Premier Orthopaedic Surgery Center Administrator Natalie Soule and DISC Sports & Spine COO Karen Reiter discuss how they've taken control of materials management to lower supply costs at their centers. 1. Verify everything as the administrator. Every new item purchased at DISC Sports & Spine Center must have Ms. Reiter's approval. Ms. Soule insists on approving all new material purchases at Premier Orthopedic Surgery Center as well. As a result, device representatives won't introduce new, more expensive technology or materials for the surgeon without regard for cost.
"We have a fairly strict process for ordering spine implants. Each request goes from the physician to the surgery scheduler and then to my desk, where and I verify the purchase price and that it's an implant for which we have already made an arrangement," says Ms. Reiter. "Then my tech emails the vendor to make sure they have it here."When device representatives ask surgeons whether they want to use new materials, surgeons are instructed to send them to the administrator. Ms. Reiter says if she can negotiate the right price with the vendor, the purchase will be approved.
"When surgeons follow this procedure, I have a lot more power than if I’m negotiating with a rep that says the doctor wants to use it and we're coming in on Friday," she says.
2. Write a policy on upselling. DISC Sports & Spine Center has a written policy to combat upselling in the operating room. Device reps are not able to upsell technology without approval from Ms. Reiter, and if they do, they're responsible for the cost. Reps must sign our vendor policy when they first come to our facility plus the center's tech has a signature on his page with a vendor written policy so there can be no mistake.
"The policy says that if reps bring anything to the facility for which they do not have authorized pricing, the physician is welcome to use it, but it's considered a no-charge trial," says Ms. Reiter. "That has stopped a lot of people from running into my office to say they want to use a new biologic."
DISC also holds an orientation for device reps to explain their expected role at the center. "If you can work out a good process to have an in-service for the reps when they first arrive about what you expect from them, things go a lot smoother," says Ms. Reiter.
3. Inform physicians about implant costs. Only a few years ago, physicians could focus on their medical practice without thinking about the price of implants and materials. Now, nearly every provider focuses on costs in addition to quality outcomes.
"It is not our place to tell a physician whether they can or cannot use a particular type of implant or supply; however, if a physician requests an implant or supply that is not on contract, we would communicate to the physician the cost of the implant/supply, and my contract alternative," says Ms. Soule. "We strive to educate our physicians to the cost of implants and reimbursements."
Ms. Reiter keeps a spreadsheet for the cost of every implant and disposable used per case and periodically shares it with surgeons. "A lot of my physicians are on staff with the hospital implant committee, so they are getting trained about implant pricing there as well," she says. "For the spine surgeons, we use a lot of new products here. I let them know how much a construct with the company would be, and if the company won't drop the price, the surgeon has to work with me to get the price down."
4. Enlist surgeons to help negotiate new technology. Administrators can leverage their surgeons to negotiate implant prices, especially if the surgeon has a strong relationship with the rep or performs a high volume of procedures using the company's devices.
"Even if one of my surgeons doesn't perform a high volume of cases with the implant at my ASC, he is using that implant at the hospital and helped the rep get it in there," says Ms. Reiter. "I tell reps that the ASC is physician-owned, and I'll tell the surgeon if the rep won't work with us. Then the surgeon makes his own choice about what to use at the hospital as well. That gives the rep something to take back to the company."
Ms. Soule found her surgeons are eager to understand how cost can impact the center. "Oftentimes, the physician is misled by sales vendors on the 'latest and greatest' implant introduced to the market," she says. "It is part of my responsibility as an administrator to inform them of the true cost to determine if an increase in cost is more beneficial compared to the quality of what the center is currently using."
5. Negotiate the entire sale. Instead of negotiating just the implant price and accepting additional disposables costs, Ms. Reiter negotiates the entire construct at once.
"Instead of paying one price for the screw and another for the implant, I discuss it all together," she says. "There are no hidden disposables after the fact. Sometimes vendors say they'll drop the price of the implant significantly, but then there's $500 worth of disposables open. If you negotiate the entire construct, they have to disclose the price ahead of time. That has made a big difference for us."
6. Make reps responsible for their trays. There have been instances where device reps come for surgery and leave without clearing all their materials. Then the rep charges for the materials missing from the tray, oftentimes for things the surgeon didn't use.
"The reps have to clear their trays the day of surgery before they leave so they can't call back and say their tray was missing something when they returned and charge us for it," says Ms. Reiter. "If they don't clear it, it's their cost. That is part of our vendor policy they have signed."
7. Take advantage of purchasing power. Ms. Soule uses a group purchasing organization to leverage the best prices available for implants. Ms. Reiter negotiates agreements for implants at DISC as well, but doesn't always feel like she has purchasing power for the cost of implants. So, she purchases in bulk for a discount with the stipulation that companies replace expired materials at no charge.
"If the facility has the money on hand to purchase a certain amount of implants, they often get last year's prices less a certain percentage," says Ms. Reiter. "That is much cheaper than consigning it. When we buy it, we have a prearrangement that if anything expires, it's replaced at no charge."
The center keeps track of materials and marks those that are six months away from expiration. When they become four months away from expiration, they are marked to switch out.
8. Compare surgeon costs at meetings. Board or investor meetings are a great place to discuss implant costs and compare the price per procedure for different surgeons at the center. Surgeons are competitive, and sharing the side-by-side pricing publicly often leads to a discussion about how to lower prices.
"We allow surgeons to use the devices they feel are best, but the more I can educate my staff and surgeons about the price of things, the more I save," says Ms. Reiter. "The best opportunity we have to keep expenses down is to work with physicians and staff on supply costs. This past year we put in more processes to monitor everything coming in and going out the door."
9. Provide surgeons with data on new technology. New technology is more expensive for the surgery center, and surgeons may inquire about it before fully knowing the cost and quality. The sales rep may talk up an implant or instrument that really has little added clinical value.
"We attempt to present the physician with independent sources of data," says Ms. Soule. "Not company brochures that show whether the item and its greater expense is really providing increased benefits that warrants increased cost."
Ms. Soule always communicates to the physician about the price and reimbursement of the same-quality implant before approving a physician preference item purchase. However, she wants physicians to make the final decision.
"We want them to have what they feel is a quality product for the patient but we expect to pay a price comparable to the equivalent," says Ms. Soule. "If this were to be an implant to be used one time, it would be more acceptable than an item that the physician wants to keep at the center at all times. Then we would look at it on a case-per-case basis."
10. Conduct staff meetings on cost-savings. Technology advances quickly and it's important to keep staff focused on whether quality improvement is worth the cost. Staff meetings can point them in the right direction and inform them of the impact out-of-control materials costs could have on the center.
"It is a good idea to have staff meetings to let staff know the importance of price control and it promotes engagement with the staff if they are able to contribute to cost savings," says Ms. Soule. "I believe most physicians are aware or try to be aware of the costs and are interested in helping control cost, especially if they are invested in the center."
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