8 Steps for Profitable Materials Management at Orthopedics ASCs

Lori Pilla on materials managementMore surgery centers today are looking to expand or add orthopedics programs. When doing so, it's important to remember the impact orthopedics can have on supply chain and materials management.

"As people continue taking care of patients in this arena, specifically in the orthopedics space, it's a place for more simple and straight forward procedures although acuity is rising," says Lori Pilla, vice president of Amerinet Clinical Advantage and Supply Chain Optimization. "We are seeing big volumes of ACL procedures, arthroscopy and shoulder repairs as well as numerous other sports medicine procedures."

Ms. Pilla discusses eight steps to improve materials management in orthopedics-drive ASCs.

1. Take advantage of commoditized implants.
Most of the low acuity orthopedic procedures for outpatient surgery centers are already standardized, and many of the implants are commoditized to some degree; those that aren't are quickly moving in that direction.

"This is beneficial for ASCs in reducing the costs and increasing availability," says Ms. Pilla. "I think the key is to take advantage of commoditization to leverage your utilization in a committed way. If you typically have a lot of sports medicine physicians in your center doing fixations and arthroscopic procedures, there are suppliers who are willing to provide substantial discounts to ASCs for committed partnerships."

If you enter into a partnership with these suppliers, such as ArthroCare or Stryker, you can purchase all the equipment at a lower negotiated rate. "When the supplier sees you are willing to partner with them, they are willing to partner with you and offer the price concessions," says Ms. Pilla.

2. Evaluate procedures before entering into contract negotiations.
Think about the procedures performed in the surgery center globally and understand what each subspecialty needs before going into contract negotiations. Experienced administrators should be aware of the types of cases their surgeons are doing and which vendors can support their case mix.

"When you discuss arrangements with orthopedics suppliers, there are some who are well known and provide quality products in the ASC, but they are very specific to one area," says Ms. Pilla. "If you have a diverse orthopedic group — but high utilization of sports medicine as opposed to foot and ankle surgeons for example — consider the specific suppliers that provide implants, tools and equipment for those anatomic areas. You wouldn't want to go into an arrangement with one of the bigger suppliers knowing that they can't support a majority of your cases which may reside in a more focused area."

Instead, work with vendors that cover a wide variety of procedures or negotiate separate contracts for the niche areas.

3. Establish protocols for case supplies.
Your preparation protocols for supplies in each case should be similar to hospital protocols; the implants should be brought onsite at least 24 hours before the case. Many surgery centers prefer just-in-time supply delivery, so make sure your staff members are ready with those orders by coordinating delivery in a timely manner.

"Because this is an ASC, procedures can't be delayed for a few hours waiting for supplies because their schedules aren't designed that way," says Ms. Pilla. "Make sure the pre-op is done in advance so there are no surprises when the patient comes into the center. Make sure the materials are pulled the day before; being very traditional in your preparation goes a long way in the ASC."

4. Stay on top of inventory.
Materials managers should track and monitor trends at the surgery center to stay on top of inventory. Ordering too many or too few surgical kits could be disastrous to the ASC's bottom line. However, they also have to be prepared for last-minute add-ons.

"You need an experienced person managing inventory in the ASC because your resources are limited; so you have to make sure all of those cases are prepared for in advance," says Ms. Pilla. "You also have to be ready for add-ons, especially in sports medicine when athletes injure themselves and surgeons want to squeeze in that case."

Materials managers should pay particular attention to scheduling so they can predict trends in the future and have enough supplies to meet higher demands when necessary.

"See where peeks and valleys trend  in scheduling and make sure you are ordering when case volume is up, such as at the end of the year after patients have met their deductibles and elect to have their procedures done before years end," says Ms. Pilla. "When doing utilization compliance of operating rooms, have a good idea of the types of cases surgeons are bringing in week by week so you can order the implants on a weekly basis for a just-in-time inventory system. You always have to keep your minimums and maximums on par with the ASC utilization; no more and no less."

5. Agree on block time scheduling.
Most surgery centers function on block time scheduling, which makes it easier for the materials manager to know what types of cases are coming in. The surgeons should be scheduling procedures more than 48 hours in advance so the materials manager has time to stock the inventory or procure specialty items.

"Get together and agree on which surgeons are operating on what days," says Ms. Pilla. "Communicate with the surgeon and their office to prepare for new procedures. When there is a new surgeon, make sure he knows how to schedule his block time successfully and keep him busy but not overbooked based on length of procedures and limited hours of operation in an ASC."

Leave enough time in the schedule to book a new surgeon because he may take a little longer than others to become acclimated to the pace of an outpatient ASC.

6. Communicate with owners and managers about physician preferences.
If your surgery center still allows orthopedic surgeons to maintain physician preferences, have a frank discussion with them about the cost of these items and continue to collaborate with them on lowering costs wherever possible. Most often you will find this is new information for them.

"When you engage your physicians upfront, present the data and financials right away," says Ms. Pilla. "As you continue taking care of patients and building the center, the materials manager needs to communicate with administrators and collaborate with physicians. The goal of the ASC is to serve more patients on a cost effective system while also providing high quality care."

It takes a lot of effort to bring surgeons on board paying attention to the cost of their services. "For the most part, forecasting those supply needs and choosing products that aren't the highest priced for the market, but clinically acceptable and have a high quality outcome, might be a better option. Once we show them the data on that, they are more willing to collaborate with us to bring those materials into the ASC."

7. Focus on organization.
In today's ever-changing healthcare environment, materials managers must focus on organization to track inventory and work with vendors on the best deals for products in their market. "It's really important in this day and age within the healthcare industry to recognize that the best way for materials managers to be successful in the ASC is to know the materials utilization patterns," says Ms. Pilla. "Software allows them to match up standard product utilization with types and volumes of procedures, making their job easier."

With the right system, materials managers can pull preference cards for physicians and forecast the surgical supplies and implants within the ASC. If the materials managers aren't focused on extreme levels of organization, they will have a more difficult time executing their job.

8. Be ready for new surgeons to come onboard.
When a new surgeon is credentialed or invests in the ASC, materials managers must be ready. Identify their preferences and make sure they fit within the ASC's contracts. If not, they must consider whether they can work the products utilized or whether the ASC will make an exception.

"Be upfront with the surgeon," says Ms. Pilla. "Instead of going to him and asking his perspective, do it more proactively and address the issue so you can mutually agree upon the supplies. There may be things the ASC needs to order, but most of the time new surgeons are pretty willing to make the switch and work within the existing product portfolio available."

More Articles on Surgery Centers:

8 Steps to Re-Negotiate Profitable Payor Contracts in 2013

5 Most Common Reasons for Denials in Surgery Centers

8 Reasons Why Surgery Centers Fail & How to Avoid Them

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