As the economy struggles to stabilize and ASCs deal with declining reimbursements, it is critical for surgery centers to take more proactive approaches to saving money and helping their bottom line when ordering supplies. Here are 10 proven strategies ASCs can adopt to cut down supply costs at their facilities.
1. Cross-examine different vendors for new supplies. When evaluating new supplies, Freida Toler, administrator at Amarillo (Texas) Endoscopy Center, says the surgery center makes it a goal to evaluate as many different options as possible before settling on a final purchase. Ordering from multiple vendors, instead of just one, may be a way to reduce costs if different vendors are able to offer better prices.
"We don't order disposable items, such as snares and forceps, from just one company. We cross-evaluate the costs and quality of as many companies as possible," she says. "Working with a GPO works when we're ordering IV supplies, start kits and catheters because you can't beat their prices. But there are other things, like chemical disinfectants, we'll order directly from the manufacturer instead of through a vendor."
2. Elect a staff member to monitor supply levels and costs. Keeping par levels low to help contain supply costs first requires formally electing a staff member who is in charge of monitoring inventory, ordering supplies and equipment and keeping a close watch on prices of each item. Ideally, an ASC hires a materials manager who is tasked with supervising this critical financial aspect of the ASC. Lorreine Borrayo, director of nursing at Carillo Surgery Center in Santa Barbara, Calif., says electing a scrub technician, not a licensed staff member, to fill the materials manager position is the most cost-efficient way to carry out supply cost duties.
"Cesar, who is our materials management staff member, is in charge of ordering everything, keeping a close eye on costs and our supply need," Ms. Borrayo says. "Of course, he keeps an eye on the quantity but also the quality of everything he orders. He's the most qualified because he's the one pulling the supplies from our inventory and making packs for our physicians to use during surgeries. So really, I think he's the best person for the job."
Steve Smith, director of Surgery Center of Wisconsin Rapids, who has also charged one staff member with regularly monitoring prices on inventory, adds that having a materials manager who controls inventory is a good way to maintain a better relationship with representatives working through your contracted GPO. "Our [inventory control] staff member and GPO representative stay in good contact with each other and look at costs of each of our supplies every month," Mr. Smith says. "They look at what we're paying right now for anything, like sterile gloves, and our GPO representative may be able to find sterile gloves that are similar to the ones we have but for less money."
3. Create custom packs to cut supply costs. At Carillo, surgery packs and trays underwent some revision to cut out supplies that weren't being used. Ms. Borrayo says by creating custom packs for physicians, the ASC was able to save money by not ordering unnecessary supplies such as non-reusable items, additional basins, blue towels and syringes. Mr. Smith agrees, saying that by creating customized packs for surgeons, his ASC was able to see drastic savings that helped the facility's bottom line tremendously.
"We just customized pre-package trays for knee arthroscopies," Mr. Smith says. "In these pre-packages, there should be everything you would need in order to perform a knee scope. By going through the packs and customizing it, we're able to lower cost by 10-15 percent without affecting patient safety or patient outcome. You always have to see if changing supply will affect either of those in any way."
4. Make surgeons and staff members aware of what everything costs. Ms. Borrayo regularly talks to Carillo's surgeons about pricing on supplies to keep them apprised of how much the facility is spending and to level with them about proposals for new equipment and supplies they may want to start using.
"They have preferences with certain supplies, so I really try to educate our surgeons and employees and point out that a cheaper alternative — such as certain sutures for shoulder rotator cuffs — from a different company is just as good as the model they want but it costs us this much less," she says. "So we really include our staff with pricing. Cesar is able to go through different companies and do price comparisons."
Staff members at Amarillo also have their own set of responsibilities that help keep them aware of the costs of supplies. Ms. Toler says staff members in each department of the facility are responsible for turning in supply orders for their department each week. On the supply orders, staff members can see the required quota needed for each item and the cost of each item.
"That supply order is updated frequently, and we also talk about supply costs in our monthly staff meetings," she says. "Through doing these things, they know they shouldn't open sterile supplies that aren't going to be used during a GI procedure, they shouldn't be using a half bottle of lubricant before a colonoscopy when they only need a tablespoon and so on. They learn that things do cost money, and the more we save the better off the facility is."
5. Take advantage of free trials. Jaime Wilber, who is the director of nursing at Ashtabula (Ohio) Surgery Center, encourages surgery centers to more actively pursue free trials of equipment and supplies before committing to a big purchase.
"We're always open to hearing what new product a vendor may have, especially if it's at a lower cost than one we're already using," Ms. Wilber says. "One time, we had a vendor come in with a new product for rotator cuff repair, and we asked to try them for free. After one of our orthopedic physicians tried them out, we agreed to purchase the implants from that vendor."
In aggressively pursuing better deals with different vendors, Ms. Wilber says there may at times be an added incentive in the form of free accompanying equipment to go with the purchase. "There's equipment a physician needs to drill holes to put the shoulder cuff implant into place," she says. "After we purchased the new implants for rotator cuff repair, they gave us the accompanying equipment for free."
