By Linda Alter
A quarter-of-a-million-dollar savings on orthopedic implants is just one benefit of an innovative program implemented recently by 308-bed St. Alexius Medical Center in Bismarck, N.D. Maybe more significant is the nearly 100 percent physician participation in the program and the opportunity for even greater savings in the future.
The program – called the Clinical Advantage Program – was designed by St. Louis-based Amerinet to help healthcare providers save money on orthopedic and cardiology implants, such as spinal implants, total joints, stents, pacemakers and implantable defibrillators.
Bringing Stakeholders Together
The key to the Clinical Advantage Program is that it calls for providers to bring together key stakeholders – administrators, physicians and suppliers – to tackle the high cost of implants, which represent 40 percent of a hospital’s supply budget. Using data compiled by Amerinet staff, the team reviews the hospital’s implant usage and costs, and identifies areas in which direct cost-savings can be realized. Next, custom contracts are written with input from the suppliers. The entire process takes on average 120 days.
“It’s a custom contract program for high-dollar, high-usage implants,” says Karen Barrow, vice president of the Clinical Advantage Program for Amerinet. “For the program to be a success, a commitment from the corporate suite is needed as well as physician participation.” In fact, physicians drive the custom contracts, she adds.
John Schreier, director of purchasing, initiated the one-year-old program at St. Alexius. He believed that it would fit well with the organization’s ongoing efforts to save money on orthopedic implants.
“Early on we identified that orthopedics – specifically implants – was an area that we needed to study,” says Claudia Dietrich, director of surgical services and a member of the Clinical Advantage Program team.
St. Alexius was interested in looking at a patient’s entire stay, and then determining where costs could be cut without sacrificing the quality of patient care.
Physicians Onboard
The key to St. Alexius’ success was getting the surgeons to buy into the process. “You need to know the physicians and what’s important to them,” says Barrow.
Physicians want to contribute to a hospital’s success, say both Barrow and Schreier. However, in most settings, they do not have access to data about the cost of implants, pharmaceuticals, blood products or other supplies. But that’s not the case at St. Alexius.
As part of the Clinical Advantage team at St. Alexius, physicians received large amounts of data regarding the hospital’s costs and usage patterns as they relate to surgical implants. In fact, for more than a decade, St. Alexius has worked closely with and educated its physicians and clinical staff regarding costs.
“Over the years, we’ve made an attempt to educate the physician population here about the costs of products,” says Schreier. “We are very forthright with the surgeons, and not just the orthopedic surgeons – all of them. If they want to know what a widget costs, we tell them what a widget costs.” Because of this history and a good relationship with the surgeons, it was not difficult to get nearly 100 percent participation in the Clinical Advantage Program.
Suppliers Join the Team
“This go-around we wanted to take a little bit more in depth look at the whole patient stay,” says Schreier. The team was interested not only in the supply costs, but also the cost of pharmaceuticals, lab tests and length of stay. All this information was shared with the Clinical Advantage team.
The next step was to involve the suppliers. Amerinet provided the team with market research identifying vendors and their market share. The surgeons were asked to name the vendors with whom they worked as well as those they would be willing to work with. Those vendors, as well as other regional and national companies, were asked to attend a meeting at St. Alexius. There, they were given an overview of St. Alexius’s program as well as the hospital’s fiscal constraints caused by Medicare and insurance reimbursement.
“We wanted to partner with them to assist us in lowering our total costs of providing these procedures,” says Schreier. All the vendors were very professional, asked questions and offered their point-of-view, he says. “None of the vendors who were invited to meet with us stepped away from the opportunity.”
Amerinet and St. Alexius jointly crafted an RFP. Meanwhile, the physicians appointed a spokesperson or “champion” to speak on their behalf. This person shared information with all the surgeons, so that each one didn’t have to be contacted individually, each step of the way. The surgeons were asked to commit 80 percent of their procedures to the three vendors with whom St. Alexius would contract.
St. Alexius received discounts off of established list prices for two years with an option for a third. “In our first year, we are anticipating about a quarter of a million dollars in savings,” says Schreier. “Implants are where we saw dramatic cost reductions,” he adds.
For example, a femoral stem that previously cost $2,500 now costs $1,750, and a $450 acetabular cup now costs $395. Savings were also realized in the blood bank and pharmacy. The pharmacy staff worked with the surgeons to standardize antibiotics used during surgery.
With the contracts in place, Deitrich and her surgical services team provide day-to-day support for the physicians. “My role and my team’s role is interfacing with the physicians, continuing to bring awareness to the issues and working with the vendors,” she says.
What’s Next?
St. Alexius’s plans call for the Clinical Advantage team to get back together in the fall to review the success of the program. In addition, St. Alexius will expand the Clinical Advantage Program to the cardiology department.
Linda Alter is a writer for The MAX, the online supply chain community and national accounts database of U.S. Lifeline, an MDSI company. She can be reached at lalter@mdsi.org.