A large portion of any ambulatory surgery center's budget is focused on implants and supplies used per case. The implant selection and use affects case cost and supply chain efficiency can make an immediate impact on a facility's bottom line. That's why it's so important for ASCs to work with suppliers who are valued vendors at their facility.
ASC owners and operators run into several supply chain management issues throughout the year. The biggest headaches can include:
1. Inventory management. Materials managers must track inventory coming into the surgery center to ensure clinical staff are prepared for their cases everyday and avoid cancellations. The administrator also needs ordering data to keep the budget balanced and ensure supplies don't expire on the shelves. It's easy to lose track of inventory and nurses may hide materials around the ASC so they'll always have a few extra supplies available if the main closet runs low.
2. Physician preference items. Individual physicians may insist on using certain tools because they have experience with specific brands and a relationship with their vendors. However, if those tools aren't in the ASC's current contracts, they could cost a premium price. ASC operators want to work with surgeons to make the ASC comfortable, but also need to cover their expenses, especially if they could lose money on high-cost implants with low reimbursing payer contracts.
3. Inaccurate price points. ASCs don't always obtain the best price for implants and supplies based on the volume and type of product ordered. In some cases, ASCs can achieve savings by purchasing in bulk or standardizing to achieve the bulk rates. Other times the invoice for materials doesn't match the negotiated price and ASCs pay more than initially thought for certain products.
4. Last-minute shipping costs. Just-in-time ordering and shipping costs for implant systems and other devices burden the ASC. Whether it's because the ASC ran out of materials without replenishing fast enough or a surgeon decides to bring in a complex case at the 11th hour, the freight expenses these items takes a huge toll on the center's bottom line to avoid a preventable cancellation.
5. Product shortages. There are some products, including important pharmaceutical drugs, the ASC needs but are in short supply. Shortages drive up the cost of products, forcing ASCs to purchase from different vendors or find alternative supplies. ASCs can limit the economic impact of these shortages by engaging the alternative options when the need arises instead of hunkering down with the same company and suffering high prices or cancelled cases.
There are several strategies ASCs can take to overcome supply chain management issues. First, appoint a materials manager who will keep an eye on all inventory, ordering, contracted rates and invoices to ensure the centers is running efficiently and cost-effectively. This person is responsible for scheduling regular audits, identifying discrepancies and recovering lost inventory or profits from overpayments.
The second step for ASCs is automation, which often means partnering with an outside vendor. Automating the inventory management system to check-in and check-out supplies keeps a digital record with easily-run reports on the ASC's progress. The process also helps materials managers avoid ordering duplicates. The administrator and materials manager can also see ordering trends to make sure they aren't over- or under-ordering at any point during the year.
Finally, working with physicians to standardize materials and implants can make a huge impact on materials costs. There may always be a few items purchased on consignment or special order for unique cases, but if the bulk of the procedures come from one or two vendors the ASC can incur savings. The savings are especially big when the surgeons choose to partner with the lowest cost implants that don't compromise quality.
Hillsboro, Ore.-based Acumed is a medical device manufacturing company that partners with facilities to improve the ASC overall. The company was founded as a small family business in 1988 and launched its first arthroscopy screw line for ACL ligaments in 1991. Now products include implants for the elbow, foot and ankle, hand and wrist, hip and pelvis and shoulder procedures.
As a partner, Acumed offers industry expertise and benefits beyond the typical provider for outpatient surgical facilities, including:
• Supports surgical cases
• Works with administrators for the best pricing
• Identifies opportunities to bring more cases into the center
• Works with centers to generate profits from new cases
One of Acumed's core values is to innovate with a purpose, both clinically and operationally. The company supports collaboration between engineers, product managers and physicians. They also work with ambulatory surgery centers to collaborate on cost-savings and revenue driving opportunities unique to each center.
For example, Acumed partners with United Surgical Partners International to provide affiliated surgical centers with implants as well as supply chain strategy assistance.
"We have several centers located in Texas and Acumed was really able to come in and understand our situation," says Carlos Adame, Director of Procurement for United Surgical Partners International. We believe that in order to effectively manage all aspects of supply chain spend, you have to form formal partnerships with strategic vendors. With that said, we solidified an agreement with Acumed that is based on growth. They understand our position and were able to work with us to positively impact the business."
Acumed collaborated with Mr. Adame and his team to develop a press release and promotional booklet for each surgical center. USPI connected with regional managers to discuss the partnership and then each manager implemented the new supply strategy at USPI ASCs.
"We don't have enough sales people to do this on our own, but Acumed was able to work with use to spread the initiative," says Mr. Adame. "They printed a thick catalogue with the USPI logo on it that included implants and then sent it to the facilities. In the first quarter we increased same-store business by about 300 percent post-agreement."
ASC owners and operators that foster a good relationship with vendors and their third-party partners can optimize services and contracts, as well as leverage their relationship, to achieve the best rates possible. The best deals are struck when managers take time to talk with their partners or vendors and communicate their needs. The ASC industry — and healthcare in general — is always evolving and as the center's needs change, so will the ways in which partners provide value.
The Acumed representatives have a full offering of products and are very knowledgeable about their products. Most company representatives have healthcare administration experience, but Acumed also has negotiating experience and can work with the physicians to help them understand every aspect of the new product.
"The more people realize that putting good resources into supply chain function is necessary, the more they'll see success and value in doing agreements and managing functionality," says Mr. Adame. "This will become more important to entities whether it's a thousand-bed hospital or a two-OR ASC. There is a missed opportunity when you don't invest in this particular position."
This article is sponsored by Acumed.