found that we needed to restructure our contracts so that instead of centers buying individually, we could participate in company contracts for our centers. We also assumed all our centers were covered, but they weren't, so we had to add a few and then got better pricing. Always do a review of the GPO contract to make sure you get universal pricing."

2. Use inventory management tools. ASCs stand to lose big if their inventory isn't managed appropriately. Purchasing an electronic inventory management system may be worth the investment to eliminate human error and control materials purchasing. ASD Management subcontracts with an electronic software that allows materials managers to input information and generate case costing reports.

"We saw on the case costing reports some surgeons were doing procedures with significantly more expensive devices than others," says Mr. Dailey. "We were then able to standardize more and improve our spend. This was made possible by the inventory management software."

3. Participate in a freight management program. While shipping for individual deliveries isn't very expensive, ASCs send and receive packages on a daily basis and those costs add up. Participation in freight management saved one center Mr. Dailey worked with more than $40,000 in one year.

"There are a lot of companies that offer freight management," he says. "Review and audit freight sent out and coming in; they are usually supply chain materials. After we realized a huge cost-savings with one of our centers, all of our centers joined the freight management program."

4. Purchase alternative implants. Name-brand implants are expensive, especially for orthopedic and spine procedures, and there are several lower-cost alternatives available that allow surgeons to achieve the same quality outcomes. There are several companies offering non-name brand alternatives made with the same materials as the mainstream products at a fraction of the cost, and most keep overhead low by not including representatives in the OR.

"By focusing on surgery center spend, we are able to have good quality implants at a lower cost," says Mr. Dailey. "Some physicians are close with their representatives or loyal to their device company. See if they are willing to consider the generic implants. We consider this our biggest opportunity to reduce spend in the future."

5. Begin reprocessing disposables. There are companies that will reprocess disposables, such as shaver blades. They will reprocess and sterilize them so centers can reuse them instead of throwing them out after one use.

"We have saved a ton of money by reprocessing disposables and that's a program we are really excited about," says Mr. Dailey. "Most of our centers use major distributors. Medline has a reprocessing program and big companies such as Stryker have them as well. We found out which companies had programs and connected them with our centers."

6. Look for lower cost controlled substances. ASD Management centers use a McKesson electronic program to order controlled substances. The online platform allows materials managers to input which products they want to order and makes the purchase — reducing the chance for error when compared with manual orders.

The program also suggests generic alternatives for the substances to purchase at a lower cost. "The program brings the generic equivalent to our attention when we order a more expensive name-brand product," says Mr. Dailey. "We can choose to order the generic equivalent instead and that saves a lot of money. The online program is also a way to track controlled substance purchases."

7. Forecast product utilization and order accordingly. Develop a program to forecast product utilization based on previous months and years to ensure the center has enough materials to operate but not too many that they're wasting away on the shelf.

"We want a clear picture of what the centers are using week-by-week and order our materials on a monthly basis," says Mr. Dailey. "We update the information every two weeks so there's a week's lead time if we need to order more of something. This gives us a very disciplined review of what stock we have at hand and minimizes the ordering of extra products."

8. Plan for patient volume changes. There are times of the year — such as the beginning of the year — when patient volume dips because people haven't yet met their deductible. Then, more cases are scheduled toward the end of the year or during vacation times and purchasing based on those projections could prevent expensive rush deliveries.

"You have higher volume months in the ASC world tied directly to patient concerns for their deductibles," says Mr. Dailey. "Because we purchase monthly, we can track and adjust to those trends as needed."

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