We asked nearly 100 outpatient facility managers for their top tips for successful supply cost containment. Here's what they had to say.

1 Shop around
If you haven't comparison-shopped lately, you may be paying too much.

"Diplomatically encourage physicians to demo lower-cost items and do blind comparison tests," says one Louisiana based nurse-manager. "For example, we did this with a 2.75mm implant knife and this resulted in a 75 percent decrease in our cost for this item."

"If your facility has the volume, and especially if you are dealing with specialty items, you have the influence to keep costs under control," says Erin Duffy, RN, director of OR services with the Ambulatory Surgery Center of Greater New York in the Bronx. "But you have to stay informed. A fully informed negotiator is very powerful."

Adds Larry Hand, BA, director of perioperative services with Mercy Medical Center in Mt. Shasta, Calif.: "Hold supply fairs. Show side-by-side equals. Display on large posters the savings you will realize by switching."

Several OR managers also recommend using other facilities' costs as benchmarks.

"They can't kill you for asking, and you would be surprised how receptive reps are in moving pricing in the direction you want. Just make sure you're comparing apples to apples, and meet only with the rep who can make decisions to cut your negotiation time down," says Ms. Duffy.

Apply this approach to your GPO by closely comparing supply prices and fees. "Price GPOs and ask if your prime vendors are on the GPO contract. And remember, this doesn't necessarily mean you'll get best pricing. Even if they say their pricing is best, make them show you," says Ann Geier, RN, MS, CNOR.

The experience of Noel Stannard, CPM, materials manager with Silicon Valley Surgery Center in Los Gatos, Calif., is a case in point. A recent evaluation of the center's GPO and an open bidding process resulted in an annual supply cost savings of nearly $100,000.

Two simple tips than can lead to big savings:

• Negotiate your way out of a GPO fee. Among our panelists who are GPO members, nearly half (48 percent) don't pay a GPO fee.

  Reduce or eliminate shipping and delivery charges. Forty percent of our panelists say they have negotiated to reduce or eliminate shipping/delivery fees through their GPOs or directly with vendors. Many pay delivery charges only for rush items, and some pay no shipping/delivery fees at all as long as they meet a quota.

"We chose our GPO because shipping fees were addressed in our contract and they do not charge for shipping. We are not very close to a large city and shipping costs were adding up very quickly," says Kathleen Byars, RN, nurse manager with Vision Surgery & Laser Center in Roseburg, Ore.

Adds Otto Griffin, vice president of materials management with Symbion Healthcare: "We reduced shipping costs by going direct to the vendor and complaining about shipments that came from several locations or multiple shipments just to complete a single order."

2 Track high-volume items
With knowledge comes negotiating power, and when you know where your supply dollars are going, you can much more effectively cut costs, say panelists. "You need to know what your biggest supply costs are, not only in terms of the highest-dollar items, but also in terms of your highest-volume and most frequently ordered items," says Ms. Geier.

Charlotte Austin, BSN, nurse manager with the Eye Surgery Center of Augusta, Ga., entered negotiations with her center's ophthalmic supplier to lower the cost of lenses based on usage, and ended up becoming one of the company's "centers of excellence," which resulted in usage-based rebates, including a 30 percent cost reduction on one lens alone.

Nancy Nix, RN, BSN, director of nursing with Spartanburg, S.C.-based Carolina Plastic Surgery, gave a list of frequently used supplies to a potential vendor. She didn't disclose her current costs but strongly suggested the vendor give her its bottom-dollar price. "This vendor came in lower than any vendor I had previously purchased from," she says.

Nearly all of our survey responders (95 percent) track high-tech/high-dollar items, but fewer (80 percent) track high-volume items (see "Percentage of Panelists Who Track Supply Costs" on page 29). It's also useful to track supply trends over time because this information, say panelists, will help you streamline inventory.

If you find you haven't used something in a six-month to 12-month period, ask about deleting it from inventory.

"We found we had only used nine Darvocet tablets in 18 months, and they were set to expire. In lieu of reordering, we presented the problem to our owner-surgeons and decided to delete that item from inventory and use alternatives," says Kathy Taylor, RN, director of nursing with the Lincoln Park Surgery Center in Kettering, Ohio. "The same thing happened with belladonna suppositories. All three owner-urologists felt we needed them in inventory when we opened, but they expired before any were used, over a 14-month period. We deleted them from inventory."

3 Tackle physician preference items
Research conducted by the Healthcare Financial Management Association shows that physician preference is the most significant barrier to reducing supply costs. Unfortunately, 35 percent of our panelists report that physician-preference items comprise one-third or more of their surgical supply budgets (see "Physician Preference Items" on page 29). This often presents a great challenge because physician loyalty to a rep and/or vendor can be strong. One panelist, in particular, notes that some companies spend significant time, effort and money enhancing rep-physician relationships.

Still, the simple fact that physician preference items may comprise such a large portion of the budget presents an opportunity to standardize. The key is to negotiate persistently and patiently with your surgeons. "It's hard to break through the allegiances physicians have to reps and products," says one Maryland-based nurse manager, "but you can do it with input, input and more input. If you can negotiate the buy-in of nurses and physicians, standardization goes much better. The best way to get them on board is to ask their opinions - and listen to their ideas."

