PPI Value Analysis and Standardization Success Through Vendor Partnering: A Case Study of Hernia Mesh Savings and Quality Improvement at Thomas Jefferson University Hospital

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Miller, Susan G.1 MN, RN, CMRP and Bourque, Megan2 PhD

 

 1Thomas Jefferson University Hospital, Philadelphia, PA

2Cornerstone Research Group, Burlington, ON


Why Standardization was Important

At Thomas Jefferson University Hospital (TJU), reducing supply costs is an organizational imperative. Standardizing product lines to one vendor is just one way in which TJU is tackling increasing supply costs, and limiting excessive spending. TJU is a 950 bed facility in Philadelphia, with 57 operating rooms spread across 4 distinct buildings. With 30 different departments, and various surgical specialties, there are requests for over 500 new products and medical devices each year, generating a surgical wish list that is simply not economically feasible. A multidisciplinary team of individuals undertook the process of standardizing hernia mesh products, in an effort to address the growing number of SKUs associated with this product class. These products represented a good opportunity for standardization as a result of escalating costs, variability in product choice, and a lack of evidence to support the use of one product over another.

At TJU, the cost of hernia mesh products was on the rise; with the annual spend nearly doubling over the course of just under two years. The main supplier of biologic grafts drove the majority of the hernia mesh spend, and was steadily increasing their cost and promoting the use of larger, more expensive, biologic grafts. Here at TJU, we had the metrics to demonstrate the rising cost of mesh and the budget implications of this cost, which got the attention of both physicians and administrators. Before standardization, there were 8 suppliers of hernia mesh products at TJU, a large variability in product selection, and an annual mesh spend of over 1.8 million dollars.

Becoming “EnMESHed”

The goal of the standardization initiative was to achieve the best possible clinical outcome while spending no more than necessary. To achieve this goal took our multidisciplinary team 13 months to complete. The final success could be attributed to the approach, which was different from our three prior attempts to reduce variation in this category. The use of tools to support the need for standardization, and monitor its success, was crucial. TJU tracked and analyzed which mesh products were used for 1 year, and the clinical outcomes associated with mesh use. Additionally, the representation of surgeons and OR personnel on the standardization team helped to ensure that all interests were represented. The successful initiative was the collaborative effort of this team, which included myself, Susan Miller (Director of Value Analysis), as well as Mike Profeta (Perioperative Nurse Manager), Monica Young (VP of Perioperative Services), Kelli McRory Thomas (Senior Contract Manager), and Dr. Ernest Rosato (surgeon champion). It was essential to have a reputable and committed surgeon champion on this team, to promote the standardization initiative and lend credibility with other surgeons. Our team met weekly to achieve the common goal of ensuring optimal product value.

In the initial stages of the standardization process, the products which represented an opportunity for cost-savings were identified. After hernia mesh products were selected, baseline data for 1 year was collected on when these products were used, which products were selected, who was using them, and what clinical outcomes were obtained (recurrences, surgical site occurrences, and readmissions). This information was essential for the monitoring and comparison of outcomes before and after standardization. Additionally, familiarity with the decision making process of surgeons was important in ensuring that any evidence-based selection criteria were considered in the process. It became clear that there was inconsistency in the rationale behind the mesh selection process, and that there was no clear evidence supporting the use of one vender over another.

Separate proposals for synthetic and biologic mesh products were requested from the main suppliers of hernia mesh, with the expectation that each vendor would offer their best price, and provide evidence to support their product line. These submissions were processed, and the surgeon champion collaborated with the committee to review each proposal. The evidence was sifted through objectively. Unfortunately there were little head-to-head clinical data available to compare hernia mesh products offered by different vendors, so the best available evidence supporting each product was assessed. The best and final offers were analyzed to determine the value of each supplier, which was a function of quality and cost.

Selecting a Partner Vendor

The best evidence available was provided by the vendors, and was used to select products that would result in favorable clinical outcomes and provide value to the organization. The mesh options were broken down into categories; synthetic, porcine, or human. Based on the literature review conducted in the initial stages of the standardization initiative, and on the data provided by vendors, when there was little evidence to suggest any significant advantage of one product over another within any given category and when there is no clear evidence to support one product versus another, the decision becomes more heavily weighted on cost. In considering the cost of standardizing with each vendor, not only were the absolute product costs considered, but also any additional value elements offered. BARD (C. R. Bard-Davol Inc, Warwick, RI) offered products in each mesh category evaluated, providing the option of full standardization. The goal at the onset of the initiative was to standardize 100% of biologics to one vendor, and 85% of synthetics to one vendor. Partnering with BARD allowed both biologics and synthetics to be standardized with one vendor. As added value, BARD has been a market leader in surgical mesh for years, and this partnership comes with an intrinsic degree of confidence, because they are being used widely with success and trusted across the country. A standardization agreement was struck between BARD and TJU as a result of this added value and reasonable product costs.

