Here are five trends in ambulatory surgery center supply chain management from Richard Peters, senior director of ASC services at Provista, who says 2012 is a critical year for ASCs to focus on understanding their supply chain costs, improving supply chain efficiency and creating control mechanisms to monitor those processes and efficiencies.
1. Increase in price of supplies is flattening. Mr. Peters says that for the past few years, the raw prices of materials have been increasing, but they will start to flatten out this year. The price of raw materials such as rubber, latex and paper are expected to remain the same, and the price of cotton — which affects textiles — and metals are on a downward trend. However, he says, the overall trend of medical and business supplies is expected to see a 3 percent increase through 2012, he says. Orthopedics will be hit especially hard as the price of orthopedic products is expected to increase 5.2 percent.
"The good news is that where all of these commodities prices were increasing over the past few years, they look like they're flattening," Mr. Peters says. "The wild price changes will be mitigated to some degree."
2. Cutting supply chain costs can help centers weather healthcare reform. Provista conducted a survey that looked at spending trends in October 2011 and found 55 percent of surgery centers surveyed were focused on cutting costs to handle budget cuts due to healthcare reform. One of the easiest places to cut costs, Mr. Peters says, is in the supply chain.
"One of the ways ASCs specifically are going to be able to reduce cost is to focus on their supply chain," he says. "I don't see how there's any other way to reduce cost. The majority of their spend is around the clinical staff, and I just don't see how surgery centers can operate any leaner than they do today"
It seems like ASCs are starting to realize this as well, and Mr. Peters says surgery centers are beginning to make changes to how they handle their supply chain. In the survey on how ASCs were cutting supply chain costs, 34 percent of centers said they are standardizing products, 24 percent are evaluating their GPO and 19 percent are implementing an order management system.
3. There's a greater push toward physician engagement in supply chain. Another trend Mr. Peters sees is a greater push to involve physicians in managing supply costs, especially physician preference items.
"The whole idea is to increase the visibility of how the physicians' choice on supplies impacts the surgery center's bottom line," he says. "They're really starting to pay attention and evaluate products they can use that have a stronger value proposition and have the same clinical outcomes."
In that same surgery center survey, 55 percent of centers said they were very or somewhat engaged with their physicians on managing supply costs, while 39 percent said they were engaging with their physicians at higher levels than in past years.
4. Surgery centers are investing in big-ticket items again. In terms of buying trends for 2012, Mr. Peters sees more surgery centers looking to buy more capital equipment, where they had shied away from making such purchases in recent years.
"We did see a lot of folks were pulling back from buying expensive items," he says. "If the monitoring equipment was working and had no problems but was out of warranty, they weren't buying; they were getting by with what they had. [The increase this year is] an uptick from what we've seen in the past couple of years in terms of buying new equipment."
The survey found 60 percent of surgery centers were looking to buy operating room equipment, 39 percent were planning on buying some sort of computer equipment and 37 percent were looking at buying monitoring equipment for the OR.
In addition to purchasing expensive items, Mr. Peters says a newer trend is for ASCs to lease equipment that is expensive or is updated frequently so they can upgrade to the newest model. One example, he says, is scopes for endoscopic procedures. These are high use items, and leasing allows surgery centers to replace them more rapidly if need be.
5. Affiliation with an ACO will change supply chain dynamics. One of the biggest healthcare changes focuses on the creation of accountable care organizations, which aim to manage the entire episode of a patient's care. Surgery centers have a role to play in these organizations, but exactly where they will fit is currently undefined. One thing that's for certain, Mr. Peters says, is that being a part of an ACO will have a significant impact on a surgery center's supply chain processes.
"What can happen depends on how the ACO is structured," he says. "The ACO may enforce product standardization, and they will be doing more group buying, which allows the group to aggregate and achieve better pricing."
In the same survey that looked at spending trends, nearly one-quarter of surgery centers said they were planning to or have already aligned with an ACO.
