With the impact of Physician Preference Items (PPI) on total supply chain costs ranging anywhere from 40-60 percent, independent, community-based hospitals have begun working with physicians to dramatically change the way that these items are evaluated and purchased. Achieving system value without sacrificing quality of care requires a mixture of standardization and utilization with pricing strategies that optimize both financial and operational performance. One of the most exciting ways to achieve these goals is through standardization of medical device contracts.
Case in point, TPC has developed a Spinal Implants program within our portfolio of custom agreements that provides pricing consistency for clinically equivalent products, and maximizes standardization of contractual terms and conditions across all suppliers awarded a contract by TPC.
Before the introduction of this new Spinal Implant program, TPC reviewed the landscape of the many agreements already in place – with nearly two dozen suppliers – only to find a wide variance in pricing and terms across the membership, even within individual Member agreements with the same supplier. These contracts were generally negotiated at the local level and, in some cases, contracts didn’t exist at all. It was clear that TPC had the opportunity to leverage our unity and buying power to provide a level playing field between our suppliers and for our Members.
Standardizing across the membership is not easy. It was necessary for all stakeholder groups to invest in providing input into the initiative to achieve success. This translated to multidisciplinary collaboration between TPC and Member senior leadership, supply chain, clinicians, and physicians. Through this collaboration, TPC 1) acquired broad acceptance of RFP requirements by all major suppliers within the category, 2) instituted price leveling for like products across suppliers, 3) standardized terms and conditions, and 4) achieved savings of $3.5M without sacrificing product quality and while maintaining choice of supplier for physicians.
Through national market knowledge and direct communication with suppliers, TPC was able to reinforce the cohesiveness of our Member group, resulting in increased product portfolio strength, and continued clinical engagement.
This is just one shining example of how independent, community-based health care systems can remain independent while leveraging large system strength to protect reputations and secure better costs. The use of highly targeted metrics for CQO (cost, quality, outcomes), provides TPC with unparalleled insight into how we can use our purchasing power to create superior results. Our documented successes are a direct result of a balanced approach and the thoughtful deliberation of our Member leaders in initiative consensus building.
Stronger Together. Superior Results. To learn more about what TPC offers, visit: https://www.tpc1.com/supply-chain/