TJU began standardization on October 16, 2013; a drop dead date. On that date, products from vendors other than BARD were removed from the shelves, and no requests for other hernia mesh products were accepted. This facilitated a clean switch, and ensured that all surgeons and OR personnel were following the new guidelines for consistent product use. At the onset of standardization, the partner vendor provided information binders, product cross-reference charts, training sessions, and monitoring charts, to ensure that all surgeons were familiar with the new product line and comfortable utilizing BARD® hernia mesh products. These efforts played a role in facilitating a smooth transition.

The End Result

The hernia mesh standardization initiative began at TJU in October, 2013. The facility is currently on track to save over 1.5 million dollars in three years, in supply costs alone. In the first year, TJU saved over $600,000. Savings associated with efficiencies were not tracked, but standardization may have saved money as a result of improved inventory management, reduced product wastage, less training and education time on multiple product lines, and ease of contract management and product ordering. With respect to variability, standardization reduced the number of hernia mesh vendors at TJU from 8 to 3, with BARD being the predominant supplier. The other two suppliers offer niche products that are not provided by the partner vendor, and are utilized at a low volume. These carve outs to the standardization agreement represent a small proportion of the hernia mesh usage at TJU. In addition to reducing the number of hernia mesh suppliers, the process of standardization helped to provide more clear guidelines as to when to appropriately use each type of mesh. Prior to standardization, surgeons at TJU used biologic grafts 37% of the time. After standardization, and with the advent of newer synthetic mesh products, such as Phasix®, this was reduced to 20%. This suggests that having criteria for the appropriate use of mesh products helped encourage consistency in mesh selection, and avoid excessive use of costly biologic grafts.

For a medical device to be considered valuable, it has to be effective as well as economical. Clinical outcomes were monitored throughout the standardization process, for one year after surgery. Clinical outcomes were maintained at a high level after the switch, with no significant changes detected. Any outcomes that were raised by surgeons as possible objections were tracked, as were outcomes that could have reimbursement implications. This was an important part of the effort, to help to ease any fears, and sustain the change over time by preventing surgeons from reverting back to their original mesh preferences based on a false sense of clinically superior outcomes.

Standardization led to an enhanced and collaborative relationship between TJU and the partner vendor, as both parties share a clear final objective. Communication about new BARD products that may be useful is more fluid, and as a result TJU is already in the process of reviewing a newer BARD product, XenMatrix® AB, which is the only antibiotic-coated biologic graft available on the market. In much the same way, TJU has evaluated and implemented the use of the fully absorbable Phasix® mesh offered by the partner vendor. Using this product significantly reduced the number of costly biologic meshes being used, saving an additional $115,000 in 2014, above and beyond the savings associated with standardization. This significant cost avoidance stems from the fact that each patient who is treated with Phasix® mesh would have previously been treated with a biologic graft, a product with a much higher cost.

As a result of standardization, the BARD sales rep involved in the process, Chris Nunciato was free to focus on the communication of information, the supply of knowledge, and product support, without the perception of promotion. This change of outlook helped the physician to focus on choosing the right product for each patient, and increased the level of trust in the advice provided by BARD. In the standardization of hernia mesh products at TJU, the support offered by the partner vendor was considered crucial to the success of the initiative. Nunciato offered in-services to educate surgeons and OR personnel on BARD products, provided weekly case reports of mesh usage and outcomes, outfitted each OR with product information binders, techniques guides, and product cross-reference charts, and was consistently available to answer questions.

What Challenges May Be Faced, and How Can They Be Overcome?

The most significant challenge that the team at TJU faced throughout the standardization process was resistance from surgeons. There were a few surgeons with strong preferences for specific mesh products, without evidence-based rationale. This was addressed by encouraging discussions about the evidence available to support each product, and the cost implications of each decision, including device costs and reimbursement amounts. It was important to communicate to surgeons that reimbursement rates are fixed for each procedure code, and that costly devices are not reimbursed differentially than more affordable ones. As a learning point, TJU noted that it was important to keep surgeons apprised of the standardization process and vendor considerations.

Despite the challenges they faced, the standardization team at TJU continues to undertake these initiatives. The “standardization” time slot allotted for the initiative has been maintained each week, and other product classes are continually being considered and evaluated in much the same way as hernia mesh. The standardization process at TJU has proven to be a reproducible and successful process.

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