Last Friday, Terry L. Woodbeck CEO of Tulsa Spine and Specialty Hospital, spoke about reducing implant costs at the 9th Annual Orthopedic, Spine and Pain Management Conference in Chicago.
After analyzing various solutions to reduce implant costs at Tulsa Spine, Mr. Woodbeck and his staff ultimately resorted to a strategy he calls the "company store." The company store refers to the type of products the hospitals prefers physicians use. "If you use those devices, you're using the company store. When we refer to it, everyone knows what we're talking about," says Mr. Woodbeck. Through the company store strategy, implant costs dropped to 28 percent.
A company store means the hospital hires implant technicians and eliminates device reps. "These techs have been with us for a long time. They've worked with implants and help the physician just like a rep would. The difference is they do not get the physician lunch and they're not responsible for his basketball tickets," said Mr. Woodbeck. Tulsa Spine went with a limited number of representatives and began buying directly from them. "This is not a physician-owned distributorship," said Mr. Woodbeck.
The hospital employs an 80-20 percent rule, where 80 percent of devices are for high-volume surgeries and 20 percent are for rarer procedures. The latter type of device is still ordered from reps. All implants are 510K-certified. Mr. Woodbeck said the hospital once bought a cervical plate for $1,300 from a rep. "Later on, we bought one for $400 directly from the vendor," said Mr. Woodbeck. "The process works the same. We're buying from the same place the reps are buying from."
Mr. Woodbeck said saving $6 million in a year was not difficult. To build consensus, physicians must sign off on every implant he or she uses. Now, when physicians use the company store, they are able to see how much money they saved compared to if they used devices purchased from reps. "You'd be surprised at how frequently physicians will come out of the operating room and ask one another how much they saved. 'I saved this much, how much did you save?' That's what you want your physicians to be talking about," said Mr. Woodbeck.
The company store, however, required the deterioration of relationships between physicians and vendors. "What kind of relationships are we talking about? Sometimes these reps and physicians stand in one another's weddings," he said. "But if you start showing physicians how much they're spending for these relationships, all of a sudden the physicians come back and want to save that money." Prior to launching the program, hospitals should distribute notes showing physicians how much they spent versus how much they could have saved, he said. "Pretty soon, physicians were coming up to us, saying, 'Stop sending us these messages and start the program already!'"
Related Articles on Cost Cutting:
10 Surgery Center Cost-Cutting Measures That Work
10 Ways to Decrease Costs in an Orthopedic-Driven Surgery Center
5 Creative Ways to Cut Costs in an Ambulatory Surgery Center
After analyzing various solutions to reduce implant costs at Tulsa Spine, Mr. Woodbeck and his staff ultimately resorted to a strategy he calls the "company store." The company store refers to the type of products the hospitals prefers physicians use. "If you use those devices, you're using the company store. When we refer to it, everyone knows what we're talking about," says Mr. Woodbeck. Through the company store strategy, implant costs dropped to 28 percent.
A company store means the hospital hires implant technicians and eliminates device reps. "These techs have been with us for a long time. They've worked with implants and help the physician just like a rep would. The difference is they do not get the physician lunch and they're not responsible for his basketball tickets," said Mr. Woodbeck. Tulsa Spine went with a limited number of representatives and began buying directly from them. "This is not a physician-owned distributorship," said Mr. Woodbeck.
The hospital employs an 80-20 percent rule, where 80 percent of devices are for high-volume surgeries and 20 percent are for rarer procedures. The latter type of device is still ordered from reps. All implants are 510K-certified. Mr. Woodbeck said the hospital once bought a cervical plate for $1,300 from a rep. "Later on, we bought one for $400 directly from the vendor," said Mr. Woodbeck. "The process works the same. We're buying from the same place the reps are buying from."
Mr. Woodbeck said saving $6 million in a year was not difficult. To build consensus, physicians must sign off on every implant he or she uses. Now, when physicians use the company store, they are able to see how much money they saved compared to if they used devices purchased from reps. "You'd be surprised at how frequently physicians will come out of the operating room and ask one another how much they saved. 'I saved this much, how much did you save?' That's what you want your physicians to be talking about," said Mr. Woodbeck.
The company store, however, required the deterioration of relationships between physicians and vendors. "What kind of relationships are we talking about? Sometimes these reps and physicians stand in one another's weddings," he said. "But if you start showing physicians how much they're spending for these relationships, all of a sudden the physicians come back and want to save that money." Prior to launching the program, hospitals should distribute notes showing physicians how much they spent versus how much they could have saved, he said. "Pretty soon, physicians were coming up to us, saying, 'Stop sending us these messages and start the program already!'"
Related Articles on Cost Cutting:
10 Surgery Center Cost-Cutting Measures That Work
10 Ways to Decrease Costs in an Orthopedic-Driven Surgery Center
5 Creative Ways to Cut Costs in an Ambulatory Surgery Center