Surgical Management Professionals Launches Medical & Pharmacy Cost Reduction Program

The following article is written by Daren Smith, RN, director of clinical services, for Surgical Management Professionals.


In an effort to provide additional value to Surgical Management Professionals clients, SMP has initiated a materials management program to examine medical and pharmacy supplies, the second highest expense after wages and salaries.


The project had the following goals:

  • Provide an opportunity to SMP clients to join an affiliate group that pools purchase volumes to get access to higher tiers within group purchasing organizations with no additional cost to the facility.
  • Provide an opportunity to join an affiliate group that does not require major changes to the facilities current supplies or supply chain.
  • Provide an opportunity to join an affiliate group that monitors and manages the supply contracts for correct pricing and expiration.
  • Provide supply contracts that demonstrate a supply cost savings.
  • Provide costing information comparing contracted materials management vs. self-administered materials management program.
  • Provide personal guidance and instruction for proper use of the software inventory module.
  • Provide supply benchmarks for facilities to monitor their materials management functions.


The process started by investigating GPOs and affiliate groups to determine the best possible fit with these goals. We landed on an affiliate group that pools their volumes to leverage higher purchasing tiers within the GPO. Considering its model met the goals of the project, we contacted the affiliate group for a market basket analysis. The purpose of a market basket analysis is to provide a snapshot of the site's current supplies and pharmaceuticals to compare its current invoice price with the affiliate groups proposed pricing. We made the assumption that a savings within the market basket will translate to a savings overall. The market basket does not include any custom packs because it is too complex to make a fair comparison. We can reasonably assume the components of the packs will follow the individual pricing.


The market basket demonstrated savings on the majority of products. The market basket also demonstrated very few physician preference items would have to change (sterile gloves, gauze, suture, etc.). The results of the market basket represent a potential average savings of 10 percent on medical supplies for the first set of centers we compared. The pharmacy market basket demonstrated a similar average savings of nearly 12 percent. Assuming that this savings could be carried through to the rest of the products, the center could recognize considerable annual savings. As part of the material management program, training was provided for the materials managers to give them the skills to manage the supply chain at their facilities.


Learn more about SMP at

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