SUCCESS STORY | Physician Preference Items
Intalere Member Yavapai Regional Medical Center Saves More than $850,000 on Physician Preference Items through Intalere’s Clinical Advantage Solution
Yavapai Regional Medical Center in Prescott, Ariz., a two-facility acute care hospital-based IDN, was faced with the realities that challenge many healthcare facilities today – ever-shrinking margins.
“We were looking at challenges in the organization related to reduced margins,” said Dorance Dillon, director of Supply Chain Management at Yavapai. “With our case mix, in essence 75 cents of every revenue dollar was coming through a combination of federal and state reimbursement. With that, facing continued shrinking margins, we needed to do something.”
Among their strategies, Yavapai worked with a consulting group to engage their entire organization in Lean process principles and more fully partnering with a group purchasing organization to drive cost savings. “We selected Intalere for reasons that involved attention to detail, supporting us operationally, and also from the standpoint of the identified savings that Intalere can and would provide,” said Dillon.
One of the biggest challenges Yavapai faced was in the area of physician preference items (PPI). Almost half of all the medical surgical supplies used in U.S. hospitals are physician preference items (PPIs), including devices and implants. Yavapai’s major areas of spend revolved around those including cardiac rhythm management, total joint reconstruction for hips and knees, spine hardware, bone products and trauma/fracture management implants.
Through their Intalere Clinical Advantage® program (ICAP), a proven strategy for reducing high-dollar implant costs while positively impacting clinical outcomes and physician support, Intalere immediately set about collecting data and conducting a market analysis. With hundreds of members across the country, Intalere was able to provide benchmarks and pricing information to bring context to the price points Yavapai was paying. Yavapai was then able to leverage this benchmarking and price point information to reduce their operational costs or direct pricing on the products.
Gaining physician support and buy-in is an absolutely critical piece to the success of any PPI project. Engaging and collaborating with physicians to develop key relationships supported through evidence-based outcomes is a foundational piece of the Intalere Clinical Advantage program.
“The ACAP team had the ability to engage our medical staff to obtain these price points and do that without offending any of our medical staff physicians,” said Dillon. “They presented the data and information while also explaining very specifically how they arrived at those numbers, including taking into account that Yavapai is in a rural setting.” Dillon and the physicians were also engaged by the way the information was presented to them. “They said these are real prices that you are entitled to. Go back to your vendors and share this.” Using this particular approach served to educate and enlighten the physicians, giving them comfort to understand that the process was not about forcing them to move away from certain products they might have been trained on or been comfortable with, but to support them and help work collaboratively to reduce the expenses associated with the products they used.
Yavapai was able to identify some quick wins and significant savings. In the cardiac rhythm management category, they were able to reduce expenses by 10-15 percent, a savings of $350,000. In the area of total joint replacement, savings was $500,000. “A cost reduction of up to 20 percent is quite significant and these are savings that have trickled right down to our bottom line,” said Dillon. “But just as important, it does not require the physicians to change what they are using and it did not change anything as it relates to the reps that support our organization.”
A key ingredient Dillon stressed is that while many organizations or potential partners can supply data, how you get from the page to the actual implementation is the true driver of success. It is paramount to have pricing transparency and subject matter experts that can interpret the data to your organization. What is the organization? Where are they? Where do they provide services? Factors such as these affect pricing within the market. “And I think that is where Intalere really shined,” he said. “In terms of their team understanding this organization, coming on site, meeting not only my team members and certain executives within the organization, but also being able to engage the physicians and surgeons where they live and being able to present a very compelling case.”
“Intalere has been a very good partner. They have guaranteed their savings,” said Dillon. “We still have other opportunities to work through, but I could absolutely state that Intalere has come through with flying colors to support what they said they would do.”