How to collaborate and work with physicians and internal teams on physician preference initiatives.

  Episode Introduction

Physician preference items, or physician-driven spend, is a significant driver of costs for a hospital. So if you want to optimize the hospital’s spend, you have to go directly to the source: physicians. The best way to increase your operating margins is by collaborating with the physicians to help them get what they need at the best price possible. 

 

Show Topics

• How to get support for your plan
• Show them the comparative market
• Offer the right information
• Go beyond benchmarking
• Listen to the physicians 
• Collaborate to gain confidence
• Switch up your strategy
• Help negotiations run smoothly
• Keep an eye on the details
• Deal with new products

 

2:32 – How to get support for your plan

Bryan said if you want to drive engagement in physician preference item initiatives, you must analyze the data, engage with the physician, and establish credibility with them.

“You need to have a clear picture of what's being used, what you're purchasing, how they're being used in the case. This could be time-consuming and slow the analysis down. I think this is the first area where working with a consultant who works in these initiatives frequently can really help speed this up, get an accurate analysis, and get your project going faster. The next area that's really important is physician engagement, and these all tie together because the data analysis is going to lead into the physician engagement. You need to establish credibility with accurate analysis and insight, provide clear data that's concise, and make sense to the physician. And then using both of those, the data analysis and the feedback from the physicians, to come up with a uniform strategy for engaging your vendor. You need to bring all this together so that you have support, not just from the physicians, but from C-suite and supply chain so that it's a uniform strategy that you're coming to the vendors with and everybody's engaged.”

 

6:08 – Show them the comparative market

Bryan said instead of focusing on benchmarking, you have to compare pricing with the comparative market.

“That’s how the physicians are looking at it. They don't understand that buying this skew with this femur, they understand this is the contract. This is the knee I’m buying. This is what it looks like. And when you pull that apart and look at it that way, you start to get other insights. You can have a great price on revisions, but when you start using those revision tibias in the primary cases, you could be adding $1,000 to $2,000 to your primary cases. And that's a much better discussion to have with physicians rather than benchmarking. They do want to see benchmarking and they want to see how they compare to the market, but they want to see that from the perspective of the constructs they're using. How does my case cost compare to the market? How does my case cost or my construct cost compare to the other physicians who are using different vendors at the same organization? And then what's my profitability look like on these cases? That's what they're interested in.”

 

8:13 – Offer the right information

Bryan said if you want to gain credibility with physicians, you have to give them clear and concise information.

“When you go into these meetings with the physicians to get support on your cost savings initiatives, you have to have your information properly put into a deck so they can understand it, so that they can support it. And bringing them insights so you can gain credibility. We were working with a client who had really excellent total knee and total hip pricing, and we were working on that engagement with the orthopedic surgeon. And even though the benchmarking data said they have very good pricing, when we dove into what they're actually using in the cases we found that the whole contract was negotiated with the assumption that they'd be using the patella in every total knee case. And this surgeon was never using a patella. So even though the benchmarking said they had excellent pricing, we were able to take that cost of the patella out of that construct cost, and then give them a pretty good reduction on these whole knees. That was a strategy that the physician had no awareness of how that contract is put together, what they're being charged, that he could get behind because it made sense.”

 

10:12 – Go beyond benchmarking

Lisa said instead of relying on benchmarking, you have to look at the real-life use of products to build trust with physicians.

“Of course benchmarking is important, but there's so much more to benchmarking. It really is this thinking, and you always say it, ‘Where's the money in this?’ Thinking about it differently. Typically there is cost takeout, or what's this contract about? And you're always about putting the pieces together, and I think that that's a big differentiator. Just line item, just benchmarking, and we love line items. We love looking at that analysis, but how you put the contract together, how you put the utilization together. What's the real life use? I think that's the difference. And like you said, it matters with those physician conversations, then you build trust. And then next time when you come to them and you're bringing something else, they're like, ‘Okay, well, this is a person I have respect for, I have a trust for.’ So they're looking at the data accurately.”

 

12:07 – Listen to the physicians 

Bryan said the way to make the most of your time is by really listening to the physician and collaborating with them.

“What I like to do is keep that presentation as short as possible. There's issues such as the patella that we talked about, expensive revisions in a case, billing issues that they're not aware of yet. Of course we're going to make them aware of those, but we're just going to show them high level, ‘Here's what you're using. Here's some ideas of different strategies that we could use to get you there.’ But then sit back and make the most of that time by really listening to the physician and collaborating, because we already know everything that the data's going to tell us. What we don't know is the information we're going to get from the physician. So we need to use that time to listen, to get as much insight as possible from the physician, to understand maybe why things were contracted the way they were in the past, what was happening previously, what's happening now, and then most importantly, what's happening in the future? It's going to do you no good to negotiate constructs if in four months that physician is going to be using a different femur or a different construct. We need to understand where they're headed, and that's where you get that information.”

 

15:04 – Collaborate to gain confidence

Bryan said good communication comes from having organized data and collaborating with the physician to understand their needs.

