Located in Boise, Idaho, St. Luke's Medical Center performs between 750-800 total joint replacements annually. Committed to reducing their costs and maintaining quality patient outcomes, St. Luke's worked with Goodroe Healthcare Solutions, a VHA company, to develop and implement systemic strategies, saving more than $3.2 million on total joint replacements during the 12-month period between May 2009 and May 2010.
Angela Christensen, MBA, BSN, administrator, Surgical Services at St. Luke's and VHA Performance Service s Implementation Managers Robyn Bellrichard and Vicki Carstens worked closely on the initiative. They offer a series of proven suggestions to achieve cost-savings on physician preference items.
1. Team effort. Make cost-saving a team effort by recruiting representatives from supply chain, administration and surgical services. To encourage legitimacy with physicians, include clinical experts such as a senior technician or a senior OR nurse who know and understand the products that physicians request.
"Vendors will try and make you believe that their piece of plastic or metal is proprietary," says Ms. Christensen. These professionals will know whether a product being touted to physicians is actually new technology or a vendor's marketing manta that adds costs without adding clinical value for patients.
2. Understand physician needs. Develop a good rapport with physicians by understanding their needs and engaging them in the hospital's cost-reduction efforts. Physicians want high-quality patient outcomes. The goal is to have the right implant for the right patient at the right time.
To achieve that objective, St. Lukes and Ms. Goodroe developed a series of implant product "constructs" or definitions that matched vendors' products to patients' needs so a 55-year-old competitive golfer who required a hip replacement would probably not get the same implant as an 85-year-old with a self-selcted sedentary life style.
Ms. Christensen also recalled a situation where 85 percent of the implants one St. Luke's physician performed used a "high-demand device" most appropriate for a very physically active patient. When queried, the physician explained that the implant vendor had declined to provide alternatives, forcing the physician into using a one size fits all solution. When the hospital told the vendor that was unacceptable, the vendor provided alternatives that more closely matched the patients' needs, helping to pare the hospitals device costs.
3. Cross-check prices. Create a system-wide cost-saving process with cross-check capability to ensure you know exactly what you are getting and pay the proper price for it. Working with its physicians, St. Luke's created constructs for implants that clearly identified their components and posted a construct in the OR for every implant procedure that was signed by the physician, the nurse and the vendor, thus avoiding potentially expensive add-on costs.
Before issuing payment, materials management would match the construct to the vendor's invoice to ensure accurate payment, and halted the vendor's practice of requesting payment directly after the physician had concluded the joint replacement.
4. Track implant costs. Compare the case's implant cost to the hospital's actual reimbursement to determine how much of the DRG the implant costs represent. The industry standard for the implant cost is 35 percent. Tracking the implant cost quarterly allows you to see a pattern of costs and provides an opportunity to investigate cost-reduction or discuss standardization for a specific implant if the costs spiral upward.
5. Investigate cost increases. Investigate cost increases and variations when they occur to determine their origin. A data analysis tool can help facilitate this effort. Are the increased costs due to using new technology or adding bells and whistles to existing technology? Are physicians using a product from a new vendor? Sharing that information with physicians will open a dialogue to help understand the cost increases and help pave the way to discussions that could lead to improved cost efficiency.
Related Articles on Orthopedic Implants:
6 Steps for Reducing Spine Implant Costs
Beating High Orthopedic Implant Costs: How to Save Money With Generics
Brett Gosney: 5 Tips for Maintaining Orthopedic Implant Costs
Angela Christensen, MBA, BSN, administrator, Surgical Services at St. Luke's and VHA Performance Service s Implementation Managers Robyn Bellrichard and Vicki Carstens worked closely on the initiative. They offer a series of proven suggestions to achieve cost-savings on physician preference items.
1. Team effort. Make cost-saving a team effort by recruiting representatives from supply chain, administration and surgical services. To encourage legitimacy with physicians, include clinical experts such as a senior technician or a senior OR nurse who know and understand the products that physicians request.
"Vendors will try and make you believe that their piece of plastic or metal is proprietary," says Ms. Christensen. These professionals will know whether a product being touted to physicians is actually new technology or a vendor's marketing manta that adds costs without adding clinical value for patients.
2. Understand physician needs. Develop a good rapport with physicians by understanding their needs and engaging them in the hospital's cost-reduction efforts. Physicians want high-quality patient outcomes. The goal is to have the right implant for the right patient at the right time.
To achieve that objective, St. Lukes and Ms. Goodroe developed a series of implant product "constructs" or definitions that matched vendors' products to patients' needs so a 55-year-old competitive golfer who required a hip replacement would probably not get the same implant as an 85-year-old with a self-selcted sedentary life style.
Ms. Christensen also recalled a situation where 85 percent of the implants one St. Luke's physician performed used a "high-demand device" most appropriate for a very physically active patient. When queried, the physician explained that the implant vendor had declined to provide alternatives, forcing the physician into using a one size fits all solution. When the hospital told the vendor that was unacceptable, the vendor provided alternatives that more closely matched the patients' needs, helping to pare the hospitals device costs.
3. Cross-check prices. Create a system-wide cost-saving process with cross-check capability to ensure you know exactly what you are getting and pay the proper price for it. Working with its physicians, St. Luke's created constructs for implants that clearly identified their components and posted a construct in the OR for every implant procedure that was signed by the physician, the nurse and the vendor, thus avoiding potentially expensive add-on costs.
Before issuing payment, materials management would match the construct to the vendor's invoice to ensure accurate payment, and halted the vendor's practice of requesting payment directly after the physician had concluded the joint replacement.
4. Track implant costs. Compare the case's implant cost to the hospital's actual reimbursement to determine how much of the DRG the implant costs represent. The industry standard for the implant cost is 35 percent. Tracking the implant cost quarterly allows you to see a pattern of costs and provides an opportunity to investigate cost-reduction or discuss standardization for a specific implant if the costs spiral upward.
5. Investigate cost increases. Investigate cost increases and variations when they occur to determine their origin. A data analysis tool can help facilitate this effort. Are the increased costs due to using new technology or adding bells and whistles to existing technology? Are physicians using a product from a new vendor? Sharing that information with physicians will open a dialogue to help understand the cost increases and help pave the way to discussions that could lead to improved cost efficiency.
Related Articles on Orthopedic Implants:
6 Steps for Reducing Spine Implant Costs
Beating High Orthopedic Implant Costs: How to Save Money With Generics
Brett Gosney: 5 Tips for Maintaining Orthopedic Implant Costs