Premier tools help hospital engage surgeons to save 1.3M on implants  

Challenge:

Premier benchmarking tools showed that Wayne Memorial was paying too much for orthopedic hip and knee implants. How could the hospital involve its orthopedic surgeons to develop and support a process to bring implant costs down to the point that they were 30 percent of the Medicare APR DRG reimbursement?

Solution:

Hospital leadership developed a deliberate, methodical process that involved orthopedic
surgeons from the outset and relied heavily on Premier tools to provide information on
which decisions were based.

• Orthopedic surgeons wanted to help the hospital pay a fair price for implants; they
  sensed the hospital was paying more than it should and far more than other hospitals.
• The team, led by the vice president of operations, included the business manager of
  surgical services, the director of materials management, and the purchasing supervisor.
• Two studies (2007 and 2008) from OrthopedicFocus™, Premiers comparative data
  service that benchmarks implant pricing against national pricing, were presented to the
  orthopedic surgeons who were surprised at how much more the hospital was paying.
• SpendAdvisor® MySpend™ benchmarking ensured that the latest information was used
  in setting up the hip and knee construct pricing.
• RFPs went to seven companies. Companies were notified that prices above the
  OrthopedicFocus target national average would not be considered. Those with pricing
  at 30 percent of APR DRG reimbursement would be used. Pricing in between would be
  considered based on price competitiveness.

Result:

All responses were below the national average for immediate savings of $1 million.
Further negotiations lowered prices another $300,000; total savings top more than $1.3
million.

• Wayne Memorial is no longer using two suppliers; their prices were not competitive.
• Orthopedic surgeons agreed to standardize to a single hip trauma and fracture supplier.
  They saw advantage in standardizing – ease of use, same tray, same components, and
  greater familiarity – for themselves and hospital staff.
• Wayne Memorial orthopedic surgeons realize that there will be greater pressure to
  reduce costs. Reimbursement is not going to go up even though no one knows exactly what the future will bring.

"As we look at other products, suppliers understand that Wayne Memorial is willing to move share. This was not just an exercise to get lower prices. There was a significant shift in market share. That will help us negotiate better contracts in the future. If we’d just lowered prices and didn’t move any share, the word would have gotten out that you don’t need to lower your price because they’re not going to change. Because we did make changes, they know that they better come in with good prices to get or keep our business. . . . Premier has been involved from the beginning – very much so. We talked with another Premier hospital that had gone through a similar process about how they were successful. Premier’s OrthopedicFocus, MySpend and regional director were particularly helpful."

Tom Bradshaw, VP Operations, Wayne Memorial Hospital, Goldsboro, NC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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