Share the pain: Vendors can save you a bundle
Packaging, delivery, data can be cost-savers
Same-day surgery managers are discovering an unlikely ally in cost-cutting efforts: vendors. Once focused only on how much product they could sell, vendor representatives now tout their efforts to help surgery centers and hospitals save money.
Baxter Healthcare Corp. in McGaw Park, IL, has begun partially compensating its representatives based on cost savings they provide to facilities. DeRoyal Industries of Powell, TN, provides monthly reports of supply usage and maintains a national database for comparison.
"[Vendor representatives] are taking on such a consultative role these days," says Bill Pittman, DeRoyal's vice president of marketing. "It's completely changed from being a [just] sales situation."
The new cost-saving push by vendors is an idea whose time has come, says Stephen W. Earnhart, RN, CRNA, MS, president of Professional Surgery Corp. in Dallas, which acquires, develops, and manages ambulatory surgery centers. As managed care squeezes same-day surgery providers, vendors will need to share the pain, Earnhart says.
Same-day surgery managers should be bold in demanding cost breaks from vendors, he suggests. Otherwise, managers can consider shifting their contracts to smaller upstart companies that offer competitive prices on products that are comparable to the name brands.
"[The major vendors] are going to have to cut their [profit] margins to keep the business they've got," he says.
Pulling a bundle for a biopsy
Even without direct prodding from same-day surgery managers, vendors are seeking ways to improve cost-effectiveness and efficiency in packaging and delivery. One such method involves the bundling of procedure-specific supplies.
When nurses at St. Joseph's Hospital of Atlanta need to pull supplies for breast biopsies, hernia repairs, laparoscopic cholecystectomies, or other common procedures, they just reach for a bundle. Baxter's Procedure-based Delivery System has saved five to 10 minutes per case and reduced inventory, says Sandra Good, RN, CNOR, manager of outpatient surgery/post-anesthesia care unit at the hospital.
Good hasn't yet calculated the dollar savings, but with 20 procedures a day in the same-day surgery unit, the reduction in staff time needed to handle supplies has been significant, she says.
Previously, St. Joseph's received supplies in large cases or canisters because that's how they were packaged by the manufacturer. Baxter now handles that bulk, only packaging items needed for each case. The pre-packaged supplies are delivered twice a week.
"This is not just-in-time inventory, but it's close to that," says Penny L. Dykstra, RN, director of outpatient surgical services and co-director of ambulatory services at St. Joseph's. "That's our goal."
The system has provided much needed efficiency, Dykstra says. "As the system was before, products would be delivered to materials management," she says. "They would receive them, stock them, and we would make a requisition for supplies. Then materials management would load them on a trolley and deliver them to the OR, where we would open boxes and distribute supplies to the shelves. It was a lot of handling."
'Modules' include 20 items for procedure
Baxter gathers the products from a variety of vendors to make up "modules." The modules contain about 20 items, including gowns, IV fluids, and irrigating water. Sutures and gloves are added separately, as are patient-or physician-specific items.
The modules are developed based on clinical pathways or an analysis of physician preference cards by a clinical nurse specialist from Baxter, says Flynn Lambert, operating room generalist with Baxter.
The cost of the Procedure-based Delivery System depends on such factors as the quantity of products purchased and the frequency of delivery.
"We charge the customer for the product, the packaging, and the delivery," says marketing director Nancy Walker, RN, MBA, MHA. In some cases, product costs might drop because of increased standardization or introduction of lower-priced items, Walker says.
A prepackaged supply system has potential drawbacks. Earnhart says he is moving away from procedure-specific packs to generic ones, with staff members picking the additional items needed. He is concerned that prepackaging may not keep up with changes in supply needs, leaving some products unused.
"I like the idea of knowing exactly what every single unit costs me," he adds. "I'd much rather give the hours to the staffing crew to pull these cases then to give it to the vendors to pack in one package."
Tracking product use saves $
DeRoyal also provides procedure-specific bundles in its TracePak system and boasts of savings of 12% to 20%. DeRoyal produces the cost-savings by working with distributors to minimize the number of "middle-man" steps in the supply chain and by suggesting lower-priced but "functionally equivalent" products, says Pittman. The company charges a 5% fee for delivering products through the TracePak process.
At Phoebe Putney Memorial Hospital in Albany, GA, OR Administrative Manager Beth Varnadoe, RN, MEd, CNOR, says she has obtained a savings of 15% to 20%. Varnadoe uses the TracePak system in about 60% of her inpatient and outpatient procedures.
"In these days of managed care, it's important that hospitals and manufacturers and suppliers all work as a team to deliver the product for the patient in the most cost-effective manner," she says.
Along with the packs, DeRoyal offers to help its customers save money by tracking product usage. Every bundle includes a form that a nurse or technician can mark to indicate which supplies were not used during the procedure. Those forms are faxed back to DeRoyal, which maintains a national database and provides monthly reports to customers.
For example, Pittman recalls one hospital that was using 20 OR towels for a laparoscopic cholecystectomy procedure. "Our database said the average is only four," he says. Why the difference? The OR staff were using the towels to line the stainless steel back table because the table cover often ripped.
"They were saving 50 cents on a [cheaper] back table cover and spent $20 on disposable towels," Pittman says.
Based on individual facility data, DeRoyal also informs customers when certain supplies are consistently underused -- for example, if bundles contain too many sponges. "There's opportunity for cost-savings galore," he says.
Baxter also touts its ability to provide cost-saving information to customers, such as an analysis of procedure cost. Representatives help customers analyze their critical pathways and standardize product use, says Walker.
"The purpose of the Procedure-based Delivery System is to remove system cost, not just product cost," she says. "It's to save them money as well as to help them understand what their procedural cost is."
Set goals with vendors: Costs down 4%
Even if vendors say they want to save you money, clearly they are still interested in selling as much of their product as possible, notes Earnhart. He advises same-day surgery managers to keep vendor representatives focused on the needs of the facility.
"Have an objective in mind before you meet with them, and never meet with them without an appointment," Earnhart says. "Tell them, 'I want to talk to you about cost reduction. How can your company assist me in achieving an overall 4% supply cost reduction?'"
Having specific goals helps define your relationship with vendors and make choices, he says. "If you can help me achieve this [cost reduction], great," he tells them. "If you can't, I'll have to work with another vendor who can."
Sometimes, same-day surgery managers may have goals that go beyond product cost alone. Through bundled supplies, Lambert estimates that he has reduced the inventory at the St. Joseph's same-day surgery unit by 40%. He says his goal is to reduce inventory by 80%.
Reducing inventory will help St. Joseph's with space needs. The same-day surgery unit had a room designed to hold an X-ray processor, but that area was needed to store supplies.
The pre-packaging has had an added benefit of encouraging standardization, Dykstra says. "Since we've started this, we've seen more uniformity," she says. *
For more information on Baxter's Procedure-based Delivery System, contact:
* Nancy Walker, Marketing Director, Baxter Healthcare Corp., 1500 Waukegan Road, McGaw Park, IL 60085.Telephone: (708) 578-2327.
For more information on the DeRoyal TracePak system, contact:
* Systems Improvement Group, DeRoyal Industries, 200
DeBusk Lane, Powell, TN 37849.Telephone: (800) 251-
9864.
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