Lori Pilla, vice president of Amerinet Clinical Advantage and Supply Chain Optimization, discusses potential cost savings in supply chain management and where the relationship between providers and device companies is headed in the future.
Q: What is the value of standardizing and streamlining supplies and instrumentation at surgery centers today?
Lori Pilla: There are several benefits for surgery centers, whether they are wholly physician owned or in a joint venture, to standardize supplies. For surgeons who have an investment in the surgery center, controlling supply costs will have a positive impact on their returns. Even in a multispecialty surgery center, there are plenty of opportunities to streamline supply vendors.
For example, if you have orthopedic surgeons and podiatric surgeons, there are many supplies that overlap; if you can get those supplies streamlined from five or six vendors down to one or two suppliers, you can reduce your costs. In return for agreeing to move to a couple of suppliers instead of several, the surgery center is able to reduce costs and increase profits for each surgeon go up.
Q: Is there room for new technology and innovation that has a clinical benefit after surgery centers decide to standardize?
LP: Yes — we are always open to looking at new technology and often there are benefits for length of stay and recovery. If the new technology initially costs more but allows patients to leave earlier and recover more quickly, there is a cost reduction on the back end. When you look at how new technology affects surgeon practices, we look at whether the surgeon will be able to perform more cases throughout the day as a result of time savings, in addition to clinical benefits.
If the surgeon can be more efficient with new technology and see more patients per day with the same or better clinical outcomes, you will be able to fill your schedule and keep staff busy instead of flexing their time. It would make for more consistent labor practices.
Q: What are the big factors that are making an impact on surgery center supply chain management today?
LP: Healthcare reform legislation is one of the biggest factors making an impact on surgery center supply chain. Over the next few years, there will be a lot going on with more people entering the pool of insured patients and the baby boomer population growing and needing medical care. This is especially true this year when it comes to spine implants; we will see an 8.8 percent increase in 2012, based on the aging population. The impact of these patients will depend on how CMS is regulating payments. Bundled payments are also coming into play and more surgeons are aware of truly utilizing a patient matching system for the implants.
Years ago, surgeons might use Stryker's total joint in all patients, whether it was a 30 year old or a 90 year old patient. Now they are putting patients through a baseline treatment and incorporating the use of therapies more often. I really think that everyone has felt the change in revenues and payments, and I think its obvious based on the number of physician practices being bought by hospitals that healthcare reform is having an impact.
As surgeons educate themselves more on the business of healthcare, they are realizing that even though it might be easy to perform the same top-dollar procedure for every patient, it might not be the best route for quality or cost.
Q: Where are physician and provider relationships with device companies headed, given the current emphasis on managing supply chain costs?
LP: As we see more consolidation with the industry, with smaller providers being merged with or acquired by larger ones, I think physicians are really going to end up partnering with the provider on cost savings. They might be best friends with their Stryker representative, but they have to side with the facility on making implant decisions because that's who will employ them or share cost savings with them in the future.
I also think we are going to see CMS, suppliers and providers come to some level of agreement about supply costs. As a result, there will be consolidation among the suppliers, who will merge or acquire each other.
Q: How are these changes in the market impacting physician preference items?
LP: There are a lot of things that are going to impact the physician preference item industry. The Office of the Inspector General has really brought to light the lack of transparency for a lot of suppliers. The more bad practices they expose, the bigger impact there will be on price.
Going forward, I think we are going to see more things that were once a specialty carve-out become commoditized, especially in cardiology. This will change the entire landscape of physician preference items. I don't see this commoditization moving as quickly in the spinal arena, but I certainly see it beginning to happen in the joint replacement space.
More Articles on Surgery Centers:
7 Steps to Kick-Start a Positive Surgery Center Culture
Are Bundled Payments Near for Surgery Centrs? Q&A With Dr. Jason Hwang of Innosight Institute
7 Ways for Surgery Centers to Make More Money Now
Q: What is the value of standardizing and streamlining supplies and instrumentation at surgery centers today?Lori Pilla: There are several benefits for surgery centers, whether they are wholly physician owned or in a joint venture, to standardize supplies. For surgeons who have an investment in the surgery center, controlling supply costs will have a positive impact on their returns. Even in a multispecialty surgery center, there are plenty of opportunities to streamline supply vendors.
For example, if you have orthopedic surgeons and podiatric surgeons, there are many supplies that overlap; if you can get those supplies streamlined from five or six vendors down to one or two suppliers, you can reduce your costs. In return for agreeing to move to a couple of suppliers instead of several, the surgery center is able to reduce costs and increase profits for each surgeon go up.
Q: Is there room for new technology and innovation that has a clinical benefit after surgery centers decide to standardize?
LP: Yes — we are always open to looking at new technology and often there are benefits for length of stay and recovery. If the new technology initially costs more but allows patients to leave earlier and recover more quickly, there is a cost reduction on the back end. When you look at how new technology affects surgeon practices, we look at whether the surgeon will be able to perform more cases throughout the day as a result of time savings, in addition to clinical benefits.
If the surgeon can be more efficient with new technology and see more patients per day with the same or better clinical outcomes, you will be able to fill your schedule and keep staff busy instead of flexing their time. It would make for more consistent labor practices.
Q: What are the big factors that are making an impact on surgery center supply chain management today?
LP: Healthcare reform legislation is one of the biggest factors making an impact on surgery center supply chain. Over the next few years, there will be a lot going on with more people entering the pool of insured patients and the baby boomer population growing and needing medical care. This is especially true this year when it comes to spine implants; we will see an 8.8 percent increase in 2012, based on the aging population. The impact of these patients will depend on how CMS is regulating payments. Bundled payments are also coming into play and more surgeons are aware of truly utilizing a patient matching system for the implants.
Years ago, surgeons might use Stryker's total joint in all patients, whether it was a 30 year old or a 90 year old patient. Now they are putting patients through a baseline treatment and incorporating the use of therapies more often. I really think that everyone has felt the change in revenues and payments, and I think its obvious based on the number of physician practices being bought by hospitals that healthcare reform is having an impact.
As surgeons educate themselves more on the business of healthcare, they are realizing that even though it might be easy to perform the same top-dollar procedure for every patient, it might not be the best route for quality or cost.
Q: Where are physician and provider relationships with device companies headed, given the current emphasis on managing supply chain costs?
LP: As we see more consolidation with the industry, with smaller providers being merged with or acquired by larger ones, I think physicians are really going to end up partnering with the provider on cost savings. They might be best friends with their Stryker representative, but they have to side with the facility on making implant decisions because that's who will employ them or share cost savings with them in the future.
I also think we are going to see CMS, suppliers and providers come to some level of agreement about supply costs. As a result, there will be consolidation among the suppliers, who will merge or acquire each other.
Q: How are these changes in the market impacting physician preference items?
LP: There are a lot of things that are going to impact the physician preference item industry. The Office of the Inspector General has really brought to light the lack of transparency for a lot of suppliers. The more bad practices they expose, the bigger impact there will be on price.
Going forward, I think we are going to see more things that were once a specialty carve-out become commoditized, especially in cardiology. This will change the entire landscape of physician preference items. I don't see this commoditization moving as quickly in the spinal arena, but I certainly see it beginning to happen in the joint replacement space.
More Articles on Surgery Centers:
7 Steps to Kick-Start a Positive Surgery Center Culture
Are Bundled Payments Near for Surgery Centrs? Q&A With Dr. Jason Hwang of Innosight Institute
7 Ways for Surgery Centers to Make More Money Now