An instrument inventory list from Spectrum Surgical

"When revenue declines, it is still important that the standard of care be maintained and continuously improved," remarked John D. Parson, vice president – Financial Services, Olympus. "Compromising patient care, your competitive position or the ability to attract and hold top quality physician talent are not acceptable options."

"Surgical facilities are in a difficult spot," described Robert Edelstein, president, Millennium Surgical. "They are continually challenged with maintaining the quality of the surgical instruments they purchase, buying instruments that will last, satisfying surgeons, and lowering cost.

"Adding to this challenge is the trend for surgical facilities to reduce staff, forcing employees charged with surgical instrument purchasing to be a jack of all, master of none," he continued. "Many facilities have enough difficulty to even identify the instrument they need, let alone effectively compare cost."

HPN talked to several surgical instrument vendors and manufacturers about what it takes to get a handle on instrument costs.

Spectrum Surgical Instruments Corp.’s vice president of operations and chief customer advocate, Matt Rudolph, noted that shopping for the best value is especially important for more expensive surgical instruments. "Obtain multiple quotes for larger purchases," he said. "Your hospital’s group purchasing organization (GPO) may not always have the lowest price. Give your count sheets to more than one company to quote new instrument sets."

"Don’t let price alone fool you," advised Nancy Vacante, director of research and development for Olympus’ EndoSite Consulting division. "Consider the whole package into any instrument purchase decision. Factors to consider include: product quality, service inclusions, warranty details, on-site loaners (or not), trade-in value, etc. If all factors are weighed carefully, the ‘total cost of ownership’ may actually be less with the ‘higher priced’ vendor."

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And don’t let accessory/device usage decisions go unchecked, she added. "Remember that the annual disposable device expenses typically exceed the capital dollars spent…yet they often get only half of the scrutiny when it comes to purchase decisions. All device usage should be carefully monitored and evaluated for quality, effectiveness and cost considerations."

Keep in mind quality instruments are essential for long-term value, offered Jamie Carruthers, director of marketing, surgical instruments, CareFusion. "The hospital should ensure the instruments they are purchasing are of the highest quality to help maintain product longevity. Instruments should meet the ASTM standard for OR grade instrumentation and have a lifetime warranty."

Surgical instrument decisions should involve all of the key players, Vacante advocated. "One of the fastest ways to deplete a surgical instrument budget or any equipment budget is to allow one group or division within the healthcare provider practice to have full autonomy over equipment decisions. A team approach is recommended. Capital equipment committees serve a very useful and effective mission in this regard."

Be resourceful with the instruments you have on hand, reinforced Carruthers. "One of the quickest ways to deplete a surgical instrument budget is by buying instruments that you already have, but are being underutilized. There are instrument tracking software programs, like CareFusion’s V. Mueller IMPRESS, that will help hospitals look at underutilized instrument sets and then compare them to another set. For example, a doctor may use a set only once in every six months, but it may contain 70% of the instruments he/she needs. Quality instrument tracking systems perform this function, along with other types of analysis to best utilize a hospital’s budget.

"By using an instrument tracking system, the hospital can better understand when and where their instruments are being lost," he continued. "Tracking systems can also re-deploy underutilized instruments into new sets; essentially better using what hospitals already have in their inventory. CareFusion allows you to have an instrument tracking system without an outright purchase for the system, again conserving the capital budget."

"Consider having your instrument vendor come in and do a physical inventory of your instrument sets, even if it is only on a small scale," added Carruthers. "A well-qualified instrument sales representative may be able to help identify possible issues with your instruments before they become something that will affect your budget."

Stressed Vacante, "Clean up your inventory! Most facilities save outdated equipment for the ‘what if we ever need that again’ scenario. Remember that most vendors offer trade-in values that decline over time. Don’t let unused equipment depreciate and trade it in instead toward the purchase price of something that you’ll use."

Parson, Olympus, noted that an assessment of equipment needs should evaluate "what must be new technology and what can be used or certified pre-owned, or what current equipment may still have utility if retained for a few more years."

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"Many of our healthcare providers have found combining equipment, consumables and service within a pay-per-procedure arrangement makes it possible to control costs and enables them to employ the most current technology," he added. "This method of paying for equipment based on when you perform procedures is a way of truly matching costs with revenue while addressing the liquidity metrics of your business.

"These types of contracted lease or financing arrangements often leverage the volume of consumables to calculate the price resulting not only in a reduced overall cost but a lock on the consumables price for the period of the agreement," described Parson. "The Olympus Cost Per Procedure (CPP) program was designed to help our customers manage cost at the procedure level. While we also offer traditional fixed payment leases, the CPP is an innovative and flexible way of acquiring the use of leading technology while keeping cash flow and total costs in line."

To avoid purchasing unnecessary instruments, said Rudolph, look at "Can trays be consolidated? Are there backup instruments that can be refurbished and put into a set? Also consider reducing the number of instruments in your trays. Do you really need twelve Kelly hemostats? These are additional ways to save your budget."

"Many facilities neglect to streamline instrument sets as much and as often as possible," commented Edelstein. "This results in the ordering of unnecessary or too many instruments. Identifying each instrument and having instrument lists that include part numbers will help as replacements or additional sets are needed."

Rudolph emphasized the importance of educating employees on instrument maintenance to help keep costs in line. "Improper care and handling of the surgical instrument inventory will lead to an increase in costs. A common issue is staining and rusting which is most commonly caused by improper cleaning solutions. Also, it is necessary to have knowledge of testing standards to ensure that an instrument is in good working order and will not be damaged during use."

