Managing supply chain well, particularly physician preference items, can go a long way to reducing the cost of ASC operations.
"A lot of times the revenue is out of our control, so the more money you can carve out of the cost per case helps your ASC remain profitable," says Joseph A. Jackson, managing director of Strategic Healthcare Services. "It is essential that ASCs make sure they can deliver the best care to their patients, while remaining profitable."
Here are five most common mistakes that ASCs can avoid:
1. Lacking good, actionable data. Make sure the person managing the supply contracts has the right information at the right time. Avoid only relying on profit and loss statements for savings tracking.
"PPI costs typically just show [up] as a lump sum designated to medical supplies on the P&L," Mr. Jackson says. "This lump sum does not let you see how well you are controlling PPI costs or to how drive strategy going forward."
Drill into the details and make sure you know each of the products used in your ASC and how they fit into your overall financial picture, and then figure out how to ensure cost savings. Knowing not only which products are used, but how physicians use them, can also help ASC administrators carve out cost savings during negotiations with supply vendors.
2. Not tracking product utilization. Unless the product utilization is tracked, ASC administrators won't necessarily see any cost-savings they initially negotiated with vendors in their quarterly financial statements.
"You may go into a negotiation saying instead of paying a dollar I'm going to pay 90 cents and the vendor will agree and the ASC will project the savings," says Mr. Jackson. "Most of the time nobody looks at the details to ensure the savings are being achieved over the course of the year and that is a mistake with PPIs."
In many instances, the utilization of products isn't tracked down to the case level to ensure they are used as expected. More often than not, the usage changes, and this affects the savings. A good robust compliance and case auditing program is necessary to make sure everything is used as initially planned, with cost savings rolling in as planned as well.
3. Going into negotiations unprepared. Remember, the vendor and their negotiation team are professional negotiators. They negotiate hundreds of these contracts every year. As such, they understand the data and the process. It is important for ASC administrators and supply managers to do their homework and have a plan before going to into those negotiations.
4. Not cultivating strong physician relationships. Good relationships are key, especially for effectively managing physician preference items. Singling out a physician champion is a good way to build those relationships. Pick a physician who is well-respected and trusted and he or she can help guide change.
5. Not talking to their physicians. Physicians also need to know what is going on in terms of utilization — what is used and when, on a weekly basis. Encourage an open dialogue with physicians so there is no drop in quality. Understand what the physician uses and why they use it. Take an interest with that level of specificity, so that you can have a good robust dialogue with your physicians and gain their trust.
"Physicians shouldn't feel like you are going to try and change the way they practice or take away the products they like," he says. "Give them specific data and talk to them about it. They will respond well."