At the 11th Annual Spine, Orthopedic & Pain Management-Driven ASC Conference on June 15, Arthur Casey, senior vice president of business development for Outpatient Healthcare Strategies based in Houston, discussed ASC leaders' potential for leveraging vendor relationships in their business strategy.
"You want to make sure your vendor is working with you and not against you. If they're not coming to you on a regular basis with cost-saving outcomes, then they're not helping you, they're hindering you," Mr. Casey said. "Remember they need you just like you need them."
All ASCs should be in a group purchasing organization, he said, but not all GPOs are created equal. The best-fit options depend on the business an ASC does, as well as the GPO's relationship with suppliers and distributors. Consistent pricing is also important.
"Competition is the all-knowing soothsayer," Mr. Casey said. "Periodically, every year or so, you should shop your vendor pricing. Take the top 25 most used items and 25 top priced items and have a competing vendor price those items for you." He warned, "Never give away the answer to the test," by telling a vendor what someone else has quoted you, because low-priced vendors may actually be able to raise their typical bidding price and remain under other vendors, cutting the center out of some potential savings. "You do want to make sure, however, that it's a like product of the same quality or better," he added.
Fostering relationships with multiple vendors may require more oversight from the center, but it can also give ASCs a competitive advantage because they'll be ready to jump on better priced opportunities without needing to forge new relationships with a vendor, he said.
Operating statistics and benchmarks are essential to evaluating a center's performance on supply savings. ASC administrators responsible for supply should readily know certain metrics, including days in inventory, total monthly supply expense, supply cost per case and supplies as a percent of revenue. "Typically, if you're spending more than 30 days of inventory, then you've got too much stuff on your shelf," Mr. Casey said.
But an administrator knowing and following effective supply strategy must also trickle down to the physician level in order to ensure compliance. Mr. Casey said administrators should educate physicians on best practices when making supply orders, and each physician should have a current preference card updated so that he or she will actually use it. "I've always believed in being direct with your doctors and showing them how much things cost and how it relates to them getting paid. It's important that they know how this relates to their overall business," he said.
Train staff members to find small savings opportunities each month, Mr. Casey recommended, which may likely get a center to its goal faster than waiting for one big opportunity.
When a center oversupplies, he instructed ASC leaders to pay small restock penalties if an item goes three or four months without use, rather than allow an unneeded item to take up inventory space for years without a foreseeable need.
Building physician investment will also boost compliance with vendor strategy. "Let physicians police themselves," Mr. Casey said. Have them standardize their products to help bolster the center's purchasing power. "They need to be active with you to leverage your vendor relationship to improve vendor cost."
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"You want to make sure your vendor is working with you and not against you. If they're not coming to you on a regular basis with cost-saving outcomes, then they're not helping you, they're hindering you," Mr. Casey said. "Remember they need you just like you need them."
All ASCs should be in a group purchasing organization, he said, but not all GPOs are created equal. The best-fit options depend on the business an ASC does, as well as the GPO's relationship with suppliers and distributors. Consistent pricing is also important.
"Competition is the all-knowing soothsayer," Mr. Casey said. "Periodically, every year or so, you should shop your vendor pricing. Take the top 25 most used items and 25 top priced items and have a competing vendor price those items for you." He warned, "Never give away the answer to the test," by telling a vendor what someone else has quoted you, because low-priced vendors may actually be able to raise their typical bidding price and remain under other vendors, cutting the center out of some potential savings. "You do want to make sure, however, that it's a like product of the same quality or better," he added.
Fostering relationships with multiple vendors may require more oversight from the center, but it can also give ASCs a competitive advantage because they'll be ready to jump on better priced opportunities without needing to forge new relationships with a vendor, he said.
Operating statistics and benchmarks are essential to evaluating a center's performance on supply savings. ASC administrators responsible for supply should readily know certain metrics, including days in inventory, total monthly supply expense, supply cost per case and supplies as a percent of revenue. "Typically, if you're spending more than 30 days of inventory, then you've got too much stuff on your shelf," Mr. Casey said.
But an administrator knowing and following effective supply strategy must also trickle down to the physician level in order to ensure compliance. Mr. Casey said administrators should educate physicians on best practices when making supply orders, and each physician should have a current preference card updated so that he or she will actually use it. "I've always believed in being direct with your doctors and showing them how much things cost and how it relates to them getting paid. It's important that they know how this relates to their overall business," he said.
Train staff members to find small savings opportunities each month, Mr. Casey recommended, which may likely get a center to its goal faster than waiting for one big opportunity.
When a center oversupplies, he instructed ASC leaders to pay small restock penalties if an item goes three or four months without use, rather than allow an unneeded item to take up inventory space for years without a foreseeable need.
Building physician investment will also boost compliance with vendor strategy. "Let physicians police themselves," Mr. Casey said. Have them standardize their products to help bolster the center's purchasing power. "They need to be active with you to leverage your vendor relationship to improve vendor cost."
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