Why meaningful data for the orthopaedic trauma service line is key for today’s supply chain teams to make more informed purchasing decisions.
Sponsored- Stryker – September- 2024 – The Journal of Healthcare Contracting
By 2030, one in six people in the world will be aged 60 or older, according to the World Health Organization (WHO). This aging population is more susceptible to fractures and other musculoskeletal injuries.
Fortunately, advancements in technology and surgical techniques have made orthopaedic trauma devices safer and more effective in treating patients whether they are older or have suffered injuries from traffic-related accidents or through physical activity. Devices include implants such as plates, screws, rods, and external fixation to stabilize and immobilize fractures. New materials and designs are more biocompatible to better withstand the forces generated by the musculoskeletal system.
“Traumatic orthopaedic injuries can threaten a patient with loss of life, limb or functional impairment,” said Stephanie Falconer, RN, Manager, Strategic Marketing for Stryker Trauma. “These injuries are often associated with long-term care that can incur significant costs.”
Indeed, the care can also be costly for health systems if they don’t have the visibility into spending patterns, product utilization, waste and efficiencies to drive standardization and savings. Better visibility will lead to an actionable plan for contracting and purchasing decisions in the orthopaedic trauma service line.
“Quality and safety record, supplier reliability, cost effectiveness and clinical compatibility are critical keys to consider when sourcing,” Falconer said. But navigating various surgeon specialties, product preferences and supplier portfolios without access to reliable, actionable data is difficult.
Inventory management, supply chain visualization and data analytics are the top three areas in which orthopaedic device companies plan to invest in, according to a LogiMed industry research study. These areas of investment can translate into a more effective supply chain and inventory management that helps lower operating costs, reduce capital expenses, eliminate waste and improve patient outcomes.
Virtua Health’s orthopaedic excellence
One health system that has prioritized its supply chain infrastructure is Virtua Health, an academic nonprofit healthcare system in southern New Jersey. Virtua operates a network of hospitals, surgery centers and physician practices. It is South Jersey’s largest healthcare provider, and uses Stryker as a preferred vendor for orthopaedic trauma.
Virtua Health’s orthopaedic and spine department has over 60 specialists treating unexpected injuries, back pain, joint problems and other issues, and it has been recognized for excellence by U.S. News & World Report.
Virtua Health aims to be clinically integrated through all its service lines, from leadership to supply chain, with its strategic sourcing and procurement team and its clinical materials resource management team leading the way. They partner with physicians to help bridge the gap between clinical interests and business aspects.
“We act as the liaison and promote the evidence-based value analysis we’re finding and provide data to help make product selections,” said Christina Bobco, Department Manager of Clinical Materials Resource Management for Virtua Health. “We seek to understand what the market share looks like and what are the next innovations.”
Bobco’s team provides clinical benchmarking data that Virtua Health has invested into the strategic sourcing and procurement team, led by its director Michele Walker, to help determine pricing, standardizations and contract compliance.
This includes data for the orthopaedic trauma category.
“The vast cost of trauma and our spend plays a large part,” Walker said. “It’s important because of market share, which contracts are usually dependent upon. We must track market share and stay within the parameters of our contracts. The health system has incorporated some analytics/ business applications to track our market share. ”
Walker says Virtua Health looks at its current spend and market share, and reviews products with its orthopaedic services product committee, in the case of orthopaedic trauma, and gets feedback from physicians, supply chain and other leadership within the OR.
“Then we decide if we’re sending an RFP or doing a benchmark for pricing and negotiating with vendors individually,” she said.
Virtua’s physicians are asked to lead initiatives based on utilization to help move the needle with leadership when there is a potential market share issue.
“It’s a shared partnership between clinical and supply chain, and physicians have to be on board,” Bobco said. Her team also consists of many clinical RNs. Critical conversations between clinicians and vendors Virtua Health produce better patient outcomes, she says.
