Discover Dollars Through Supply Savings: 8 Tips for ASCs

Here are eight suggestions from ambulatory surgery center administrators and managers for saving money and spending smarter on supplies.

1. Avoid impulse supply purchases. ASCs should never make impulse purchases of supplies and materials. When ordering supplies, an ASC must stay tough and focused on what may be the best deal for the surgery center as a whole and not just for individual physicians. Compare prices between several companies before settling on a final purchase, says Georganna Howell, administrator of Baltimore-based Greenspring Surgery Center.

"There was a company that offered $18 per unit for a Bovi pen after I was offered $25 per unit [by a previous company]," she says. "But I could get [the deal] if I buy a minimum of 1,000 units. I went with a third company because there was no minimum or maximum purchase required, and I actually ended up with a better price than either company.

"You never want to lock yourself into a minimum or maximum purchase requirement," she says. "Everything we purchase has a thought behind it. I want top-of-the-line supplies and won't settle for less, so I'm going to shop around."

2. Have a long-term purchasing mentality. ASCs often obtain equipment and instruments for "free" and need to pledge to buy certain amount of supplies at a certain volume and cost. These supplies are marked up to cover the cost of the technology; ASCs are therefore, in essence, buying the "free" equipment or instrument, says Susan Kizirian, chief operating officer for ASCOA. More often than not, buying the technology and then purchasing the disposable supplies at a lower cost is more cost-effective over the long term.

3. Consider 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 that are cheaper from a compounding pharmacy, and some drugs that are not cheaper we’ll get from our vendor.”

4. Track expiration dates.
During quarterly inventory, Jesseye Arrambide's staff flags items that are approaching expiration. Jesseye Arrambide, RN, BSN, CNOR, is the executive director at Oregon Outpatient Surgery Center and president of the Oregon Ambulatory Surgery Center Association.She then sets up a "show and tell" table so that staff can look at nearly-expired items and plan to use them before the expiration date arrives. "That gives us a three-to-six month lead time for all supplies," she says. "For implants, we do it six months before the expiration date because they're really expensive." Setting up this "show and tell" table can also give staff members an idea of which supplies frequently approach expiration without being used.

5. Buy 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 warranted 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, market director for MedAssets, a healthcare supply chain management 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.”

6. Trial news items before committing. Frequently an ASC will see a commonly-used item from another manufacturer at a reduced cost, such as a hand cleanser or non-sterile gloves, and immediately switch without a mini-trial. The trial doesn't have to be a big deal, Ms. Kizirian says. Just get the item for trial and gather feedback, and then switch to the new item, giving staff and physicians who use the item time to try the new item, compare it to what's currently used and give feedback. Upfront buy-in saves the dollars that overcoming resistance to change generates.

7. Post PAR levels. Prevent supply hoarding in your ASC by posting periodic automatic replenishment levels on your shelves and bins, Ms. Arrambide says. "I'm a nurse, and I know that nurses really want to make sure we don't have to run down the hallway and get something," she says. "We tend to packrat things and stock a bin fuller than it needs to be stocked."

If your staff members are overstocking supplies, you will end up with more supplies on your shelf than you need. Determine the correct level of each supply in the pre-op and post-op areas, then post those PAR levels to let staff members know when to stop stocking.

8. Continually evaluate and update GPO contracts. Continually evaluate group purchasing organization contracts to optimize savings opportunities. Most GPO organizations have multiple tier levels, meaning the more you purchase, the more you save, says Amy Gagliardi, vice president of supply chain for Regent Surgical Health. As your surgery center grows and changes, make sure you are reaching the maximum tier level within your contract.

"If your ENT use was low last year but is reaching $50,000 this year, see if you can qualify for a new tier," she says. "At Regent we have worked with our GPO to recognize us at the right tier. We can aggregate 99 percent of all surgery centers to optimize the highest possible tier level and best possible pricing."

When you are contracted with a GPO they must honor the savings at a set level once you reach that threshold. However, each ASC should track its bills and make sure the company is charging appropriately based on those contracted rates.

"You want materials management and the business office to make sure every item you purchase is being billed at the correct price," Ms. Gagliardi says. "At Regent, we use a software program that tells us if something doesn't match. For example, if we place an order for $10 and the invoice comes back for $20, our software won't allow that invoice to be paid until it is rectified. Make sure your business office and accounts payable department are working closely and intertwined with materials management."

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