Adds Dick Farr, OPA-C, CASC, director of the Outpatient Orthopedic Surgery Center in Statesboro, Ga.: "I got physicians to rethink why they do things, especially with draping, and got them to standardize drapes and use fewer without compromising sterility. Tradition can be hard to break with doctors, but it can be done."

Once you get your surgeons to try an alternate product, do everything you can to make sure product trials go well. "Make sure the first time the doctor uses the new item that everything that can be done to make it go smoothly is done," says Jeremy Williams with Georgia Bone & Joint in Cartersville, Ga. "For example, be sure the rep is there, the doctor has been briefed and the staff knows the ins and outs of the product."

This whole process may take time, but many say it is worth the effort because the cost savings are both direct and indirect. By keeping cost control on the minds of the OR team, you can slowly raise the overall cost-consciousness.

4 Get more on consignment
Our survey shows that facility managers typically pay for most of the disposables on their shelves, and only a minority consigns the bulk of their implant inventories (see "Portion of Disposables and Implants on Consignment" on page 33). This, says Ms. Geier, is an unnecessary cost to the facility.

"My rule is that I do not want to pay for any disposable supplies or implants. If you have been in operation for a while, you may be used to paying for these items, but it doesn't mean it has to stay this way. Go back and negotiate," she says. "Five years ago, many companies wouldn't consign. Today, 100 percent of my vendors consign every disposable and implant - from orthopedic implants and ear tubes to shavers and blades. This is huge in terms of cost control."

Implant consignment can be particularly beneficial because expensive implants may not move off the shelves very fast. "Implants plague us," says Debbie Kitchens, BSN, director of surgical services for Macon Northside Hospital in Macon, Ga. "They creep up on us every month and, this past month, were at 123 percent of budget."

Adds another Kentucky-based executive director of surgical services: "Implant costs are too high, and there are too many non-moving supplies on our shelves. I think it would be wise to work toward more consignment on non-moving items like vascular grafts, for one."

Implant consignment may also help satisfy some of your physician preferences without the cost burden, as long as you get the accompanying instruments on consignment, too. "Implants are difficult to standardize due to different surgeon preferences, so put all your implants on consignment," says Robin Cameron, assistant director of nursing with Newington, N.H.-based Northeast Surgical Care. "This saves your facility time and money."

5 Foster your own rep relationships
Many panelists stress the importance of fostering relationships with reps that are based on trust, respect and directness. For example, don't share one company's prices with another or create false invoices or stories to try to get lower prices. Tell a rep when you can get a better deal elsewhere, but keep specifics in confidence.

Lorie Butler, the materials manager at Dublin, Ohio-based Columbus Surgical Center, took that approach on her facility's sagittal saw blades and rasps; she got them on consignment and saved 10 percent to 15 percent.

Mr. Farr has found that this kind of honesty is the best policy. "You can be up front and simply state that a product's price is too high without fabricating information or divulging competitors' prices," he says. "My med/surg rep has gone to the manufacturer to secure lower prices, and he goes the extra mile to make sure I have what I need, when I need it, at the lowest possible cost. I attribute this to a good working relationship."

Still, don't kowtow to reps, say our panelists. Tell them exactly what you expect, hold them accountable and negotiate fairly. "Do not tell your favorite reps that they have the business, because they'll come in and quote whatever they want," warns Ms. Geier. "They must take you seriously."

Beverly G. Morris, BSN, director of clinical operations with the Tulsa, Okla.-based Memorial Surgery Center, says her I-mean-business approach reduced her hospital's procedure pack costs.

"I successfully changed manufacturers for our procedure packs, resulting in a 4 percent savings for the hospital. I met with the company reps to hear their proposals. I told them I would not make a change unless a certain percentage of cost savings would be realized. I refused to back off from this stated cost savings, and we went through several iterations of pack contents," says Ms. Morris. She continued to negotiate the price of the packs with other manufacturers during the change, involved key staff members in evaluating and recommending contents of the new packs and presented the information to the physician board regarding the cost savings, while providing samples of the proposed packs.

Another tip: Focus your efforts on those reps who can do you the most good. "I have built strong relationships with the manufacturer and device reps. My distributor rep only shows me the items that are most profitable for him, while the manufacturers' reps will assist in any conversion including in-services," says a Florida-based director of materials management.

Remember quality and safety
Finally, don't let cost supplant quality, patient safety or reliability. "If there isn't a less expensive product with the quality our patients deserve, we pay the price," says Dana Yocum, RN, BSN, CNOR, CASC, administrator with the Mid Rivers Surgery Center in St. Peters, Mo.

"Our centers are multi-specialty. We perform state-of-the-art surgical procedures that are very costly. I must standardize as much as I can, but each procedure brings its own challenges," adds a Florida-based director of clinical operations. "When suppliers know they have the only product that will be necessary, it is hard to negotiate. I find I must make decisions based on safety and not always on which product is most cost effective."