“Heading into that physician conversation, we definitely want communication. And that's communication from us having organized data, ensuring that we can answer any question that they have, and then collaboration with the physician to understand their needs current and future, to understand their comfortability with their vendor, what products they like, what products they don't like, how they feel about the initiative moving forward. Are they open to a potential change? Are they not open to a potential change? Are they going to support the initiative? Because they believe it's fair that supply chain is approaching the vendors with a market-driven, data-driven Bayer approach. And yeah, they're more likely to support that initiative. And that's the last point is confidence. Do they have confidence in the approach that's going to generate the outcome, that they'll put their weight behind it? And we need everyone to have confidence in the approach.”

 

15:59 – Switch up your strategy

Bryan said there isn’t a one-size-fits-all strategy for negotiating a contract. You have to look at the situation and figure out the best line of inquiry from there.

“There’s really not one strategy that fits all. It's really difficult to negotiate one contract for a PPI category and expect it to work for a number of different organizations, because everybody's in a different position. You could have one surgeon doing 80 percent of the volume at an individual standalone hospital. They use the same four constructs. They've used the same vendor for 15 years. That's a really different approach and strategy than coming into an IDN where you have hospitals that have been recently purchased, people who are new to the organization. You have 20 different surgeons or more using seven different vendors. It's a completely different approach. And even within the same vendors, they could be using vastly different levels of constructs for knee or hip or taking completely different approaches to correcting a spinal issue. That's why that communication and collaboration is so important to drive in that confidence, because you need to understand what everybody's position is and come up with a strategy that can work as best as it can for everybody involved.”

 

19:16 – Help negotiations run smoothly

Bryan said it’s important to put together a strategy beforehand because the goal is for negotiations to go as smoothly as possible.

“Sometimes when you do a capitated program, you make it really difficult on materials management, because now they have to completely convert all of these items to build in the material system these caps. And then you make it difficult on AP, because instead of having your system check the item master price of a single item versus what was purchased, now you have this case costs that have five or six items. And then who's responsible for checking to make sure that the cap that the vendor states they're billing you on is the actual cap that goes along with the items that are being supplied? So it can create a whole host of issues. So we always want to make sure that we're putting a strategy together that works for materials, that works for supply chain, that the physicians support, and that is completely backed by C-suite to make sure that the negotiations go as strongly as possible.”

 

21:44 – Keep an eye on the details

Bryan said you have to go through the proper channels and pay attention to the details, otherwise, important information could slip through the cracks.

“Once this category has been negotiated, it should go through the proper committees and channels. They should get the proper price applied to them and then added to the agreement to make sure they're in the system. But we do see that. We see hospitals that negotiate fantastic total joint contracts. And then I saw one recently where the vendor updated their item numbers and just completely caused a contracting disconnect between aligners for the knee, the poly inserts, and the contract price. And it doubled. And the hospital paid the double price for over a year, and they thought it was a new item, paid it, and added it to the agreement, but it was the same item, it just changed numbers. So obviously this item got added, came into the system at a higher price, and there really wasn't that process in place to question all these new items as they came in. So they just paid it.”

 

22:50 – Deal with new products

Bryan said there’s a whole wave of new products and innovations in healthcare equipment. But you have to look at these new products carefully to determine if they’re worth the price.

“We're seeing a whole wave of new products and innovation in pacemakers. CRM, new products coming in, differentiating themselves at much higher price points. So how are these getting contracted in? How are you deciding what to pay? They have new differentiating features. This takes collaboration again between the doctors and the team in supply chain purchasing and understanding what they do. Do they really provide a benefit versus what you're buying now? The reimbursement hasn't changed, so are the outcomes improving? Is it saving you money downstream with readmissions? Is it warranting this higher price point because of better outcomes? These are the conversations that successful programs are having, addressing new products and then making sure they're priced appropriately, rather than just deciding to order a new product and then the hospital paying and then just not addressing it until the contract comes up again in the cycle.”

 

You’ll Also Hear: 

• The three biggest challenges for hospitals starting their PPI initiatives:
  • Data analysis.
  • Physician engagement.
  • Managing vendor contracts.

• Understanding why data analysis becomes an obstacle to cost savings. ‘… it’s not getting a utilization report from the vendor, it’s going through your PO detail report. It’s pulling in bill only data, it’s pulling in reimbursement data and then categorizing the data.’’

• Why focusing on construct rather than benchmarking is the most effective way to engage physicians in cost awareness.

• The physician’s relationship with the vendor: why it matters and how to manage it.

• Uncovering hidden construct costs: the use case that revealed the contractual inclusion of unused patellae in every total knee case.

• The one tip to ensure thorough preparation for physician engagement. ‘’We have all of the data organized, cross labeled, and the subcategories. We can answer any question, we’re so prepared.’’
• The 3 Cs to ensure successful implementation of PPI strategies for cost management.
• The challenge of new item creep. ‘’We’re seeing a whole wave of new products and innovation in pacemakers CRM, new products coming in, differentiating themselves at much higher price points. How are these getting contracted in, how are you deciding what to pay?’’
• Don’t wait for contract renewal! Why healthcare organizations need to carry out quarterly analytics reviews on every single PPI category.

Show Links

Connect with Bryan

📱 https://www.linkedin.com/in/bryan-covert/

Connect with Lisa

📧 lmiller@viehealthcare.com

🖥  https://viehealthcare.com

📱 https://www.linkedin.com/in/lisamiller/

 

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