“Communication also plays a large part,” Walker added. “There are more items in the orthopaedic trauma category than in other categories and communication with vendors is critical.”
Having the opportunity to negotiate beyond GPO pricing in the trauma space is important, according to Walker. “Not everyone is as standardized as we are,” she said. “We have two major players in basic trauma which account for over 80% of the market share, and we have some niche items.”
“So much goes into standardization,” Bobco added. “If you don’t have a physician relationship or people to give you clinical feedback, they’re going to choose the items they’re used to. We value those relationships.”
Greater insights
Most supply chain departments struggle with data and analytics. There’s been a tremendous focus in the last five years to improve this, whether it’s through ERPs, financial system upgrades or bolt-on solutions from third-party vendors.
Indeed, data and analytics is becoming the way to get to the granular detail needed to make better decisions. “The struggle has always been the validity of that data, because it’s subjective to how things are documented at the encounter,” said Ana Sanchez, Vice President of Supply Chain & Support Services for Virtua Health. “We’re all chasing it. The challenge is, how to get the true accuracy of consumption, because it is subjective to a clinician entering in information.”
If supply chain teams have the granularity of how complex the cases are, the credibility with clinicians is higher because they can show how the information is compiled and sliced. For instance, analytics can show that Dr. A’s trauma cases are primarily car accidents and not a slip-and-fall type of older patient, so, you’re not generalizing the cases in your discussions with clinicians. There is a myriad of factors that could justify why one procedure would be $10,000 and the other would be $20,000. “Today, oftentimes it’s all just bundled together because you don’t have that dissection of the data to keep drilling down to why it’s different,” Sanchez said.
“That’s the end of that spectrum,” said Walker. “If you find out that there really is not a difference in the two procedures, but there is a large cost difference in the two procedures, it can be presented to the physicians to show them that maybe there’s a less costly way to perform the procedure.”
Ten years ago, health system supply chains were completely dependent on what vendors said their consumption was, down to the physician and patient type, because financial systems were not talking to clinical systems, Sanchez said. “Very few people had the resources to marry it up, and because the way the reimbursement worked, you weren’t worried; the more that something cost, the more you got paid back.”
That’s no longer the case. Now providers are told how much they’re going to get paid for these cases, so they are working backwards to figure out what the supply cost needs to be to maintain a margin or just break even. “Hospitals work at a 1% net after if you’re lucky,” she said. “Right now, most hospitals are working at a loss.”
Today, systems analytics and applications have been developed, and hospital systems have hired analysts to mine the data. The silos between electronic medical records and the financial systems have continued to drive a lot of this mystification of the data, but there is more crossover between the two, Sanchez said. And that can only lead to lower costs and better outcomes.
“Whether it’s trauma or any other service line, the data gathered by supply chain teams will hopefully drive some further conversations about pricing and how the model works overall.”
Stryker’s Alliance Program
To help health systems break down those silos and gain greater visibility in the orthopaedic trauma category, Stryker introduced Alliance – a trauma and extremities value program that provides meaningful data to help hospital supply chains make more informed, more confident purchasing decisions.
With more items available in the orthopaedic trauma category than in other categories, supply chains must make purchasing decisions while navigating surgeon specialties, product preferences and supplier portfolios.
Access to the right data to make decisions is a challenge. Alliance filters, compares and analyzes critical data to help make those decisions and reduce costs for hospitals and provide better outcomes for patients.
“Visibility into the trauma and extremities service line can help with predictive spending, cost analysis and efficiencies around inventory management,” Falconer explained. “Optimization is important for maximizing resources and ensuring that the surgeon and patient have what they need.”
Stryker’s Alliance Program helps health systems unlock value through increased visibility to trauma utilization data and programs and solutions that drive standardization, promote efficiencies and maximize contract and operational performance.
Learn more at Alliancecanhelp.com
Pain Points
The biggest pain points for hospitals in the orthopaedic trauma category include:
- Multiple vendors
- Lack of standardization
- Inventory management
- Cost