Cost Containment Strategies for the Physician Owned Hospital
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Cost Containment for the Physician Owned Hospital is a practical guide outlining several simple and specific strategies for reducing costs for the Physician Owned Hospital.
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Cost Containment Strategies for the Physician Owned Hospital
- 5. How much $ is your hospital throwing away?
- 6. GPO MEMBERSHIP = DISCOUNTS
- 7. MAXIMIZE YOUR GPO MEMBERSHIP
- 9. GENERICS
- 12. GO GREEN WITH REUSABLES
- 14. THINK OUTSIDE THE BOX
- 16. MEDICAL WASTE
Editor's Notes
- My goal is for each person here to identify and write down at least one expense reduction strategy that they can implement as soon as they return home. I may ask you later which strategy you have chosen to implement. If you cannot identify at least one area of improvement for your facility, see me afterward, I would like to hire you for my consulting team
- It’s no secret that reimbursements are going down and expenses are going up. We have to narrow the gap between income and expenses. To survive in this economy it is essential to narrow this gap. The best way to narrow this gap is with cost-containment since there is not much you can do to increase Reimbursement rates.
- Notice I didn’t ask , if you throwing away money, but how much. You will see in this presentation that every hospital represented here can benefit from at least one of the strategies that will be presented. Let me tell you a story about a recent cost containment assignment my team and I recently had with a hospital and what we discovered. To protect their identity we will call this facility the Empty Pockets Hospital. Empty Pockets Hospital was not accessing all available GPO discounts (we will discuss GPO’s later) They were purchasing basic medical and surgical supplies from 30 different vendors . They were not utilizing available generic drugs and supplies Empty Pockets Hospital had departments that ordered supplies 1-3 times per day from the same vendor. They were throwing away many items that have reusable alternatives. Most of what they were throwing into red bags was not classified as medical waste at all and could go into the regular trash. They had pending lawsuits from patients, lots of staff turnover, and poor relationships with vendors . As we go through this presentation we will discuss specific strategies to address each of these areas.
- A GPO membership is much like a Triple A membership. Just like Triple A auto club gives discounts on travel, GPOs provide discounts on medical products and services.
- How many of you know who your GPO is? How many of you know the name of your GPO rep? Do you feel like your GPO rep is a valuable member of your team? EMN has yet to work with a facility that is taking advantage of all of the contracts and discounts available to them. This can be a very complicated, cumbersome, and time consuming task.
- Remember Empty Pockets Hospital ? They were purchasing common medical and surgical supplies from 30 different vendors . We advised them to consolidate as much as possible to their main medical supply distributor. This reduced administrative costs, shipping costs and overall hassle. There are only a few medical/surgical supply items that have to be purchased directly from the manufacturer. A good medical distributor will bring new items into their distribution system at the customer’s request. You can even get most if not all of your office and janitorial supplies from your primary medical distributor?
- Empty Pockets Hospital did not utilize all the generics available. Good examples of generics are Propofol instead of Diprivan, Ondansetron instead of Zofran, Glycopyrrolate instead of Robinul, Meperidine instead of Demerol. Also, be aware that most medical distributors and some GPO’s offer their own generic private labels for common items such as gloves, gauze, tape and bandages.
- Empty Pockets Hospital had departments that ordered supplies 1-3 times per day from the same vendor. We were able to reduce the ordering frequency to twice per week. It has been estimated that it costs between $50- $100 to produce a purchase order.
- Another advantage of Consolidation is a reduction in the number of purchase orders created. Other ways to reduce the amount of purchase orders: Implement a simple system in each department so everyone can communicate what supplies they need -Dry erase board or logbook works great. 2 . One primary person per department placing orders
- Empty Pockets Hospital was throwing away many items that have reusable alternatives. We converted them to Reusable, Autoclavable stainless steel bowls, cups and basins in the OR instead of disposables We demonstrated to them that cloth surgical gowns were economical and much cooler and more comfortable than paper. We directed them to manufacturers of autoclavable electrocautery pencils and tips, reusable electrocautery grounding cables.
- Just an example of thinking outside the box Empty Pockets Hospital asked me to advise them on the purchase of several monitors that they use for certain procedures.
- Does anyone know what this is ? S-Video output used to plug an endoscopic camera into. I go down to the local big box electronic store and find that you can purchase monitors with s-video outputs.
- In the example of Empty Pockets Hospital: Some of the medical waste containers were placed beside sinks, all paper towels were thrown into medical waste box. Check with your state. In general if an item contains less than 20cc’s of blood or body fluid it does not have to go into the medical waste.
- Empty Pockets Hospital was not as nice as they could have been to: Patients Staff Vendors And it costs them big-time in: Lawsuits from patients Staff turnover Uncooperative vendors
- Patients Studies have shown the most effective way to prevent law suites is to be nice to your patients. Nice Doctors don’t get sued as much. STAFF Each staff turn-over costs thousands. Hire slow/terminate fast Did you know that weather you are a garbage collector or a neurosurgeon #1 reason people leave a place of employment is the same. Does anyone know the number one reason a person leaves a place of employment? They don’t feel appreciated. Speaking of garbage collectors, an anesthesiologist friend told me something I will never forget, “If you really want to find out who is important, let the garbage men go on strike.” Retaining employees has less to do with compensation and more to do with appreciation . Repeat. I had the privilege of meeting a great business leader that was so good at showing his team respect and appreciation that they stuck it out with this great leader without a paycheck for several weeks until they recovered from a major set-back (Steven Scott promoter of the Total Gym). Vendors Being kind but firm gets you the best deals.
- How many of you use disposable patient scrubs for outpatient surgery procedures? I was observing patient flow at the Empty Pockets Hospital and observed something comical but very time-consuming and costly. Patient had outpatient plastic surgery and the recovery room nurse was trying to get a tight fitting sweater over the patient’s large bandaged head. The patient was groggy. Even though you instruct patients to were loose fitting clothes with a button up shirt, what do they show up in? A turtleneck sweater with a neck hole about this big. Better idea: Disposable patient scrubs Prevents bottlenecks in the recovery room.
- Would you purchase groceries without looking at the prices? Just by labeling the shelves at the Empty Pockets Hospital their expenses were reduced. These are just a few examples of cost containment strategies that can be easily implemented. Where you to pick out at least one strategy that you can incorporate or improve on at your hospital?