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1. Increase in price of supplies is flattening. Mr. Peters says that for the past few years, the raw prices of materials have been increasing, but they will start to flatten out this year. The price of raw materials such as rubber, latex and paper are expected to remain the same, and the price of cotton — which affects textiles — and metals are on a downward trend. However, he says, the overall trend of medical and business supplies is expected to see a 3 percent increase through 2012, he says. Orthopedics will be hit especially hard as the price of orthopedic products is expected to increase 5.2 percent.
"The good news is that where all of these commodities prices were increasing over the past few years, they look like they're flattening," Mr. Peters says. "The wild price changes will be mitigated to some degree."
2. Cutting supply chain costs can help centers weather healthcare reform. Provista conducted a survey that looked at spending trends in October 2011 and found 55 percent of surgery centers surveyed were focused on cutting costs to handle budget cuts due to healthcare reform. One of the easiest places to cut costs, Mr. Peters says, is in the supply chain.
"One of the ways ASCs specifically are going to be able to reduce cost is to focus on their supply chain," he says. "I don't see how there's any other way to reduce cost. The majority of their spend is around the clinical staff, and I just don't see how surgery centers can operate any leaner than they do today"
It seems like ASCs are starting to realize this as well, and Mr. Peters says surgery centers are beginning to make changes to how they handle their supply chain. In the survey on how ASCs were cutting supply chain costs, 34 percent of centers said they are standardizing products, 24 percent are evaluating their GPO and 19 percent are implementing an order management system.
3. There's a greater push toward physician engagement in supply chain. Another trend Mr. Peters sees is a greater push to involve physicians in managing supply costs, especially physician preference items.
"The whole idea is to increase the visibility of how the physicians' choice on supplies impacts the surgery center's bottom line," he says. "They're really starting to pay attention and evaluate products they can use that have a stronger value proposition and have the same clinical outcomes."
In that same surgery center survey, 55 percent of centers said they were very or somewhat engaged with their physicians on managing supply costs, while 39 percent said they were engaging with their physicians at higher levels than in past years.
4. Surgery centers are investing in big-ticket items again. In terms of buying trends for 2012, Mr. Peters sees more surgery centers looking to buy more capital equipment, where they had shied away from making such purchases in recent years.
"We did see a lot of folks were pulling back from buying expensive items," he says. "If the monitoring equipment was working and had no problems but was out of warranty, they weren't buying; they were getting by with what they had. [The increase this year is] an uptick from what we've seen in the past couple of years in terms of buying new equipment."
The survey found 60 percent of surgery centers were looking to buy operating room equipment, 39 percent were planning on buying some sort of computer equipment and 37 percent were looking at buying monitoring equipment for the OR.
In addition to purchasing expensive items, Mr. Peters says a newer trend is for ASCs to lease equipment that is expensive or is updated frequently so they can upgrade to the newest model. One example, he says, is scopes for endoscopic procedures. These are high use items, and leasing allows surgery centers to replace them more rapidly if need be.
5. Affiliation with an ACO will change supply chain dynamics. One of the biggest healthcare changes focuses on the creation of accountable care organizations, which aim to manage the entire episode of a patient's care. Surgery centers have a role to play in these organizations, but exactly where they will fit is currently undefined. One thing that's for certain, Mr. Peters says, is that being a part of an ACO will have a significant impact on a surgery center's supply chain processes.
"What can happen depends on how the ACO is structured," he says. "The ACO may enforce product standardization, and they will be doing more group buying, which allows the group to aggregate and achieve better pricing."
In the same survey that looked at spending trends, nearly one-quarter of surgery centers said they were planning to or have already aligned with an ACO.
Related Articles on Supply Chain Management:
HSCA Responds to State of the Union Address and Highlights Critical Role of GPOs in Reducing Healthcare Costs
Opinion: Focus on ASC Quality, Not Technology — 5 Reasons Not to Adopt EMR in the ASC
9 Supplies That Endanger Profitability for ASC Cases — and How To Reduce the Damage