Effective supply chain management is key to running a successful and profitable ambulatory surgery center. The right type of supplies at the right price can help ASCs deliver high-quality care as well as keep profits on the rise.
According to Andy Davis, national sales manager for ambulatory surgery centers at Provista, supply cost containment is an area that administrators have control over. "There are a lot of areas that they don't have control over such as reimbursement, but they do have control over how much they spend on supplies. So this is a good area for management to use best practices to reduce cost," he says.
However, there are areas of supply management in which surgery centers tend to lose money or end up spending more than they should. These are:
1. Inefficient supply chain management: There are several elements of effective supply chain management for ASCs that can help them save money. Doug Golwas, senior vice president of sales in the ambulatory surgery center division at Medline Industries, Inc., sums up some of the key aspects of effective supply management at surgery centers:
• Managing the supply chain to support case volume maximization and room turnover.
• Doing the most procedures per day, per week and per month without incurring over time.
• Reducing supply handling touch points from point of order to completed procedure and ensure the most efficient process possible.
• Managing supply costs by ensuring you have access to accurate pricing from your distributor, group purchasing organization, manufacturing partners and materials management system provider as well as employing standardization and utilization processes.
• Managing inventory efficiently and reducing obsolete items.
• Managing space constraints with efficient supply programs.
• E-commerce and robust data to provide useful analysis of product usage and expenditures to help better manage supplies.
2. Inaccurate price points. ASCs are not always obtaining the best price levels or tiers that they are entitled to. To ensure they maintain price integrity, ASCs can look to and should expect price transparency and/or help from their group purchasing organization, distributor, manufacturing partners and materials management system provider, says Mr. Golwas.
It is also important for ASCs to compare supply costs for their facility against others. "Most implant providers contract locally rather than nationally and the price can vary geographically, even across the street," says Mr. Davis. "Comparing and benchmarking costs against other centers in the same space is very helpful."
Surgery centers that don't compare prices tend to overspend, especially on the big-ticket items, such as operating room equipment. Having the right group purchasing organization can help ASCs ensure that they are getting the best possible price for their supplies.
3. Low reimbursement for high-cost items. "An area that's gaining more and more importance is to track each case in terms of reimbursement versus supply cost," says Mr. Davis. This is another huge opportunity for savings that ASCs sometimes miss out on because they are not detail-oriented or don't perform the analysis properly.
Surgery centers can perform cost per case analyses and use it to find areas for increased cost containment, says Mr. Davis. The analysis includes cost per case among a particular group of specialists at their facility, and then among specialist groups at ASCs across the industry.
4. Product shortages. Surgery centers sometimes have trouble locating the products they need and this can drive up costs because they might have to source the products from different vendors or buy alternate supplies, says Mr. Davis. "This can affect ASCs on the pharma side in particular," he says.
It's beneficial for surgery centers to have a plan in place and identify primary and secondary strategic partners in key spend categories to deal with product availability issues. Unplanned purchases or shortages will always exist, but ASCs can limit the economic impact and time spent on product shortages by engaging alternative options before the need exists, says Mr. Golwas.
5. Unleveraged partnerships. By leveraging the relationships that ASCs have, they can save money, according to Mr. Golwas. Good partners should be invested in the specific goals of the surgery center. Surgery centers can get their partners invested by clearly defining the goals and expectations they have of their partners.
"GPOs, management groups, distributors and suppliers can support low hanging fruit savings [and] opportunities and longer term projects with price integrity, inventory reduction and other solutions specific to the ASC market and that center," he says.
6. Every physician using different products. According to Alan Whorton, vice president of the ASC market at Provista, surgery centers can save money by standardizing the supplies that they use. ASCs can conduct value analysis of their products and find ways to standardize. "Standardize the product to drive higher volume and get better pricing and contracts," he says.
7. Keeping paper inventory records. "IT is a challenge for most if not all ASCs," says Mr. Davis. "To incorporate IT and embrace it is the way forward." Moving toward automation would help surgery centers with cost savings and inventory management. "The Provista market surveys indicate that approximately 50 percent of surgery centers are still managing their supply chain with paper-based systems," says Mr. Whorton.
8. Huge price discrepancy. It is important for surgery centers to ensure that the actual price that was invoiced based on the purchase order, the price they contracted with the GPO and the price listed on their receipt are all the same, says Mr. Whorton. "I would certainly recommend facilities to have a 'three-way match' between purchase orders, invoices and receipts," says Mr. Davis. It is very common in the ASC space for there to be price discrepancy at the facility level and it can result in surgery centers spending more than they should.
To achieve cost savings through supply management, surgery centers can leverage the data available to them from their business partners, set realistic, tangible goals as well as process improvement and inventory reduction objectives that make sense for their individual centers, says Mr. Golwas.
"Don't try to eat the elephant in one bite," he says. "Also, be sure to celebrate the small wins so that you are gaining buy-in within the center, achieving savings targets and gaining momentum to tackle larger savings initiatives in more sensitive categories."
