Supply Chain Management

Trendsetter: Reimagining Physician Preference Items: Why Value—Not Cost—Is the Name of the Game

November 27, 2017 1:38 pm

It’s easy for hospital leaders to revert to pricing when considering ways to reduce costs. They may cast clinicians, particularly those who use high-cost implants and other surgical products, as being contrary to “organizational success” or “tone deaf” about financially sustainable clinical practices. However, handing out directives can quickly turn off key clinical audiences or cause them to become defensive if leadership tries to convince surgeons and other physicians to use less-expensive products without respect to the clinical care effects.

If leadership is serious about realizing savings within this area of spend, a shift in mind-set is required. Rather than looking at physicians as a barrier, decision-makers should approach clinical stakeholders as scientists who need accurate, reliable, and unbiased information to support quality and cost decisions. Instead of thinking that these items are based on clinicians’ preferences, the conversation should engage clinical staff from the outset when determining which options deliver the greatest value for patients. In essence, it comes down to rebranding how leaders think of these products and how physicians embrace these decisions. Instead of labeling essential surgical tools as physician preference items, organizations should think of them as high-value implants.

When leaders make this shift, they see how engaging clinicians in value-based decisions about products could ultimately benefit patients and be leveraged in negotiations to achieve optimal pricing. The move toward accountable care also creates incentives to redirect focus from the acquisition cost of implants to the total value created by using these products.

Embracing this shift, a large, mid-Atlantic, urban medical center tapped Premier Inc. to collaborate on developing a defined, value-focused methodology that optimizes the high-value implant-selection process. Premier and the medical center collaborated on a framework that enables informed decision-making, fostering the switch from a reactive, siloed effort to a data-driven, comparative value analysis process—which helped to determine the best options through the lens of cost, quality, and outcomes.

Determining the necessary data

To start, Premier engaged physicians about which information was critical in the decision-making process. “We pushed the reset button on this project to reimagine the approach in tackling high-value implants,” says Robin Czajka, RN, service line vice president of cost management at Premier. “This was a physician-driven program from the beginning, steeped in clinical data and insights. The input from key clinical stakeholders about goals, what kind of data would best inform their decisions, and what would generate buy-in from frontline physicians was crucial for this transformation.”

After the assessment, Premier delved into the medical center’s data about implant and equipment usage for devices and products used in total joint replacement, spinal, and trauma surgeries. “We leveraged our high-value implant advisory services and quality benchmarking capabilities to analyze items across quality, cost, and performance,” Czajka says. “With a robust amount of business and clinical intelligence, we drilled down to the service line and procedure levels between physicians and by vendor. Our goal was to deliver concrete data on these products, along with recommendations to revamp contracting strategy so physicians could readily decide which high-value implants would ultimately improve care and reduce costs.”

“Premier helped us launch this effort to identify key opportunities,” says Joel Turner, MD, a physician affiliated with the medical center and who has his own busy surgical practice. “The company’s data analysis and benchmarking capabilities gave us clear, easy-to-understand information that painted a detailed picture so we could pinpoint improvements and maximize value.”

Gaining physician buy-in

To achieve the needed results, the medical center incorporated surgeons into the review process. “You can’t just tell physicians you are making changes,” Turner says. “These are the end users, and if they are never given the chance to explore and test the equipment without giving feedback, then you’ve lost your audience, and they are less likely to participate going forward. By engaging this audience at the beginning, many of our physicians embraced the evidence-based data and were shocked how much we paid for certain products that had therapeutic alternatives. This data-driven process fostered a shift among physicians who willingly tested new products to determine which options ultimately benefited patients while reducing costs.”

Instead of putting out directives, the medical center’s leaders redirected the decision to the frontline physicians by offering evidence-based data and asking them to decide whether they would recommend the product—or not. “I think if we had pushed too hard, this could have back-fired,” Turner says. “As this process is scaled across additional service lines and procedures, we see increased physician investment. They now offer recommendations based on their clinical expertise without us having to prompt them. Bottom line, when the word spread, this was a pleasant, data-driven experience with physicians treated as decision-makers, and we were able to build on our success and expand the program.”

Measuring success

The process helped narrow options around a few evidence-based products for each procedure—allowing the medical center’s team to leverage volume when negotiating with vendors while providing flexibility for physician choice. “For example, instead of using eight different bone cements within the orthopedics department, we selected two vendors that offered multiple options,” Turner says. “This drove significant savings without negatively affecting quality or care delivery. We noticed when you convince physicians that quality won’t be compromised and practice patterns won’t drastically change, they are usually willing to try new things— especially if the organization is transparent about the value proposition. These efforts helped us achieve our goal to examine the highest-value products and leverage our decisions in securing the lowest price.” Turner estimates the efforts have generated around $3.5 million in savings.

Ensuring consistency over time

After the testing and contract-negotiation phases, Premier uploaded information about the preferred products and vendors within an automated technology platform to allow financial and supply-chain professionals easy access to the data. “This way, if the organization receives a purchase order that doesn’t match the agreed-upon price, it can quickly identify the problem and resolve the matter,” Czajka says. “While a tedious exercise, it’s the only way to ensure standardization across the board, establish an accurate pricing structure, and realize savings.”

Meanwhile, the medical center is sustaining momentum around this value-based product assessment process. “You don’t want to circumvent something that you developed to optimize quality and cost of care because this creates problems down the road—and it also sends a message to vendors that they’re above the established process,” Czajka says. “It’s crucial that all potential purchases go through this tested process and leaders engage in periodic audits—this increases accountability and is critical to the cost-management initiative’s long-term success.” To keep the medical center on track, Premier provides back-end auditing and improvement recommendations quarterly.

Setting the stage for value-based care

Establishing an infrastructure for selecting high-value implants may seem like a tactical exercise, but it creates a strong foundation for delivering results within value-based care models, including accountable care organizations and bundled payments. “By reframing this process to focus on value, the medical center can be confident that it has taken a step toward providing the best care to patients at the lowest cost,” Czajka says. “This prevents pure preference with an emphasis on pricing from becoming decision factors and leverages quality in the value equation.”

It takes a multifaceted approach

Large-scale healthcare transformation is not easy, but it is possible when healthcare organizations work together to solve problems, using effective tools, resources, and services. By collaborating with physicians and developing a data-driven decision-making infrastructure, Premier facilitates a reliable, value-drive methodology that guides the selection of physician preference items.


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