DOING BUSINESS


the name-brand implants. They might even be almost indistinguishable from the name-brand items but offered at prices discounted 50 percent or more. Surgeons typically need an incentive


Successfully negotiating prices entirely independent of list price requires ASCs to take the time to gain an in-depth understanding of what the prices should be and setting cap prices appropriately.”


—Tim Burney, Advantien


agement. They understand—and some- times try to exploit—the disconnect that can exist between the surgeons and the ASC’s purchasing experts when sur- geons are largely unaware of the costs of the products they use. That leaves mate- rials managers in a difficult position. It is their job to get the best pricing possi- ble, but they do not want to prevent sur- geons from using what they want. To successfully overcome this chal-


lenge, you must be able to tell rep- resentatives exactly why the pricing needs to be lower. You must explain how their products compare to similar products currently used at your facility and know how to counter their inevi- table argument that their product is dif- ferent/better and deserving of a higher price. You might also need to be able to provide the same technical explanation to the surgeons who work at the ASC to gain their support. Simply demand- ing a bigger discount will not be as effective as providing the technical and clinical rationale for why the product needs a particular price point.


20 ASC FOCUS APRIL 2016


Surgeons often have the knowledge needed to be your technical/clinical expert and assist with vendor negotia- tions, but they often lack the time or desire to get involved with pricing. Show your surgeons a simple table that compares supplier prices for like items, and ask them to at least sup- port getting the outliers to the lowest common denominator. Seeking the guidance of third-party implant man- agement experts can augment your in- house knowledge; just make sure that the third party has the product exper- tise for your facility’s specific implants.


Value-Based Alternatives Meaningful savings can be achieved from existing vendors by understand- ing and navigating the tactics described above. An even greater level of savings can be realized with value-based or lower cost suppliers. Hundreds of companies have FDA clearance to sell their spine and ortho- pedic implants in the US. Most of these implants are as safe and effective as


to make such a switch. Surgeon owners of an ASC tend to be the most recep- tive due to the inherent financial align- ment. Even then, convincing surgeons to make a change from the representa- tives and products they are comfortable using will require providing them with alternative and lower cost products that meet or exceed their clinical and tech- nical requirements, as well as quantify- ing the improved profitability that will result from the switch. Substituting value-based implants for


just one or two implant types can have a dramatic impact on an ASC’s bottom line, while preserving surgeons’ pre- ferred representatives and products for their remaining utilization. For example, polyetheretherketone (PEEK) interbody cages are one of the least differentiated categories of spinal fusion implants. Substituting value-based PEEK while retaining the surgeon’s preferred “metal” representative might save 10–25 percent of the implant cost for a spinal fusion.


Knowledge is Power There are many ways to reduce implant costs, but maximizing savings and prof- its requires navigating the sales tactics of the device companies and, perhaps most crucially, leveraging or acquiring an inti- mate understanding of the technical and clinical aspects of the implants. Given how much of an ASC’s expenses spine and orthopedic implants may represent, it is well worth the effort to acquire and leverage the product-specific expertise needed to maximize implant value.


Tim Burney is the chief executive officer and founding partner of Advantien in Greenwood Village, Colorado. Write him at tburney@advantien.com.


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