Part 2: Endomechanical Sourcing Tips for Healthcare Supply Chain
Part 1 of our endomechanical sourcing series looked at the market and challenges of endomechanical sourcing. In Part 2, we continue our conversation with industry veteran, Randolph Williams. He’s spent a career in the endo space and now shares practical advice for healthcare sourcing teams working on these challenging contracts.
Endomechanical Sourcing Conversion? First Step Is Cross-Reference
Anytime you tackle a conversion from one endo device manufacturer or supplier to another, one of Supply Chain’s first steps is to cross-reference the products, making sure there's a like-for-like match. “Medtronic and Ethicon are the only two companies with complete cross references,” noted Williams.
Compliance and standardization will be even harder as more players come out. Although Supply Chain could look at it as more players means competition, that might not really be the case. “In most cases, they're not players who will be able to convert 80 to 90% of your business. There's still only the two - Medtronic and Ethicon,” Williams noted.
Build a Strong Team of Endomechanical Stakeholders
Endo is usually considered a PPI product category with two main players, leaving Supply Chain without a lot of choices. Plus, the biggest players in any industry, including endomechanical, don’t have to be the best negotiators. That underdog position stresses the need for winning stakeholder support to go with any conversion.
“You’ve got to be buttoned up,” Williams declared. “To be successful, you need the ear and commitment of your surgeons and C-Level leaders. If surgeons aren't bought in, an endomechanical sourcing initiative will not succeed.”
Stakeholders in endomechanical sourcing include these executive-level roles:
- Surgeons - Bariatric, Colorectal, Gyn, General Sections
- Vice President - Operating Room
- Vice President - Sourcing/Supply Chain
Success Depends on Leadership
For many hospitals, elective procedures are critical to revenue, and losses from missed rebates don’t help. Sourcing success depends on how willing the C-Suite is to let someone potentially take away rebate revenue by impeding endomechanical contracts related to their procedures.
Sometimes surgeons resist the change you’re trying to make. Sometimes it’s nurses or scrub techs who crush a conversion. To launch an endomechanical conversion, the C-Suite and Supply Chain must lock arms to handle naysayers.
Weekly Progress Meetings a Must
Supply chain must build a core conversion team of stakeholders to define success and monitor progress weekly. Weekly progress meetings should include the supplier team (reps and leaders), SCM, the executive C-Suite, and key surgeons.
The health system’s distribution partners play a key role in the transition from a supply standpoint. Distribution ensures product is available during the trial and maintains ongoing conversion supply. Nothing would be worse than completing a successful trial, and then once conversion happens, backorders destroy credibility and results.
“They must keep on it every week to monitor progress and handle every problem that comes up. Whether it's a scrub tech, a nurse, a unit manager – everyone in that process is getting held to it. They can get fed up and shoot holes in it,” Williams declared. “But you can overcome that if you have a core team of all the stakeholders that defines success, monitors progress, handles problems, and has a strong C-suite commitment.”
Understand Your Corporate Agreements
For successful collaborations, It’s essential that stakeholders understand your corporate agreements with endomechanical suppliers. The healthcare supply chain will know what kinds of corporate agreements they have and the effects on endo sourcing.
“When I was at US surgical, my job was putting corporate agreements together, big agreements that tied in Vessel Sealing and Suture and Endomechanical and Covidien. We tied in diapers and band-aids. We tied everything in. The more you use, the more rebate you get,” he declared.
Maintain a United Front to Maintain Pricing
A lot of SKUs, products, and other things figure in the conversion mix. “A surgeon could see a new grasper from a company that only does graspers, and he wants it. One surgeon wanting that particular product can affect your compliance, which can affect your pricing,” he explained.
“You need a good supply chain to say ‘Doc, we'll let you try it, but can we at least see if our current supplier (likely Medtronic or Ethicon) or whomever has a similar device before you do that? Because it could affect our compliance.”
“They need to be united to handle that surgeon who says they’re leaving if they can’t use a specific device. That happens all the time.”
Define Success in Order to Reach It
Success means whatever criteria the core team comes up with – compliance satisfaction, fewer SKUs. It depends on what’s realistic for your market. Success can be a myriad of things, but you've got to define it, and you certainly have to monitor it. Otherwise how do you know when you're done with the conversion?
How should you define success when it comes to endo sourcing? For some hospitals, that means specifying the number of surgeons who use the devices, and then, is that group converting? That’s what the stakeholder team will need to watch, according to Williams.
“Say there's 10 surgeons. Defining success means we get nine or eight of them. We might let the one go, but for the ones who don't want the conversion products, we let them know it's going to cost more. A good executive team will negotiate: ‘Hey, I know you've been looking for a scrub tech, but we can't afford it. And if you use that device, we can’t afford your new scrub tech.’
That's the kind of trade-off Supply Chain and their allies can use for negotiating endo contracts and compliance with surgeons.
Defining the Timeline of Success
Another part of the definition of sourcing success is meeting a conversion timeline. The conversion needs an endpoint to not continually disrupt the OR with reps, new products, or something else. Maybe the time limit gets defined as a pilot.
For example, during said pilot, a hospital aims to get 90% of the surgeons converted within two months. (This requires monitoring physician and facility usage data.) The next success factor after converting could be to make sure nurses and techs are trained; the distributor has enough product on the shelf; or if you self-distribute, ensuring there's enough product in-house. There are still a lot of logistical pieces after the pilot moves into conversion to make sure you're all set up.
A healthcare system will never be done sourcing endomechanical devices as long as patients need them. Maintaining a level of success requires ongoing commitment, monitoring, and keeping up with technology advancements. Still, in defining success for a specific conversion or contract, an endpoint is still required.
Compelling Revenue Impact Can’t Be Ignored
A successful conversion might sound challenging if not impossible, but it’s definitely worth it because of the financial impact. Success can mean a lot of dollars to health systems that spend several million or more a year on endo. It adds up, and it can get even greater with Vessel Sealing tied in.
Still have questions about endomechanical sourcing? Let’s connect and have a conversation about them.