Carruthers noted that repair and refurbishment programs can be a great way to trim costs. "Many instruments can be ‘brought back to life’ if they are repaired before the damage becomes too severe. If hospitals keep their instruments in top working condition, they can extend their useful life and potentially eliminate the need to purchase new ones."

"In many cases, it is far less expensive to repair an instrument than to replace," explained Rudolph. "For example, a new laparoscopic grasper will cost $500-$750, while the repair can be as little as $35. Preventative maintenance will also allow hospitals to have minor repairs serviced before they become a high cost major repair."

"Determine which equipment warrants service agreements versus not," encouraged Vacante. "Repair costs can easily consume instrument budgets. Here, historical repair data can guide your decision on this issue."

Rudolph cautioned, "If your repair budget and your instrument budget are one and the same, problems can easily arise. You should have individual budget breakouts for rigid scopes, flexible scopes, power equipment, and stainless. For example, it only takes one flexible scope repair of $6,000 to completely wipe out a careful year of budgeting and planning. Additionally, the categorized budgets will allow you to see overage, as well as under usage—it is simply a better use of money."

An instrument pitted by bleach - Photo courtesy Spectrum Surgical

Naturally, surgeons want the latest technology and hospitals want to attract the greatest surgeons, but how do you balance surgeons’ desires with ever-tightening budget constraints?

"This can be summed up in one word, compare!" said Carruthers. "One of the best ways to tackle this issue is to work with your contracted instrument vendor and let them know one of your doctors prefers a different brand. A good instrument vendor will be able to cross reference that brand and then bring their contracted brand of instruments for the surgeon to compare. Many times, this real-life comparison will allow the doctor to make the decision that your contracted vendor’s instruments are what they need for their patients. Of course, it also helps your budget that those instruments are covered under your instrument contract."

"The highest quality surgical instruments are made in Germany," explained Rudolph, and "many instrument vendors obtain their products from similar or sometimes even the same sources. If a surgeon has a specific request, for example a costly abdominal retractor system, this may be able to be supplied by several different instrument companies. Besides price, be familiar with the quality and warranty."

Look for "alternatives for non-critical patterns," he added. "Instrument patterns such as towel clamps and sponge forceps don’t necessarily need to be the highest quality. Since these instruments typically get lost or thrown away, it is an opportunity to substitute a step down in quality and reduce costs. These ‘non-physician preference items’ can be a middle grade or economy grade (Pakistan)."

"It is important to maintain accurate expectations of instrument utilization," Edelstein advised. "If you hear of new surgeons or new procedures coming to your facility, ensure you will be getting a strong ROI before filling an instrument ‘wish list’.

"Clearly identify which instruments do not impact surgeon satisfaction," he said. "Buy these from the low cost vendor as long as the quality provides an instrument which will hold up well. Being forced to replace instruments often will counter any benefit of reduced cost. Focus your cost comparison and evaluation on the higher cost items. These items will have the most effect on your surgeon satisfaction and your budget. 

"Use a vendor that will help you receive the most overall value on your instrument purchases: qualified product consultants and the resources to help you do cost comparisons quickly, effectively and in an organized manner," offered Edelstein. "Continue to compare cost. The higher cost specialty instruments present the greatest challenge but also will have the most impact on your bottom line. A good practice is to focus on the instruments which cost more than $100.00 and find a resource that can help you compare these items quickly and effectively. If a certain instrument or instrument vendor is preferred by a surgeon, it does not mean a lower cost alternative which will satisfy the surgeon, cannot be located."

"It is also helpful when a surgeon can justify the need and requirement for additional equipment," said Vacante. "If they really need a new piece of equipment, they will be able to detail the ‘why’ and ROI."

In addition, "work with your equipment manufacturers to determine ROI before making new instrument/equipment decisions," she recommended. "Be sure to factor in downstream revenue opportunities that may offset equipment expenses when new services are offered."

"It is important to plan ahead as well," said Parson, "making sure that the lease or financing term be set in sync with the upgrade path for new technology to support keeping technology current in the future. It also keeps the surgeons happy when they can count on a strategy that will keep them current and enable them to do their best in providing patient care."

"Strategically plan together on a proactive basis rather than react to demands as they come up," suggested Vacante. "Purchasing managers should communicate budgetary guidelines and limitations to the entire staff (RNs and doctors) so that input can be provided to the equipment committee. This helps promote an informed decision based on data. Full transparency into the reality of the budget available helps prioritize the needs over the wants."

Vendors described how new advancements have helped to improve quality of care, productivity and efficiencies as well as improve costs.

For example, according to John Barrett, vice president, sales & marketing, Havel’s Inc., "hospitals can save money by exploring the many lower priced surgical blades on the market. There have been technological improvements made to the manufacturing process in the last couple years, including computer honed edges and quality Swedish stainless steel or Swiss carbon Steel. It may be hard for surgeons to change, but paying 3 or 4 times as much for surgical blades is just not necessary anymore."

In addition to quality of care and efficiency gains with new minimally invasive surgical devices, Rudolph touted the benefits of "take-apart" instruments. "Several instrument patterns can now be disassembled for cleaning and processing. Take-apart laparoscopic instruments and Kerrison rongeurs are just two common examples now found in many hospitals. In addition to improved cleaning, there is also a cost reduction when repairs are needed. Because a laparoscopic instrument is modular and comes apart in pieces, a specific piece can be replaced instead of the entire instrument."

"The ability to properly clean instruments is one of the most focused-on cost improvements by hospitals, especially with the change in reimbursement for hospital-acquired infections," said Carruthers. "It’s important to select products that focus on making an instrument easy to clean. For instance, laparoscopic instruments should have a flush port on them to help ensure that they are properly cleaned before sterilization."