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January 25, 2011

5 Keys to Successful Product Standardization in ASCs

Product standardization, an important facet of an ambulatory surgery center's supply chain and materials management, must be approached strategically and be carried out diligently.  Adam Higman, manager at Soyring Consulting, a healthcare solution company based in St. Petersburg, Fla., shares five keys to successful product standardization in ASCs.

1. Strategically set up a committee. 
"What you want are key physicians from each practice area to be that committee, the individual who handles materials management, and the individual that handles vendor contracts and negotiations, though the two may be carried out by one individual," Mr. Higman says.  "Usually, the committee should be comprised of individuals who are familiar with different products and the tactics needed to take on product standardization."

2. Analyze and find the biggest "spend" categories.
  Mr. Higman says once the ASC's committee determines those categories, the next crucial step is setting up goals for how to reduce the costs related to each category.  "When the committee comes together to find the biggest 'spend' categories, it's usually going to be rather clear-cut," says Mr. Higman.  "For example, implants are a huge 'spend' area [for orthopedics-driven ASCs], and then there are commodity items ASCs buy in greater volumes on a regular basis, such as gowns and procedure trays."

3. Consolidate or streamline products and vendors.  Mr. Higman says there is power in contract negotiations with vendors when your ASC promises a larger volume of cases, which can only be achieved when the ASC's physicians have agreed on a fewer number of products.  "For example, if you have four orthopods all using different vendors, your ASC is most likely not getting very great pricing.  If you can reduce the number of vendors down to one or two, you'll get better pricing because it's really all about volume," says Mr. Higman.  "New vendors are willing to reduce their prices as long as they obtain an increase in volume.  They are interested in how much money you will spend with them and, correspondingly, how much [business] they can get from your surgery center."

4. Continuously follow up with product standardization.  Mr. Higman says many surgery centers face this downfall.  The first step to ensure ongoing product standardization is electing one staff member to follow up with the process.  "That individual then needs to make sure invoicing for contracted products are all correct, rebate checks are being properly received, physicians are uniformly using the same products, and that everything a vendor promises is put down in writing," he says.  "The individual also needs to track all the transactions and provide updates to the rest of the center.  It's about setting up a culture and expectation that the road to savings is ongoing."

5. Maintain a high level of communication.  "ASCs need to absolutely keep physicians and staff members in the loop as they go through this process," Mr. Higman says.  "If the committee suggests using a new intraocular lens because it is going to reap huge savings, the committee needs to ensure that decision is being communicated to all affected surgeons.  Otherwise, you run into a common problem where the facility ends up operating in a vacuum because all the physicians are back to using different products."

For more information on these keys to success, read the full article from Becker's ASC Review.

Review our Cost Reduction and Supply Chain Management approaches to learn how Soyring can help your organization realize its product standardization potential or Contact Us with your specific issue.

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