Moving beyond PPI, increasing cost savings

por Lauren Dubinsky, Senior Reporter | March 01, 2021
From the January/February 2021 issue of HealthCare Business News magazine

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.

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