The spine service line can be a profitable one for outpatient surgery centers and their partners; however, favorable contracts with implant vendors are key to ensuring spine benefits a center's bottom line. Every additional dollar that is spent on implants and supplies is a dollar that does not fall to bottom-line profitability.
Here are six steps to reduce the cost of spine implants.
1. Maximize opportunities for group purchasing. Whether a group purchasing organization adds benefit or a health system alliance is an option, purchasing in bulk will yield a higher level of interest by the manufacturers. Joining forces allows the ASC to offer greater volume to vendors, which can result in more favorable pricing, says Beth A. Johnson, vice president of clinical systems for Blue Chip Surgical Center Partners.
2. Gather "like" comparisons from vendors. "Ensure that the quotes are apples-to-apples comparisons. If one quote is for one level and includes a plate and two screws, then make sure the quotes from the other manufacturers include materials to accomplish the same patient outcome," says Ms. Johnson. "Though it seems obvious, it can easily be confused or get overlooked and is essential to an accurate comparison."
Ms. Johnson also recommends that leaders make it clear to vendors they should provide their best pricing upfront. "I communicate that I won't be returning to them for a second level of negotiations or pricing," she says. "I advise them that I cannot present them as a 'preferred provider.' I let them know I will present the financial facts and the remainder of the sales process is their responsibility."
3. Present vendor proposals to physicians. After gathering vendor bids, ASC leadership should present the proposals to the physicians in a controlled environment, such as a board meeting. In most cases the lowest bid is the most favorable, assuming accepting it would not sacrifice quality. In the past, pricing varied significantly, which made implant selection less difficult. However, vendors have become much more competitive in the last few years, making selection more challenging as physicians debate the merits of similarly priced implants, says Ms. Johnson.
4. Gain physician consensus on implant standardization. Even though physician investors at an ASC have a financial incentive to standardize their use of costly implants, gaining consensus to stock just one type of manufacturers' implants can still be challenging. "In a hospital environment, physicians are accustomed to requesting a new supply item and receiving it. It has to be different in the ASC setting; ASCs don't have the financial margins to perform procedures in which expenses exceed the reimbursement," says Ms. Johnson.
"We communicate to the physician partners early on the importance of standardization," says Ms. Johnson. "Even if implants are stored on consignment, there are administrative costs associated with managing inventory from multiple vendors."
5. Let physicians test drive implants. During the consensus building process, it is important to let physicians evaluate any implants they are not familiar with. This may mean having numerous sales representatives spending time with their product in your facility, says Ms. Johnson.
"If [physicians] have never used a plate, they'll want to try it before making a purchasing commitment to a vendor," says Ms. Johnson. "During this process, and in the final agreement, ensure that all implants are brought in on consignment, and that the associated instrumentation are kept at the facility as a 'loaner' set. It is less efficient for all parties involved if a set of instrumentation must be secured each and every time a procedure is performed."
After physicians have tested the various implants, a decision on standardization can be made quickly. The entire consensus process should take no longer than a month, says Ms. Johnson.
6. Aim for exclusive contracts. If possible, centers should enter into exclusive arrangements with vendors, says Ms. Johnson. Exclusive contracts usually require a center to commit to using the vendor for 80-90 percent of its implant business. "If the facility can honestly commit to that, you will receive favorable pricing," she says.
Vendor relationships should be reviewed on an annual basis. The industry is changing and constantly evolving offering us new alternatives, says Ms. Johnson.
Learn more about Blue Chip Surgical Center Partners.
Here are six steps to reduce the cost of spine implants.
1. Maximize opportunities for group purchasing. Whether a group purchasing organization adds benefit or a health system alliance is an option, purchasing in bulk will yield a higher level of interest by the manufacturers. Joining forces allows the ASC to offer greater volume to vendors, which can result in more favorable pricing, says Beth A. Johnson, vice president of clinical systems for Blue Chip Surgical Center Partners.
2. Gather "like" comparisons from vendors. "Ensure that the quotes are apples-to-apples comparisons. If one quote is for one level and includes a plate and two screws, then make sure the quotes from the other manufacturers include materials to accomplish the same patient outcome," says Ms. Johnson. "Though it seems obvious, it can easily be confused or get overlooked and is essential to an accurate comparison."
Ms. Johnson also recommends that leaders make it clear to vendors they should provide their best pricing upfront. "I communicate that I won't be returning to them for a second level of negotiations or pricing," she says. "I advise them that I cannot present them as a 'preferred provider.' I let them know I will present the financial facts and the remainder of the sales process is their responsibility."
3. Present vendor proposals to physicians. After gathering vendor bids, ASC leadership should present the proposals to the physicians in a controlled environment, such as a board meeting. In most cases the lowest bid is the most favorable, assuming accepting it would not sacrifice quality. In the past, pricing varied significantly, which made implant selection less difficult. However, vendors have become much more competitive in the last few years, making selection more challenging as physicians debate the merits of similarly priced implants, says Ms. Johnson.
4. Gain physician consensus on implant standardization. Even though physician investors at an ASC have a financial incentive to standardize their use of costly implants, gaining consensus to stock just one type of manufacturers' implants can still be challenging. "In a hospital environment, physicians are accustomed to requesting a new supply item and receiving it. It has to be different in the ASC setting; ASCs don't have the financial margins to perform procedures in which expenses exceed the reimbursement," says Ms. Johnson.
"We communicate to the physician partners early on the importance of standardization," says Ms. Johnson. "Even if implants are stored on consignment, there are administrative costs associated with managing inventory from multiple vendors."
5. Let physicians test drive implants. During the consensus building process, it is important to let physicians evaluate any implants they are not familiar with. This may mean having numerous sales representatives spending time with their product in your facility, says Ms. Johnson.
"If [physicians] have never used a plate, they'll want to try it before making a purchasing commitment to a vendor," says Ms. Johnson. "During this process, and in the final agreement, ensure that all implants are brought in on consignment, and that the associated instrumentation are kept at the facility as a 'loaner' set. It is less efficient for all parties involved if a set of instrumentation must be secured each and every time a procedure is performed."
After physicians have tested the various implants, a decision on standardization can be made quickly. The entire consensus process should take no longer than a month, says Ms. Johnson.
6. Aim for exclusive contracts. If possible, centers should enter into exclusive arrangements with vendors, says Ms. Johnson. Exclusive contracts usually require a center to commit to using the vendor for 80-90 percent of its implant business. "If the facility can honestly commit to that, you will receive favorable pricing," she says.
Vendor relationships should be reviewed on an annual basis. The industry is changing and constantly evolving offering us new alternatives, says Ms. Johnson.
Learn more about Blue Chip Surgical Center Partners.