Recruiting surgeons to take supply chain management seriously requires strategy and tact

Make the wrong move and you’ve damaged your credibility to the point of nullifying any future influence; make the right move, however, you may become a trusted business confidante and mentor for clinicians who prefer to focus on managing patient care.

Demand for physician-specific high-tech devices and equipment represent a significant expense for hospitals and a monumental challenge for materials managers and administration – and whatever product and service contracts they’ve developed.

Clearly a chasm exists between materials managers and physicians. On a fundamental level, physicians want to operate their own businesses, managing responsibilities to their patients, partners and practices without being advised by administrators how to do their jobs. They represent a facility’s revenue stream but also a considerable portion of the expense stream for the products they want. Meanwhile, materials managers have to maintain control over their portion of the bottom line, which represents a significant amount of their facility’s expense stream, while not running afoul of the key group generating revenue. A continuing conundrum to say the least.

Both have to find ways to bridge the chasm, to reach a consensus while keeping the budget in full view. So what are some surefire ways that proved successful for materials managers to incentivize physicians to help control costs enough without compromising quality and what are some tactics that tanked?

Healthcare Purchasing News posed these questions to several consultants, group purchasing executives and supply chain management executives with clinical and materials management expertise. Here are some gleaming success stories and miserable failures and the reasons behind them.

Joane Goodroe

"A hospital increased their staffing ratio in the operating room and also worked on decreasing their delays in order to move cases through the [operating room] in a more efficient manner," said Joane Goodroe, senior vice president, innovation, VHA Inc., Irving, TX. "This made it easier for the physicians to get their cases done on time so the physicians were willing to help the hospital save money. Also, the hospital involved the physicians in determining how they were going to save money instead of dictating change to the physicians," she added.

Joe Colonna

"A cath lab manager had built a terrific relationship with the [electrophysiology] docs," said Joe Colonna, principal, Appleseed Healthcare Resources, Savannah, GA. "By building a relationship with that manager and publicly acknowledging how well he managed the physicians we were able to engage his help in a renegotiation of CRM contracts. His strong relationship resulted in the physicians’ participation and support of the process, including a threat to change vendors, resulting in a $2-million dollar savings for the organization. He talked to them as equals and didn’t make assumptions. Not overnight, but overtime."

Karen Barrow

Karen Barrow, senior vice president, Amerinet Inc., St. Louis, recalled one member facility where healthcare executives, materials managers and surgeons worked together, enabling the facility to reduce orthopedic implant costs, generate $800,000 in savings and lower the average length of a patient’s stay to 3.2 days from 4.2 days in all cases in one year. "In addition, the hospital provided a nurse practitioner as liaison between surgeons [and the] hospital, implemented standard order sets and improved the patients’ nausea and pain control," she said. "The result of materials managers utilizing these techniques resulted in a cost reduction initiative [and] a win-win-win situation that improved quality of care delivered, physician relations and net profit per case."

John Gaida

John Gaida, vice president, supply chain, Texas Health Resources, Arlington, TX, highlighted one success story that didn’t involve shutting out vendors or standardizing. "It was an orthopedic process to lower costs but keep all vendors in play by suggesting a cost that is a percent of reimbursement, thus being fair to all and suggesting all who want to play can," he said. "Docs were brought in early involving administration and made a part of the process prior to discussing with the vendors. It was orchestrated well." 

For every success story, however, there’s a tale of tarnish.

"The hospital chose an incentive (funding educational events for physicians) without speaking to the physicians," Goodroe said. "They also changed products without speaking to the physicians. The physicians quickly moved a majority of their cases to another hospital."

The key factor to remember, Goodroe stressed, is to never make a product change if the physicians are not involved in the decision. "Incentives usually do not work unless the physicians are involved in choosing the products," she added.

Colonna recounted a similar fate of failing to engage physicians from the beginning of the process. "We instead moved forward with a ‘capitated price’ model for hip and knee implants. We told vendors that if they did not meet pricing demands we would no longer use their products," he said. "The vendors rallied the physicians with threats of no access to products. The physicians sided with the vendors and forced the organizations to accept contracts with the vendors at a fraction of the originally projected savings. Orthopedic docs felt they were being screwed over by administration. We had all the evidence in the world but they didn’t care."