This post is an accompaniment to Power Supply's Expert Series TM where Kermit CEO Rich Palarea serves as the Implant Spend Management Expert. The original Power Supply Expert Series post can be found on Power Supply's LinkedIn.
Unlike other supply and spend categories within the hospital, implantable medical devices often also referred to as physician preference items (or PPI) defy most of the common controls used in strategic sourcing to procure, use, and pay. This Expert Series will examine some of the problematic themes of the category’s spend management and how, with just a bit of knowledge, you can use best practices to achieve meaningful and lasting results.
Surgeons Choose and Hospitals Pay
The name “physician preference items” has a curious second word: preference. As early as a surgeon’s residency and fellowship training, medical device companies begin work to ensure that surgeons are regular users of their instruments and implants. Or, to state it another way, medical device companies do what they can to influence their preference.
At the end of the day, surgeons are the subject matter experts, and their preference does matter immensely as it is closely related to their top concern of patient quality of care. However, most of the time, surgeons do not know the cost of the device they are implanting, and the hospital will pay the supplier for whatever is used. It is this lack of transparency that has caused a riff in communication and collaboration internally and allowed millions of dollars to slip through the cracks.
This usually means that the hospital, or more specifically supply chain, does not have the upper hand in managing costs within the operating room. To compound the issue, because these items are billed via pen and paper in what is called the “bill-only process,” key usage analytics remain locked away. Breaking the cycle starts with recognition and acceptance, understanding that having a broken process does not require an entire rebuild of current systems and workflows, but by adding visibility and allowing open discussions major cracks can be repaired.
What Hospitals Need
In order to properly manage implant spend, with physician preference in mind, surgeons must be enrolled early in the process, shown pricing and utilization analytics, and made into champions who will accomplish both saving the hospital money and keeping patient care as their first priority. When presented with sound data, surgeons will participate in the project and can be the difference between project success and failure.
There are plenty of solutions for achieving the goal of savings, however, not all of them take into consideration the importance of allowing surgeons to still engage with their preferred vendors and maintain that relationship for the sake of the patient. When deciding on a solution for savings, it is imperative that surgeons, as well as supply chain, are actively involved in the decision to find an option that works for everyone.
Kermit’s solution provides a comprehensive item utilization report, price benchmarking estimate and we meet early in the project with stakeholders (including surgeons) to understand the savings opportunity and to negate any impact to clinical care. When presented with sound data, surgeons will participate in the project and can be the difference between project success and failure. We cover this process in-depth in a future installment of this series when we discuss “Successful Cost Reduction in Implantable Medical Device Requires Surgeon Alignment”.