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  • Writer's pictureL. Pearce McCarty, III MD, MBA

Preference Card Optimization 201: Surgical Supply Cost Containment – Part I



 

The Cost Crunch

Per KaufmanHall’s January 2023 report, with national hospital profitability in 2022 down 21% YoY:


Profitability



And supply expenses up 18% since 2019:


Expense



In my last post, Preference Card Optimization 101: The Basics we learned what a preference card is, so now let’s get busy leveraging it to reduce cost! But how? What are some practical ways to leverage preference cards in your institution to reduce surgical supply costs?


 

Cost reduction strategies involving preference cards can be conceptualized using three interdependent tiers as illustrated by the “Preference Card Optimization Pyramid”.




Preference Card Optimization Pyramid




The simplest strategy, and the foundation upon which the others rest – Tier I – is engagement of surgeons in effective preference card review that includes supply and implant cost transparency.


Furthermore, as we move up the optimization pyramid, the complexity and magnitude of effort of the strategy implemented increases significantly, but the cost savings opportunity increases proportionally!


We will return to the complexity and effort problems later, demonstrating the efficacy of a digital tool as a force multiplier.


In my next post we will take a detailed look at Tier I: Surgeon Review and Increased Price Transparency and asked the question: Does it work?




 

Dr. McCarty is a practicing orthopedic surgeon in Minneapolis, MN, former team physician for the Minnesota Twins, Fuqua alum, healthcare leader and entrepreneur.



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