Slashing supply costs with orthopedic preference items — 7 strategies

Physician preference items, particularly orthopedic preference items, can contribute significantly to supply costs at an ambulatory surgery center. It is in the center's best interest to keep these costs as low as possible to achieve financial success.

Getting enviable pricing
There are a number of options for obtaining the best price for orthopedic devices and implants, says Jebby Mathew, director of operations at The Orthopaedic and Spine Center of Southern Colorado in Colorado Springs, a PINNACLE III managed facility. One of the best options is joining a group purchasing organization. GPOs have extensive experience negotiating supply pricing and also have relationships with vendors, which allows them to obtain the best prices for their clients.

However, if the ASC wants to contract independently, it is important administrators understand physician preferences and how those preferences affect the center's operating budget, notes Mr. Mathew. "When the center is a physician-owned organization, there are plenty of opportunities to talk to physicians to ascertain which supplies they are using and why," he says.

Securing the backing of your physicians, and even including them in your conversations with vendors, is important, says Holly LeRoux, MS, RN, director of operations for PINNACLE III at Boulder (Colo.) Community Musculoskeletal Surgery Center. "Having physicians present at vendor meetings and being willing to switch vendors if the discussion is unproductive can be powerful. Physician backing can help bring prices down."

Additionally, ASC staff members responsible for negotiating with vendors must have in-depth knowledge of the products the center needs and possible alternative products, as well as a good rapport with the vendors and representatives.

Keeping supply costs low
In addition to ensuring an appropriate price from the outset, there are a number of strategies surgery centers can employ to keep orthopedic supply costs in check.

1. Know the cost-per-case for all procedures. ASC administrators who want to cut orthopedic supply costs first need to have a detailed understanding of all case costs. "I look at the procedure code(s) as well as the corresponding supply and staff costs related to each case type," says Mr. Mathew.

2. Get physicians on-board. This is a basic, yet powerful tool, to reduce supply costs. Physicians determine the purchase of implants and devices in accordance with the type of procedure being performed and their comfort level with varying products. Thus, switching to different and more cost-effective supplies requires physician buy-in.

"I sit down with every physician," says Sasha Meyer, RN, MSN, clinical director at Orthopaedic and Spine Center of Southern Colorado. "We review reimbursement versus implant cost data and then allow physicians to make the best decision related to optimal patient outcomes."

Preparing implant cost and reimbursement data before talking to physicians is key, Ms. Meyer adds. Go into the conversation with information regarding reimbursement and implant options as well as best and worst case scenarios for using one product versus another.

3. Avoid overstocking. According to Cicily Wilson, materials manager at Boulder Community Musculoskeletal Surgery Center, a common mistake surgery centers make is overstocking during shortages or supply crises. ASC administrators and materials managers need to be able to maneuver through different systems and sets of information to keep tabs on stock and prices. This will allow them to make evidence-based decisions regarding how many supplies they need to order. "Pace yourself as best you can when it comes to ordering supplies," says Ms. Wilson.

4. Appoint a materials manager you can trust. Appoint the right employee to the role of materials manager. "An administrator can keep a pulse on supply chain management but you need someone looking into the supply chain regularly. You need someone you can trust and who is passionate about keeping costs low," says Mr. Mathew.

5. Engage in reprocessing. Ms. LeRoux suggests looking for opportunities to reprocess single-use medical supplies for orthopedic and other procedures. Actively looking for reprocessing opportunities can help reduce supply costs significantly.

6. Keep preference cards up-to-date. Physician preference cards do more harm than good if they are not regularly updated. According to Mr. Mathew, updated preference cards not only let staff know what is needed in the operating room for each procedure, they help staff members avoid opening unnecessary supplies.

7. Instill a culture of collaboration. Keeping orthopedic supply costs low requires a collaborative effort at a surgery center. "Everyone — the administrator, the materials manager, the physicians — has to engage in the effort to contain costs," says Ms. LeRoux. "You must promote a culture that is willing to actively look for ways to be cost-effective."

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