6. Seek cheaper options for medications whenever possible. Using generic versions of medication can help cut supply costs, which Ms. Borrayo says has made a huge difference to its supply expenditures and eventually its profit margins.
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 from a compounding pharmacy that are cheaper, and some drugs that are not cheaper we'll get from our vendor."
7. Outsource billing services to save on overhead costs. Outsourcing is becoming a more popular option for cutting costs as ASCs seek different ways to save dollars spend on staffing hours and supplies. Billing is just one example of a service that ASCs can outsource as a way to cut work hours and supplies such as paper or even medical equipment.
"We use companies that supply implants and they actually do the billing directly with insurance companies, so instead of us absorbing the price of the implant — which is substantial — they do the billing and take care of all that," Ms. Borrayo says. "We get the prior authorization to make sure insurance companies can cover the costs, and it's a substantial savings because now our own staff doesn't have to do the billing."
8. Partner with a GPO aligned with your specific specialty. Laxmaiah Manchikanti, MD, medical director of the Pain Management Center of Paducah (Ky.) and Ambulatory Surgery Center in Paducah and Chairman of the Board and CEO of the American Society of Interventional Pain Physicians, says partnering with a GPO that is in-tune with the specific needs of a single-specialty ASC is a great cost-saving measure when ordering supplies. "We go through a GPO, which assures that we get very good prices, but it is best to have a GPO specific for interventional pain management surgery centers and pain management practices," he says. "Such a GPO was started by Lora Brown, an ASIPP board member, which may be helpful for many centers, including the smaller ones."
9. Use credit cards to accumulate awards. Administrator Linda Phillips, RN, of Southgate (Mich.) Surgery Center, says the ASC has started using a credit card to pay for supply orders because the center is able to accumulate points to exchange for rewards each time the credit card is used.
"We earn those points through the bank to get thing such as iPods and docking stations, for our physicians and staff because they like listening to music, and a mini-fridge," Ms. Phillips says. "By paying our supply bills by credit card, we are able to save money by buying things through these points. We immediately pay off the credit card with our checking account because you don't want to fall into the trap of paying interest. We really try hard to be creative in this economy."
10. Streamline supply or equipment costs. Mike Kintner, service contracts manager at TriMedx, says there are various strategies ASCs can adopt to streamline supply costs, including consolidating equipment purchases, working to negotiate a warranty tailored to your advantage, standardizing equipment and more.
Mr. Kintner adds that most organizations don't look how much it costs over a piece of equipment's life span to support it and only look at the capital acquisition. "They have to actively manage service costs to understand that maybe an investment in equipment with higher capital would be better because its service costs over its life span will be lower than cheaper equipment," he says.
1. Cross-examine different vendors for new supplies. When evaluating new supplies, Freida Toler, administrator at Amarillo (Texas) Endoscopy Center, says the surgery center makes it a goal to evaluate as many different options as possible before settling on a final purchase. Ordering from multiple vendors, instead of just one, may be a way to reduce costs if different vendors are able to offer better prices.
"We don't order disposable items, such as snares and forceps, from just one company. We cross-evaluate the costs and quality of as many companies as possible," she says. "Working with a GPO works when we're ordering IV supplies, start kits and catheters because you can't beat their prices. But there are other things, like chemical disinfectants, we'll order directly from the manufacturer instead of through a vendor."
2. Elect a staff member to monitor supply levels and costs. Keeping par levels low to help contain supply costs first requires formally electing a staff member who is in charge of monitoring inventory, ordering supplies and equipment and keeping a close watch on prices of each item. Ideally, an ASC hires a materials manager who is tasked with supervising this critical financial aspect of the ASC. Lorreine Borrayo, director of nursing at Carillo Surgery Center in Santa Barbara, Calif., says electing a scrub technician, not a licensed staff member, to fill the materials manager position is the most cost-efficient way to carry out supply cost duties.
"Cesar, who is our materials management staff member, is in charge of ordering everything, keeping a close eye on costs and our supply need," Ms. Borrayo says. "Of course, he keeps an eye on the quantity but also the quality of everything he orders. He's the most qualified because he's the one pulling the supplies from our inventory and making packs for our physicians to use during surgeries. So really, I think he's the best person for the job."
Steve Smith, director of Surgery Center of Wisconsin Rapids, who has also charged one staff member with regularly monitoring prices on inventory, adds that having a materials manager who controls inventory is a good way to maintain a better relationship with representatives working through your contracted GPO. "Our [inventory control] staff member and GPO representative stay in good contact with each other and look at costs of each of our supplies every month," Mr. Smith says. "They look at what we're paying right now for anything, like sterile gloves, and our GPO representative may be able to find sterile gloves that are similar to the ones we have but for less money."
3. Create custom packs to cut supply costs. At Carillo, surgery packs and trays underwent some revision to cut out supplies that weren't being used. Ms. Borrayo says by creating custom packs for physicians, the ASC was able to save money by not ordering unnecessary supplies such as non-reusable items, additional basins, blue towels and syringes. Mr. Smith agrees, saying that by creating customized packs for surgeons, his ASC was able to see drastic savings that helped the facility's bottom line tremendously.
