How orthopedists helped Saint Luke's Health System cost-reduction initiative succeed

Practice Management

In 2013, Saint Luke's Health System in Kansas City, Mo., launched a novel cost-reduction initiative, which reduced its medical supply costs by more than $6 million, and orthopedic surgeons were instrumental to the success of the initiative.

The initiative relied on collaboration between supply chain managers and physician-led, evidence-based practice teams. Five orthopedic physicians joined with a materials management resource manager to create a value-analysis team. Efforts also were made to include orthopedists who did not participate directly on the VAT, but who were responsible for large numbers of procedures through individual meetings and phone calls.

 

The committee assessed cost information and usage patterns regarding medical devices. The physicians also reviewed available quality and performance information in comparison with a knee and hip registry developed in Australia.

 

Ultimately, physicians decided that Saint Luke's should establish flat, "fixed and final" rates for knees and hips, or prices the physicians collectively considered to be fair and reasonable, and then approach the prosthetic manufacturers about meeting the numbers. After meetings with vendors, only one company refused to lower its prices to meet the targets.

 

These efforts resulted in projected savings in orthopedic surgery increasing from a few hundred thousand dollars to approximately $2 million annually.

 

Saint Luke's expanded the value-analysis collaborative model across other specialties, and continues to do so.

More articles on practice management:

Top 10 specialties with highest physician burnout rates
10 recent orthopedic practice expansions & additions
14 reasons for physician burnout

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