10 Ways to Lower ASC Supply Costs

Kelli McMahon, vice president of operations for the eastern region at Pinnacle III in Fort Collins, Colo., pinpoints 10 ways to lower supply costs.

1. Switch to consignment of big-ticket items. Under a consignment arrangement, the vender still owns the items on the ASC's shelves and does not buy them until they are opened. Many centers have already switched to consignment for orthopedic implants, but the same arrangement could also be used for other high-cost items, such as laser fibers for different types of surgery and stents and stone baskets for urology.

2. Use products with GPO discounts. In some ASCs, staff members don't check out which products are available for GPO discounts. This can be difficult to track because the list of GPO discounts changes regularly. "Nobody tells you that this product you're using all the time is not on the list," Ms. McMahon says.

Some GPOs can help a facility make sure it is taking full advantage of discounts. On invitation, some GPOs will perform quarterly audits of purchases to determine if the ASC is taking full advantage of discounts. "The audits will show you which items are purchased outside the contract and suggest substitutions for them that will provide discounts," she says.

3. Get reviews by the distributor. Medical-surgical distributors can perform annual business reviews of items that were ordered through them. In its analysis, the distributor can point the ASC to an item that could provide substantial savings. "They will often be able to show you an item that is less costly," Ms. McMahon says.

4. Invite competitors' reviews. Invite a competing distributor to cost out the ASC's top 50 items, based on total spend. If the company demonstrates savings beyond the contracted distributor for those items, move to the next 50 items to check savings there, too. "Even if you do identify more overall savings, switching distributors is a big deal and you may not want to do it," Ms. McMahon says. "You'd want to see some pretty substantial savings before switching." But the competitor's report is still useful. The ASC could share it with its current distributor and ask for similar savings. The distributor would not match prices on each item, but it might agree to an overall reduction.

5. Standardize physician preference items. "Physicians typically have no idea what the cost of an implant or other high-cost item is," Ms. McMahon says. "Therefore, presenting prices can be very effective." Assemble ASC physicians and ask them to whittle down the number of devices they use for the same procedure. Vendor representatives whose items are on the short list would then be invited to explain the items to any physicians who would need to switch.

6. Train materials managers. The ASC's materials manager should understand cost containment. "Often the surgery center is using one of its surgery techs, who may not be from that world of purchasing, to do material management," Ms. McMahon says. Having no materials management background is understandable in a small center, yet "the materials manager still needs to have the right perspective," she says. "They should not just be ordering whatever." The ASC Association offers seminars, some GPOs host webinars and distributors may provide educational resources to help part-time materials managers get the needed training.

7. Start an incentive program. The ASC could start an incentive program that rewards the material manager for reducing costs. Overall, supplies make up 15-20 percent of net revenues, so an ASC with a substantially higher figure has room for reductions. The ASC can also obtain national benchmarks on certain supplies and direct the materials manager to meet those goals.

8. Use just-in-time inventory. Have supplies to cover only surgeries four to five days in the future. Look at surgery schedules that far out, determine what supplies will be needed and just order those supplies. The ASC can order supplies two to three times a week, with delivery usually on the next day.

9. Make sure staff knows prices. If staff were aware of the cost of the small instrument that gets wrapped up in the surgical drapes and thrown out, it might be more careful. "It always helps to know what different items cost," Ms. McMahon says. If staff knew the price of a shoulder implant, they would be very careful about opening one, because that means the center would be buying it.

10. Ask for cost-saving suggestions. Ask staff for suggestions on ways to save money and make a contest out of it. Offer a modest prize, such as a $10 gift card, to the winner. The suggestions are going to save the ASC much more than that. For example, a surgery tech might notice that an item is being used in 90 percent of a certain type of surgery, meaning it could go into the custom pack and draw a significant discount.

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