What to Expect from Your Supplier: A Conversation with Peggy Camp, BSN, MSN
Tue Mar 29 13:00:31 CDT 2016
Peggy Camp knows the importance of clinical integration within hospitals’ strategic sourcing efforts. A retired perioperative nurse with more than 50 years’ experience, she was the division clinical resource director for Hospital Corporation of America (HCA) Healthcare. Responsible for supply chain savings initiatives at 11 hospitals in her division, Camp oversaw the conversion and standardization of products under new contracts negotiated by Hospital Purchasing Group/HCA. She worked closely with suppliers and negotiated locally on contracts to obtain better pricing. She participated in monthly facility Supply Management Action Team meetings to communicate new agreements, provide feedback on facility compliance, and address administration concerns on product changes that affected HSA facilities. She frequently met with key stakeholders (clinical specialists, physicians, department directors) in each facility to obtain their support for changes that were to be implemented. Peggy has published and spoken extensively on supply chain opportunities and challenges.
We recently chatted with Peggy about the challenges hospitals face in standardizing products while maintaining quality patient care. Here, she shares what suppliers must do today to earn their business.
- They understand where your hospital network (and each of its facilities) fall on the demographic, financial and payer continuum.
There are two realities today based on where a hospital is located, the population it serves and what kinds of payments it receives. Hospitals in states or regions where the revenue stream is primarily Medicare, Medicaid or self-pay focus more on cutting costs and are motivated to standardize their products. In hospitals that primarily serve those covered by private insurers in a managed care/self-pay setting, there’s less pressure to standardize.
- They understand how physician preference items affect sourcing decisions.
Physicians’ product preferences (and hospitals’ desire to retain physicians) can make the standardization of high-tech items difficult. Doctors who bring a high volume of cases to a facility will more likely to have his or her product requests fulfilled. Originally, the expectation was that once a physician sold his practice to a hospital network, that doctor would be more compliant with the hospital’s standardized product. However this expectation hasn’t become reality. The physician’s preference, the amount of cases they bring to the hospital and the revenue these cases generate determine what products a hospital buys and how they’re utilized. At HCA’s Florida facilities, we standardized on one supplier for a drug-eluting stent. Doctors at these facilities either adapted to the change or moved on. In HCA’s Denver division, there was more physician resistance to standardizing that product.
- They have a demonstrated compliance portfolio.
One product that HCA considered for standardization was a trauma implant. The company with the less expensive product had not prepared a full compliance portfolio, so it was rejected.
- They document and present clinical evidence.
As a hospital moves from the easier standardization purchases of commodity items to high technology products, it’s often difficult to purchase just one high tech product in a category. That’s where clinical evidence comes in. Is Company A’s clinical evidence better than Company B? Company C? What supports the evidence presented by each? HCA looks to its suppliers for proof of clinical outcomes. Is the new product a look-alike, or is there something clinically different that would justify the additional cost? If the cost is $1,000 more, the decision will not be as critical; however, if we’re spending $50,000 we have to understand the data that would justify the extra money. Solid clinical evidence will help hospitals make better decisions.
- They research and demonstrate utilization. They support inventory reduction. They know that time is money.
HCA considers how easy the product is to use, and what percentage of the time it’s being used. We’ve focused a lot of our supply chain efforts in the operating room. What is the cost of inventory? How often does inventory move? What can be standardized? How much inventory is too much? If there are three products, can we get rid of two?
One of the things HCA looks at in the OR is how the packaging, selection and opening of instruments and device packages affect turnover time. Suppliers need to demonstrate that 90 percent of the products contained in their multiple-item surgical kits are being used 90 percent of time by all surgeons.
Suppliers can educate clinicians on the importance of opening only what is needed for that case. If suppliers make sure preference cards are complete for the procedure, nurses will only open only what is needed. Suppliers can also support inventory reduction by working with managers to survey the OR after each procedure to determine what remains unopened/unused.
- They understand operating and profit margins.
These days, hospitals must examine all ways to operate efficiently. In the past, we looked mostly at how many cases doctors could support. Now we look at the cost of each procedure. Say, for example, that Dr. Brown has $500 in supply costs for a certain procedure. What’s involved in that $500? Meanwhile, Dr. Smith’s supply costs are $700. What did each use in terms of their particular facility and procedure? What are the commonalities and differences?
- They engage the hospital’s clinicians, resource directors and division directors.
At HCA, suppliers educate clinical resource directors as a group, so everyone hears same thing. If we’re sourcing two competing products, both suppliers present their story. After this meeting, suppliers set up education programs within each division in the facility. The facility’s clinical resource director needs to know where things stand in the partnership. Therefore, it’s important to meet regularly to assess product utilization and pricing, schedule education or training, and address compliance issues.
- They offer educational tools and programs to facilitate product adoption.
Because new technology always requires a learning curve, it’s important for suppliers to continually update clinicians on new products and procedures. If an influential clinician is not educated on how to use the new product, their opinion may cause the product conversion to fail. Printed information and on-demand video seminars are effective tools that clinicians can access any time, anywhere. One company HCA works with offered a video for nurses on a new procedure, followed by a knowledge quiz to test their retention.
- They partner with the supply chain managers.
To increase savings and standardize more products, HCA’s senior management works closely with its supply chain managers. Every facility has a monthly supply management meeting that includes the CMO, CFO, CFO and all those who have high supply costs: the clinical resource director, pharmacy director, director of OR, head of interventional radiology, catheterization lab director. This team reviews savings generated, pending product conversions and new contracts.
Success of any new product conversion depends on the supplier having a facility champion. What are the expectations for your contract at a facility level? Is it a sole source agreement or facility source agreement? If the product is exciting and you have clinical evidence, suppliers will have a better response. Why is it special? Why is it easy to use?
- They make the conversion easy.
If a supplier is part of the hospital’s conversion effort to standardize one of his company’s products, that supplier needs provide the hospital with a cross-reference document that includes all competing products. HCA assigns standard SKU’s, derived from manufacturers’ numbers, for every product it uses. Suppliers with a nearby warehouse / service center can ensure compliance by making products easier and faster to deliver.