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According to Andy Davis, national sales manager for ambulatory surgery centers at Provista, supply cost containment is an area that administrators have control over. "There are a lot of areas that they don't have control over such as reimbursement, but they do have control over how much they spend on supplies. So this is a good area for management to use best practices to reduce cost," he says.
However, there are areas of supply management in which surgery centers tend to lose money or end up spending more than they should. These are:
1. Inefficient supply chain management: There are several elements of effective supply chain management for ASCs that can help them save money. Doug Golwas, senior vice president of sales in the ambulatory surgery center division at Medline Industries, Inc., sums up some of the key aspects of effective supply management at surgery centers:• Managing the supply chain to support case volume maximization and room turnover.
• Doing the most procedures per day, per week and per month without incurring over time.
• Reducing supply handling touch points from point of order to completed procedure and ensure the most efficient process possible.
• Managing supply costs by ensuring you have access to accurate pricing from your distributor, group purchasing organization, manufacturing partners and materials management system provider as well as employing standardization and utilization processes.
• Managing inventory efficiently and reducing obsolete items.
• Managing space constraints with efficient supply programs.
• E-commerce and robust data to provide useful analysis of product usage and expenditures to help better manage supplies.
2. Inaccurate price points. ASCs are not always obtaining the best price levels or tiers that they are entitled to. To ensure they maintain price integrity, ASCs can look to and should expect price transparency and/or help from their group purchasing organization, distributor, manufacturing partners and materials management system provider, says Mr. Golwas.
It is also important for ASCs to compare supply costs for their facility against others. "Most implant providers contract locally rather than nationally and the price can vary geographically, even across the street," says Mr. Davis. "Comparing and benchmarking costs against other centers in the same space is very helpful."
Surgery centers that don't compare prices tend to overspend, especially on the big-ticket items, such as operating room equipment. Having the right group purchasing organization can help ASCs ensure that they are getting the best possible price for their supplies.
3. Low reimbursement for high-cost items. "An area that's gaining more and more importance is to track each case in terms of reimbursement versus supply cost," says Mr. Davis. This is another huge opportunity for savings that ASCs sometimes miss out on because they are not detail-oriented or don't perform the analysis properly.
Surgery centers can perform cost per case analyses and use it to find areas for increased cost containment, says Mr. Davis. The analysis includes cost per case among a particular group of specialists at their facility, and then among specialist groups at ASCs across the industry.
4. Product shortages. Surgery centers sometimes have trouble locating the products they need and this can drive up costs because they might have to source the products from different vendors or buy alternate supplies, says Mr. Davis. "This can affect ASCs on the pharma side in particular," he says.
It's beneficial for surgery centers to have a plan in place and identify primary and secondary strategic partners in key spend categories to deal with product availability issues. Unplanned purchases or shortages will always exist, but ASCs can limit the economic impact and time spent on product shortages by engaging alternative options before the need exists, says Mr. Golwas.
5. Unleveraged partnerships. By leveraging the relationships that ASCs have, they can save money, according to Mr. Golwas. Good partners should be invested in the specific goals of the surgery center. Surgery centers can get their partners invested by clearly defining the goals and expectations they have of their partners.
"GPOs, management groups, distributors and suppliers can support low hanging fruit savings [and] opportunities and longer term projects with price integrity, inventory reduction and other solutions specific to the ASC market and that center," he says.
6. Every physician using different products. According to Alan Whorton, vice president of the ASC market at Provista, surgery centers can save money by standardizing the supplies that they use. ASCs can conduct value analysis of their products and find ways to standardize. "Standardize the product to drive higher volume and get better pricing and contracts," he says.
7. Keeping paper inventory records. "IT is a challenge for most if not all ASCs," says Mr. Davis. "To incorporate IT and embrace it is the way forward." Moving toward automation would help surgery centers with cost savings and inventory management. "The Provista market surveys indicate that approximately 50 percent of surgery centers are still managing their supply chain with paper-based systems," says Mr. Whorton.
8. Huge price discrepancy. It is important for surgery centers to ensure that the actual price that was invoiced based on the purchase order, the price they contracted with the GPO and the price listed on their receipt are all the same, says Mr. Whorton. "I would certainly recommend facilities to have a 'three-way match' between purchase orders, invoices and receipts," says Mr. Davis. It is very common in the ASC space for there to be price discrepancy at the facility level and it can result in surgery centers spending more than they should.
To achieve cost savings through supply management, surgery centers can leverage the data available to them from their business partners, set realistic, tangible goals as well as process improvement and inventory reduction objectives that make sense for their individual centers, says Mr. Golwas.
"Don't try to eat the elephant in one bite," he says. "Also, be sure to celebrate the small wins so that you are gaining buy-in within the center, achieving savings targets and gaining momentum to tackle larger savings initiatives in more sensitive categories."
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