As healthcare costs have risen, medical supplies are taking larger pieces out of the budget for physician practices.
Fortunately, members of Children’s Health Network have access to group purchasing organizations (GPOs). GPOs cut supply costs, saving the US healthcare system over $36 billion each year.
CHN has partnered with Medline Industries to offer a savings cooperative to its members. John Kenny, VP of Physician Office Corporate Team, Medline Industries, explains how the cooperative works, and why it benefits CHN members.
Q: CHN is comprised of two groups of physicians: those employed directly by CHN, and those who are independent, but associated with CHN. Are group savings available to both groups?
John Kenny, VP of Physician Office Corporate Team, Medline Industries: Employed physicians do sometimes have access to greater savings, as they get to utilize the hospital’s leverage to get good contracts, higher volume of supplies at discounted rates, etc. It’s a little bit more difficult for independent physicians to get the same amount of savings, but they are absolutely able to get them through our program.
Q: How much can practices expect to save?
John: That’s a difficult question to answer, as each office has different needs. Today, physicians within an affiliate are paying wildly different prices for the same medical/surgical items. So, we begin with an analysis to start to see how much each office we can save.
We do guarantee that every practice will have at least a 7% savings, but it’s usually more than that — we normally see 15% to 20% or higher. And depending on how closely the office is monitoring supply costs, we have even seen some offices have 40% to 80% savings.
There are other ways to save a practice money as well, such as increasing lab reimbursements, savings on vaccines, and reduction in pricing for ancillary services (cell phones, copiers, computers, etc.) This program could potentially reduce costs in everything except labor and rent.
Q: That guaranteed 7% savings—is that for every item?
John: No, it’s an aggregate amount. Some items may be discounted more, some less. But in total, it will be a 7% savings.
Q: What types of supplies can physicians save on with the CHN/Medline partnership?
John: We provide savings on commodity items, like exam table paper and gloves. Anything that isn’t clinically sensitive, but could make a big difference in spending in the long run.
Q: Is there a way to save on clinically significant items through CHN’s group purchasing?
John: Yes, definitely. We have access to companies like Provista, who have national contracts on other medical items. So, if you want to buy a certain type of syringe, you can access a nationally negotiated price on product through Provista.
At Medline, we also make similar products. If you find them clinically acceptable, we can provide them at a lower cost, as well.
Q: What about savings on non-medical items, like supplies for the office?
John: We can help with that, too. We’re sort of the door — you come in, and we’ll help you save, or connect you with people who can. With contacts like Provista, we’ve been able to help physicians save on plenty of non-medical supplies, like shipping costs, cell phones, new computers for EMR systems, copiers — anything.
For example, one customer needed to purchase all new computers for the entire group. When connected with group purchasing, they saved over 55% — over $100,000.
Check with your representative before writing any check — even if you think it’s ridiculous, or has nothing to do with group purchasing.
Q: How is Medline able to provide so much in savings?
John: We make our products, we don’t just sell them — and savings are a lot better when they go directly from us to the consumer. Our products have become a leader in the healthcare market, from hospitals, to physician offices, to nursing homes.
Our exam gloves are an example of this — right now, we make 40% of the entire world’s exam gloves.
Q: Will savings stay the same throughout the cooperative, or will they continue to grow?
John: We start with minimum savings, but we’ll bring you as much as we can. As a privately held company, with no stockholders, we’re able to think long-term. We want you to be our costumer for 30 years. We’ll continue to drive value as long as you’re here.
Q: How does group purchasing impact patient care?
John: Group purchasing can make a significant contribution to improving patient care.
With the CHN/Medline cooperative, we focus on consistency and staying with patients through the entire continuum of care. This helps because there is more standardization of products.
The patient journey often involves going to several different locations, like a follow-up appointment or a rehabilitation center. Without standardization, they may be exposed to different types of products. And since different products can have different outcomes, the patient’s outcome can be unpredictable.
The goal of medicine and healthcare is to prevent bad outcomes, and not having patients come back with complications. Of course, there are many factors that go into it. But streamlining and standardizing supplies throughout the continuum helps physicians meet that goal.
Q: Why is it more important to participate in a GPO than ever before?
John: We’re very aware of how the healthcare landscape has been changing. Five to ten years ago, a GPO wouldn’t have been as necessary—it didn’t really make a difference how much supplies cost, and reimbursements were better. But today, things have changed.
It’s much harder for physicians to earn as much as they used to, and to maintain the quality of life they want. Saving has become more important than ever, and supplies are the low hanging fruit.
Q: Does Medline work directly with physicians, or with the administration?
John: Whenever possible, we love to work directly with physicians. It’s their money at the end of the day. That’s definitely easier with independent physicians, as they’re often the ones who want to make decisions about supplies.
It’s a little harder with employed physicians, since we usually work with administrators in bigger systems. But if we can, we really do enjoy working with physicians directly.
