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GE Healthcare Camden Group Insights Blog

Physician Preference Cards: An OR Director’s Key To Efficiency

Posted by Matthew Smith on Sep 1, 2017 3:27:57 PM

By Don Martin, Senior Manager, GE Healthcare Camden Group

Efficiency and cost management – the metrics by which OR Directors live and breathe. Data on First Case On Time Starts, cut to close times, room turnover, supply usage help administrators keep a close eye on how efficiently their perioperative suites are running. And among the tools every OR Director should use to ensure they’re running efficiently and profitably: physician preference cards.

Preference cards contain clear and concise procedural instructions that, when combined with an accurate record of needed supplies and equipment, prevent unnecessary delays and procedure interruptions. More importantly, they positively impact patient safety and quality by enabling the surgeon, nurses and technicians to focus exclusively on the patient. Preference cards improve surgeon satisfaction, instrumentation and supply inventory management, as well as staff orientation and training.

Discovering Value In Preference Card Data Mining

Physician preference cards provide another significant benefit. Taken together with supply usage data, preference card information becomes a vital source of data for uncovering valuable supply savings opportunities in the operating room. With surgical costs increasing and reimbursements decreasing, hospitals and physicians need to partner to find ways to contain and reduce costs – and a close-up inspection of supplies may deliver big rewards. The key to this effort begins with information – information that can transform simple data into an effective, actionable tool for driving practice change and cost reductions in the OR.

Costs Of Neglecting Preference Card Management

The majority of hospital surgery departments utilize electronic preference cards generated from their clinical information systems and all feature a catalog of surgical supplies and implants needed during a procedure. Hospital leaders at times make the assumption that those preference cards accurately reflect the supplies the surgeon will use during a case. Our experience tells us otherwise. Often we find supplies – sometimes a few, sometimes several – on each preference card that surgeons rarely if ever use. In fact, when we physically display items on a surgeon’s preference card for their review, many are surprised to find certain supplies were being pulled for their case.

Inaccurate and out-of-date preference cards result in real costs: Hundreds of thousands of dollars in wasted supplies and labor jeopardize already thin contribution margins. Fortunately, corrective measures exist to solve this issue, but they require the combined efforts and commitment of OR Directors and surgeons.

Data Is Key To Improving Preference Cards

Relevant, actionable data enables staff and surgeons to quickly identify and evaluate efficiency and cost-savings opportunities. Unfortunately, we frequently hear surgeons say that throughout their years of practice, they have not received empirical data they can use to drive more efficient and cost-effective supply utilization practices.

Information drawn from physician preference cards and historical supply usage data supports surgeon-specific and comparative supply usage analysis. Let’s look at an example. Table 1 shows a partial list of supplies used by Dr. A in laparoscopic appendectomy cases. The highlighted items include supplies provided for the case but never used, or picked in insufficient quantities and requiring the staff to leave the OR to retrieve them during the case. Both represent opportunities for workflow efficiency and supply cost reduction. OR Directors can show surgeons this data and point out how poor preference card management results in case delays, supply waste, and lost time and effort moving unused supplies between the OR and storeroom. In doing so, they will likely gain allies in refining a more selective and efficient case cart build process.

Metrics

Here’s another example. Table 2 shows comparative supply usage data across multiple surgeons for a common procedure. A supply analytic tool like this identifies opportunities to convert a surgeon to a clinically equivalent, lower-cost supply that his colleagues use to achieve similar outcomes. It also identifies opportunities to convert an entire group of surgeons to the same supply, enabling the organization to leverage volume purchasing as well as standardize products and reduce inventory variability. OR Directors can partner with their Supply Chain VP to include not only surgeon supply usage statistics, but also the average cost of supply expense per case for each of the surgeons in the analysis. This approach grabs attention and often motivates surgeons to dig deeper into the data to better understand the reasons behind the cost differences.

Metrics

Our clients have discovered that presenting supply utilization data in this straight-forward and concise fashion invites surgeons to open a dialogue with the OR staff and with each other – leading to a renewed desire to pursue more efficient supply selection and consumption.

Our work with clients has shown us that achieving improved operational and financial results in the OR through effective physician preference cards requires significant effort and focus.

Non-Labor Expense Reduction


MartinD.jpgMr. Martin is a senior manager with GE Healthcare Camden Group with more than 20 years of financial and clinical experience with operational responsibilities for patient care delivery, fiscal management, staff development and government, and regulatory compliance. His collaborative approach guides clients through the complex process of optimizing existing technology to meet healthcare’s Triple Aim: increase operational efficiency, improve the quality of patient care, and decrease the costs of care.

 

Topics: Perioperative Services, Non-Labor Expense Reduction, Operating Room, Supply Chain, Physician Preference Cars, Don Martin

Taking Cost Out Of Supply Chain: Make Versus Buy

Posted by Matthew Smith on Aug 29, 2017 4:16:52 PM

By Janice Davis, RN, Senior Consultant, GE Healthcare Camden Group

As the healthcare industry transitions from volume to value-based care, controlling supply chain costs becomes increasingly important. Supply chain executives must continually seek to reduce cost while operating efficiently in this increasingly demanding environment.

