Six- to Seven-figure Savings Accrue to Systems That Involve Surgeons in Supply Chain Management

CORRelations staff regularly visits with leaders at efficient practices to learn about the innovations, modifications, or upgrades that have made big differences.

This week, CORRelations spoke with Kevin Shea, MD, Director of Sports Medicine and Assistant Surgeon in Chief For Quality and Supply Chain at Stanford Medicine Children’s Health. Though he’s in academics now, he previously spent 20 years in private practice, and is considered a national expert in supply chain efficiencies. CORRelations recently covered an article of his for the Fractures & Trauma section in which a game-theory based approach that he helped to lead resulted in 7-figure cost savings.

CORRelations: What’s been the biggest game-changer for your practice in the last year or two?

Kevin Shea, MD: The biggest game-changer has been physician involvement in supply chain management and decision-making.

Prior to COVID and the international disruptions to supply chains, many clinicians had very little insight into supply chain operations.  After COVID, many clinicians become aware of supply chains and the impact on clinical/operational efficiencies.  With regard to orthopaedic/surgical supply chains, national data sets are available in health systems to guide clinicians and supply chain leadership to identify appropriate targets that can increase value to patients. These data can help determine where clinicians are spending excessive amounts on medications, implants, disposables, and the like, and engage clinicians in cost-saving and value-creating partnerships.  Physician-led teams with content and care expertise can form effective partnerships with data-led supply chain teams to negotiate better contracts that are in the best interests of patients, clinicians, and health systems. 

Contracts with industry and vendors can be challenging for both the supply chain negotiation team and physicians. By working together, the supply chain and physicians can speak with a unified voice about contracts that are important to get the best outcomes for patients, and the lowest possible cost (or the best value).  Physician integration into supply chain decision-making is critical for success, and both physician and supply chain leaders learn from each other when this is done in the context of what I’d term “accountable care.” Accountable care means that you are responsible both for the quality of the care and the costs of that care. 

Health systems (both nonprofit and for-profit systems) that create an accountable care approach are better positioned to thrive into the future. Value-based selection committees are one approach that can incentivize the clinician teams that help do this work.

CORRelations: Why are you so excited about it?

Dr. Shea: Historically, health systems and supply chain teams struggled to form effective partnerships with clinicians. In the operating room, surgical supplies and implants are among the highest annual spending categories for most health systems.  Many health systems tried to dictate supply choices without involving physicians, leading to poor integration and a lack of trust. By using national datasets and local spending trends, clinicians can partner with supply chain teams to work together better, facilitating trusting relationships that are built to last.  

Engaging surgeons in supply chain decision-making can create a more efficient, cost-effective operating room environment with consistent supply availability, reduced complexity, lower costs, and reduced risks associated with poor inventory management. These programs can also simplify the sterilization processes, reduce OR preparation time, improve case efficiency, and increase value in ways patients will perceive it.

CORRelations: How has it worked out?

Dr. Shea: In many health systems, the total spend for orthopaedic surgical care and supplies is an 8- to 9-figure number annually.  Orthopaedic surgeons can acquire the supply chain knowledge and leadership skills to save $300,000 to $3 million annually in specific surgical cost areas such as total joints, spine, sports, orthobiologics, and trauma. Each of these domains offers efficiency of contracting and pricing. These savings can apply to nonprofit systems, ambulatory surgery centers, and physician-owned specialty hospitals.

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