Surgery center recovered over $5,000 in rebates

Another $14,000 saved in careful negotiations

(Editor's note: This is the second part of a series on saving money in outpatient surgery. In last month's issue, we discussed some specific ideas about how to save with equipment and supplies. This month, we discuss contracts and cost control managers.)

Paying attention to details, knowing your contracts, standardizing supplies and equipment, and being willing to purchase large volumes from one vendor can result in significant savings for outpatient surgery programs.

When you use more than one vendor to provide items for a certain specialty, you can coordinate your negotiations to come up with the best price possible, says Darcy Thor, MBA, senior accountant at Harmony Ambulatory Surgery Center (ASC) in Fort Collins, CO. "We use two different vendors to provide our gastroenterology supplies and equipment, but I renegotiated our contracts with them, letting them know that they were both providing pricing, to see how I could get the best pricing," she says. Rather than switch all products to one of the vendors, Thor's efforts resulted in more favorable contracts with both vendors that will save the surgery center more than $14,000 per year.

Despite her success with the two vendors, standardization of supplies is still an essential element to controlling costs, says Thor. "I noticed that we stocked eight different types of nonsterile gloves in all different sizes, and I started asking people how many different types and sizes of gloves we really used," she says.

Her investigation found that many gloves were added one at a time to the inventory without making an overall evaluation of all gloves. After arranging demonstrations and trials of different gloves, Thor was able to reduce inventory to the silver nitrate gloves manufactured by one vendor. "We only saved 2 cents per glove for a total of $50 per month, but it simplified our inventory and demonstrated the importance of evaluating all products when you want to add something," she says.

She knew that VHA, a health care provider alliance in Irving, TX, awarded the surgery center a rebate on purchases, but Thor noticed that no check had been received for two quarters. "I found out that although VHA had sent our check to us directly in the past, a change in the rebate program meant that our check was sent to the hospital instead of us," Thor explains. It took her a few months, but she recovered three quarters' of rebates that had been sent to the hospital for a total of $5,517. Although the individual rebate checks were not huge, the rebates do add up to a significant amount of money for the surgery center, Thor says.

Maintain a close relationship with sales representatives who can alert you to potential savings, she advises. "I communicate with our pharmacy sales representative at least once a month to review our contract, changes in our purchases, and updates to prices," she says. During one conversation, the representative asked if she knew about the soon-to-be-released generic form of Zofran, she says. Although she didn't know about the timeframe for the generic, this conversation enabled Thor to switch her facility to the generic drug as soon as it was available, saving about $4,500 per quarter.

Last year Thor also was able to bring in an unexpected $3,500 from the sale of outdated equipment. "I don't recommend this as a way to make money, and I probably won't do it again," she says.

In previous years, outdated equipment and supplies that could not be turned in for credit were donated to a church mission in which a staff member was actively involved, but the nurse was no longer employed at the center. Thor worked with her group purchasing organization to identify a company that purchases used equipment. "I know that there are a lot of vendors who sell reconditioned equipment, so I assumed that there was a market for my equipment," she explains.

After several false starts with some companies, Thor finally found a company that would buy her equipment, but she warns that shipping was a "nightmare." It was difficult to find someone to pack and ship the equipment, Thor says. "I decided that the time I spent on this project wasn't justified by the money we received," she says. "Next time, I will find a charity that will accept the donation." [Editor's note: Recovered Medical Equipment for the Developing World (REMEDY), which links donors of medical equipment and supplies with charities, has evolved its AIRe-mail service into a web-based service named Med-Eq. For more information, go to www.med-eq.org.]