For many organizations, this leads to the question of whether self-distribution would be a viable alternative to a vendor-provided distribution system. Commonly, supply chain experts refer to this as “make versus buy” for the distribution channel. In other words, should the hospital continue to “buy” the distribution service from a vendor or should they “make” their own supply chain distribution channel? The answer very much depends on which supply chain distribution system will best support the hospital’s core patient care business.

The Case For Self-Distribution

In a self-distribution model, the organization assumes the responsibility to obtain supplies and clinical products from the manufacturers and deliver them in correct quantities to the point of consumption (POC). These responsibilities include procurement, warehouse management, inventory control, order completion, transportation, and any other functions that are associated with a distributor. Supply chain leaders must design a self-distribution model robust enough to handle all the services and issues currently handled by the distributor, such as stock outs, back orders, satisfactory fill rates, and customer satisfaction.

However, designing and implementing a self-distribution option is expensive and carries financial and operational risks. All decisions impact the overall actual product expense and the organization must carefully evaluate each decision point to ensure the model meets the overall organizational objective. This requires detailed analysis to evaluate the feasibility of establishing a self-distribution network and determine the characteristics of the network that will meet the strategic goals of both the hospital and supply chain.

To begin the process, the supply chain leader should identify motivational forces driving the suggestion, examine potential supply chain approaches, and assess whether self-distribution would successfully address those issues while supporting the hospital goals and direction. Some situations make self-distribution more feasible. In our experience working with hospitals, healthcare systems and IDNs across the country, we find these situations often make the case for self-distribution:

  • If the organization owns a warehouse, it might make financial sense to use that warehouse as a part of a self-distribution model.
  • IDNs comprising many hospitals with different item files and supply chain processes might adopt self-distribution to standardize products and exert more control over the supply chain.
  • Dissatisfaction with the current operations of a distributor supply chain might encourage the organization to explore the opportunity to “make versus buy”.

The supply chain leader also needs to assess whether key success factors are in place, or whether they need to be developed. In our experience of guiding clients through this process, we recommend various key success factors, including:

  • Executive sponsors: Strong executive sponsors provide leadership and facilitate the decision-making throughout the evaluation, design and decision process
  • Operational knowledge: In-depth supply chain knowledge facilitates the creation of a product management system that minimizes product touchpoints and inventory locations while maximizing efficiency and customer service
  • Robust information systems: A self-distribution system relies upon comprehensive information systems and materials management software support that can electronically manage the information and establish records of transactions and payments, maximize use of Electronic Data Interface, and establish records of transactions and payments

The Alternative: Reducing Supply Costs Through Fee Management

Methodically implementing thoughtful strategies will significantly reduce product expense, effectively reducing the fees associated with product purchases from the usual 7% to 13% overall rate to less than 3%, as illustrated below.

Make vs. Buy

In our experience, this strategy often provides the same or even more savings than building a self-distribution model – with much less risk involved. When implemented in a thoughtful manner, this approach will standardize products and reduce the overall costs. Managing these fees and creating a “blended” fee approach may be the key to reducing expense and improving your bottom line without embarking upon a self-distribution journey.

Supply chain leaders can reduce product fees by meticulously examining product contracts and the fees allocated to individual products within the contract, then increasing products in the product groups with lower fees. For distributed medical-surgical products, for instance, this is accomplished by moving from national-branded items with a fee structure of 3% to distributor-branded items at a zero-based fee structure with increased rebates. When there is no corresponding distributor-branded product, hospitals can renegotiate distribution terms for national branded items. This reduces fees to 1% or less. For distributed non-contracted products, contracts can be secured reducing the distribution fees or the products can be ordered direct from the manufacturer. This reduces fees from between 8% to 12% down to 5% or less.

In addition, some medical-surgical products are eligible to move through the pharmaceutical distributor, where the fee structure is a “cost minus,” thus eliminating any distribution fees and reducing the product acquisition cost. Vendor negotiation to reduce product costs also benefits other product groups, such as Environmental Services and Food; optimizing Group Purchasing Organization agreements will further add to organization-wide savings.

Through partnering with vendors, distributors and customers, supply chain leaders can optimize the blend of distributed products, use distributor-branded products where clinically acceptable, maximize the Group Purchasing Organization contracts, and minimize non-contract products. The result: incremental fee reductions that lower overall supply costs while maintaining quality care.


DavisJ.jpg

Ms. Davis is a senior consultant with GE Healthcare Camden Group and brings more than 30 years of clinical experience, specializing in acute care surgical services, while supporting clients on their road to improving efficiency and optimizing their resources while delivering safe and cost-effective care. With a solid nursing foundation, Ms. Davis has developed an array of subject matter expertise that includes a strong focus in perioperative services and a wealth of knowledge in Truven Action OI. 

 

Topics: Non-Labor Expense Reduction, Janice Davis, Group Purchasing Organizations, Supply Chain

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