A simple cost-saver: Demand the best price
New products save 6% to 40% beyond discounts
Savvy consumers of OR equipment and supplies ask a vital question: Is this the best possible price? If you're not asking that of your vendors, then you're probably paying too much, purchasing experts advise.
New products and services have emerged to help same-day surgery managers compare the cost of items that have the same specifications and determine whether they are getting a good deal. Getting a "discount" does not guarantee that you're getting a good price, purchasing experts say. In fact, they say same-day surgery managers can save at least 6% to 7% beyond their current "discount" price -- and sometimes much more.
"Vendors today realize they need to give you a discount. They increase their prices so they can discount their prices," says Robert Edelstein, president of Millennium Surgical Corp. of Wayne, PA, which sells and repairs specialty surgical instruments and products. "It's become a department store out there. They want to give you the impression they're giving you a better price.
"[Same-day surgery managers] need to make a concerted effort to seek out companies that can do better for them [at pricing]," Edelstein says.
A more assertive attitude about purchasing can pay off, says Sandra Schwartz, RN, manager of Supplyline, a cost-comparison product of the Healthcare Materials Services division of the Houston-based Owen Healthcare.
"There's a lot of misconceptions that the bigger hospitals get the best price, or because I belong to this [purchasing] group, I get the best price," Schwartz says. "What we've found is the best negotiator gets the best price."
On-line data reveals best price
In purchasing, information is power. It's important for a good consumer to know the difference in price and specifications of similar products -- and, if possible, what other same-day surgery managers are paying, purchasing experts say.
Supplyline provides an on-line data base with price comparison information from hospitals and surgery centers around the country. The data base contains 300,000 items, including surgical supplies such as gowns and suction canisters and office and housekeeping supplies such as copy paper. It does not include capital equipment, Schwartz says. (For contact information, see source box, p. 90.)
"We look at the components of the products, the specifications of how it's made, and determine which ones are equivalent products," she says.
The fee for Supplyline varies depending on the level of service the facility seeks, Schwartz says. Some subscribers have access only to looking up cost and product information. Others receive detailed quarterly reports of their purchases and the potential savings if they had received the "best price available," according to price quotes from facilities around the country, Schwartz says.
Once receiving that information, same-day surgery managers use it as a tool when dealing with vendors, she says. "Once we give you the financial analysis, you have to do the negotiating to get better pricing," Schwartz says. "On the average report, we locate 15% savings. We're hoping our customers are getting at least 6% or 7%.
"We know no one will get the best price on everything. But if you can save half of the potential savings for your hospital, you've saved a lot of money."
Same-day surgery managers may find cost-and-product comparison information for capital equipment on SELECTplus and PriceGuide, database products of ECRI, a nonprofit agency based in Plymouth Meeting, PA, that specializes in health care information, technology, and risk management.
In addition to providing detailed information on brands, specifications, price, and other purchasing issues, SELECTplus can provide customized reports that include a life-cycle cost analysis of how much the equipment will cost over its lifetime, says Nanette Bross, manager of ECRI's Healthcare Product Comparison System. PriceGuide provides information about national or regional averages and lowest prices paid for specific supplies. (For ordering information, see source box, p. 90.)
"People have a tendency to look at the sticker price and not what the disposables or the technologist's time is going to cost them over the life of the equipment," Bross says. "Certainly that has been a growing concern as hospitals and surgery centers are trying to contain their costs."
Save money with same specs, cheaper brand
While growing cost pressures have created greater interest in price comparisons of surgical supplies and equipment, product comparison information has been available for several years. ECRI developed its first Healthcare Product Comparison report in 1982, Bross says.
The binder system of publications now covers capital equipment ranging from endoscopes and sterilizers to OR tables and surgical scrub sinks. Subscribers receive a binder of current reports and quarterly updates.
The reports include charts comparing the specifications of various items. "[Same-day surgery managers] may have had a sales representative from one vendor come in and give a big presentation," Bross says. "But they may want to find out what else is on the market that is comparable."
Creating comparable but less expensive surgical equipment is Edelstein's business at Millenium Surgical Corp. Millenium buys products directly from manufacturers or contracts with manufacturers to produce items of certain specifications, then sells them to hospitals and surgery centers. For example, many ophthalmic instruments are made by craftsmen at small shops who alter the handle for a different "look" for different distributors, he says.
Edelstein says he sells comparable products in ophthalmology, ENT, plastics, orthopedic surgery, gynecology, and endoscopy, often manufactured by the same suppliers as the "name brands," for a discount of 30% to 40%. (For contact information, see source box, p. 90.)
As an example, Edelstein cites a 27-gauge air injection cannula, which he purchases from a manufacturer for $2.50 and resells for $5. Another leading manufacturer lists the item for $20. "If they give a 40% discount [to purchasing groups or high-volume customers], you're looking at $12, which is still six times what it costs to make the product," Edelstein says.
Purchasing contracts don't cover all items
That price disparity is one reason why even members of group purchasing organizations may want to review cost comparison information, purchasing experts say.
Sometimes contracts with group purchasing organizations require same-day surgery managers to purchase items through the organization. But there are still occasions when same-day surgery managers need to use their negotiating skills, says Schwartz. "There are still quite a few items that they're buying off contract, either because the group doesn't have a contract on that particular item or because they have to buy things that go with a particular machine they have," she says.
If you purchase an item that is not the "name brand," make sure the vendor will allow your surgeons to test the quality and will stand by a satisfied-or-money-back guarantee, Edelstein says.
He also cautions same-day surgery managers not to assume that someone else in the hospital or surgery center is already comparing and negotiating prices. "If [same-day surgery managers] do their correct homework, they will get value and better investment in quality products," he says.
"From administration down, they need to make a concerted effort to seek out vendors who can do better for them." *
For more information about Supplyline, contact:
* Sandra Schwartz, Manager, Supplyline, Healthcare Materials Services, 9800 Centre Parkway, Suite 1100, Houston, TX 77036. Telephone: (713) 777-8173. Fax: (713) 776-9533.
For more information about SELECTplus (price varies according to the size of facility), PriceGuide (price varies), or the Healthcare Product Comparison System ($370 annually), contact:
* Tony Montagnolo, ECRI, 5200 Butler Pike, Plymouth Meeting, PA 19462-1298. Telephone: (610) 825-6000, ext. 175. Fax: (610) 834-1275. E-mail: [email protected].
For more information about comparing products with identical specifications, contact:
* Robert Edelstein, President, Millennium Surgical Corp., 999 Old Eagle School Road, Suite 109, Wayne, PA 19087-1707. Telephone: (800) 600-0428. Fax: (800) 600-0429.
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