Moving beyond PPI, increasing cost savings

March 01, 2021
by Lauren Dubinsky, Senior Reporter
Some hospitals try to recruit high-volume surgeons by promising them the medical products of their choice, but that often comes at a cost.

“This is one of the major internal conflicts that hospitals need to reconcile in order to implement standardization programs to reduce waste and unnecessary variation,” Dr. Jimmy Chung, associate vice president of preoperative portfolio at Providence St. Joseph Health, said at the Association for Health Care Resource & Materials Management (AHRMM) virtual meeting.

These products, commonly referred to as physician preference items (PPI), represent a relatively broad category that can include implants, instruments, capital equipment, pharmaceuticals and any other products that physicians and clinicians request.

Supply chains can account for 30% to 40% of a hospital’s expenses and PPIs account for somewhere between 50% to 60% of that, according to Chung. On top of that, this category is usually the most difficult for supply chain leaders to manage.

“Waste and unnecessary variation leads to inefficiency, medical errors and excessive costs,” explained Chung. “Hospitals should stop promising choices based on preference when recruiting physicians and instead focus on quality, efficiency and evidenced-based practices.”

He recommended that supply chain professionals should focus on standardization because it is an effective way to reduce waste and variation.

BJC HealthCare in Saint Louis has been working to reduce variation for about nine years now. To achieve that, the health system fostered collaborative and productive relationships between its clinicians and supply chain professionals.

“We try to discuss the beneficial effect we have on errors and on efficiency when we reduce that variation,” said Dr. Bruce Hall, vice president and chief quality officer at the health system.

He added that over this time, his organization has drastically reduced the number of vendors it deals with.

They first established baseline expectations for performance and expenses. After that, they worked to educate their physicians on the need for evidence to support purchasing decisions and the importance of keeping the number of suppliers low.

Ochsner Health System in Jefferson, Louisiana took a unique approach when purchasing drug-eluting stents in the cath lab.

There are four major manufacturers of these devices. The health system has clinical comparative evidence that suggests there is no clinical difference between the devices.

However, due to their physicians’ different training and backgrounds, their preferences for the devices vary widely.

Dr. Christopher J. White, medical director of value based care at the health system, and his team conducted an evidence-based search using a library tool called LumiR. They gathered the information and disseminated it to about 58 of their cardiologists.

They then polled individual cardiologists and asked them to rank their preferences. The data revealed that there was no consensus favorite.

But when they were shown this data, 57 of them agreed that 90% of the time they will go with the best price from a single vendor. The other 10% of the time, a physician could select a specific device if needed.

“I let my supply chain guys make the best deal they could,” said White. “That worked, and we put our preferred vendor on the shelves.”

His team monitored utilization out of the cath lab quarterly and if someone fell below the 90% level, then the preferred device was the only thing offered to that cath lab until they achieved that 90%. As a result, they experienced “significant savings.”

“This is a partnership and I think for many years, physicians assumed that they weren’t necessarily part of the big picture, but the more you engage your clinicians [and] be transparent, we’ve actually found that physicians are very interested,” said Dr. Christopher Kwolek, co-chair of perioperative products and the technology steering committee at Partners HealthCare.

Getting buy-in and engagement from physicians also proved to be especially important during the COVID-19 pandemic. In White’s case, the crisis necessitated vendor consolidation and while his organization was able to avoid furloughs and pay cuts, this consolidation was still taxing for its physicians.

“[We were] asking for more commitment than we normally would, asking for more give than we normally would get,” White said. “This was expensive and we needed to find ways to save, and this was [their] contribution to Oschner getting on the other side of this COVID challenge.”

He said this process yielded very positive results.

“We saw cooperation and actually bottom-up ideas about better ways to save,” said White. “It was a very gratifying two or three months there in the summer when we would see everybody pulling each other up.”