Standardization isn’t always the best supply-chain solution

Regarding “Hospitals have an unrealized $25.4 billion supply chain opportunity” (ModernHealthcare. com, Oct. 18), I have been preaching this for years. Yes, collaboration is the key, but standardization at the cost of physician preference (and sometimes patient outcomes) is not completely necessary.

While it is a good approach to standardize, many hospitals are unsuccessful in achieving 100% standardization because surgeons do not want to relinquish implants and instruments they are comfortable with (and some do not want to relinquish their vendor rep relationships).

The way to consistently achieve these savings is through initial cost reduction of all implants (referred to in supply chain as “all play”) at a fixed price as well as ongoing spend management of the category using software to screen invoices coming out of the operating room for correct pricing and compliance with contract terms. This transactional data is transformed into analytics that can be used by surgeons, supply-chain staff and executives to identify additional savings opportunities.

Hospitals rush into this category, either with their group purchasing organizations or other consultants, on promises of big savings. You need to understand your payer mix and reimbursements first to ensure that your revenue will not be negatively impacted and then you need a technology-enabled solution—not spreadsheets. Richard Palarea Co-founder and CEO Kermit Lutherville, Md.