"We just customized pre-package trays for knee arthroscopies," Mr. Smith says. "In these pre-packages, there should be everything you would need in order to perform a knee scope. By going through the packs and customizing it, we're able to lower cost by 10-15 percent without affecting patient safety or patient outcome. You always have to see if changing supply will affect either of those in any way."
4. Make surgeons and staff members aware of what everything costs. Ms. Borrayo regularly talks to Carillo's surgeons about pricing on supplies to keep them apprised of how much the facility is spending and to level with them about proposals for new equipment and supplies they may want to start using.
"They have preferences with certain supplies, so I really try to educate our surgeons and employees and point out that a cheaper alternative — such as certain sutures for shoulder rotator cuffs — from a different company is just as good as the model they want but it costs us this much less," she says. "So we really include our staff with pricing. Cesar is able to go through different companies and do price comparisons."
Staff members at Amarillo also have their own set of responsibilities that help keep them aware of the costs of supplies. Ms. Toler says staff members in each department of the facility are responsible for turning in supply orders for their department each week. On the supply orders, staff members can see the required quota needed for each item and the cost of each item.
"That supply order is updated frequently, and we also talk about supply costs in our monthly staff meetings," she says. "Through doing these things, they know they shouldn't open sterile supplies that aren't going to be used during a GI procedure, they shouldn't be using a half bottle of lubricant before a colonoscopy when they only need a tablespoon and so on. They learn that things do cost money, and the more we save the better off the facility is."
5. Take advantage of free trials. Jaime Wilber, who is the director of nursing at Ashtabula (Ohio) Surgery Center, encourages surgery centers to more actively pursue free trials of equipment and supplies before committing to a big purchase.
"We're always open to hearing what new product a vendor may have, especially if it's at a lower cost than one we're already using," Ms. Wilber says. "One time, we had a vendor come in with a new product for rotator cuff repair, and we asked to try them for free. After one of our orthopedic physicians tried them out, we agreed to purchase the implants from that vendor."
In aggressively pursuing better deals with different vendors, Ms. Wilber says there may at times be an added incentive in the form of free accompanying equipment to go with the purchase. "There's equipment a physician needs to drill holes to put the shoulder cuff implant into place," she says. "After we purchased the new implants for rotator cuff repair, they gave us the accompanying equipment for free."
6. Seek cheaper options for medications whenever possible. Using generic versions of medication can help cut supply costs, which Ms. Borrayo says has made a huge difference to its supply expenditures and eventually its profit margins.
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 from a compounding pharmacy that are cheaper, and some drugs that are not cheaper we'll get from our vendor."
7. Outsource billing services to save on overhead costs. Outsourcing is becoming a more popular option for cutting costs as ASCs seek different ways to save dollars spend on staffing hours and supplies. Billing is just one example of a service that ASCs can outsource as a way to cut work hours and supplies such as paper or even medical equipment.
"We use companies that supply implants and they actually do the billing directly with insurance companies, so instead of us absorbing the price of the implant — which is substantial — they do the billing and take care of all that," Ms. Borrayo says. "We get the prior authorization to make sure insurance companies can cover the costs, and it's a substantial savings because now our own staff doesn't have to do the billing."
8. Partner with a GPO aligned with your specific specialty. Laxmaiah Manchikanti, MD, medical director of the Pain Management Center of Paducah (Ky.) and Ambulatory Surgery Center in Paducah and Chairman of the Board and CEO of the American Society of Interventional Pain Physicians, says partnering with a GPO that is in-tune with the specific needs of a single-specialty ASC is a great cost-saving measure when ordering supplies. "We go through a GPO, which assures that we get very good prices, but it is best to have a GPO specific for interventional pain management surgery centers and pain management practices," he says. "Such a GPO was started by Lora Brown, an ASIPP board member, which may be helpful for many centers, including the smaller ones."
9. Use credit cards to accumulate awards. Administrator Linda Phillips, RN, of Southgate (Mich.) Surgery Center, says the ASC has started using a credit card to pay for supply orders because the center is able to accumulate points to exchange for rewards each time the credit card is used.
"We earn those points through the bank to get thing such as iPods and docking stations, for our physicians and staff because they like listening to music, and a mini-fridge," Ms. Phillips says. "By paying our supply bills by credit card, we are able to save money by buying things through these points. We immediately pay off the credit card with our checking account because you don't want to fall into the trap of paying interest. We really try hard to be creative in this economy."
10. Streamline supply or equipment costs. Mike Kintner, service contracts manager at TriMedx, says there are various strategies ASCs can adopt to streamline supply costs, including consolidating equipment purchases, working to negotiate a warranty tailored to your advantage, standardizing equipment and more.
Mr. Kintner adds that most organizations don't look how much it costs over a piece of equipment's life span to support it and only look at the capital acquisition. "They have to actively manage service costs to understand that maybe an investment in equipment with higher capital would be better because its service costs over its life span will be lower than cheaper equipment," he says.