Physicians tend to get the supplies they want, even the most expensive brands, because no one wants to cause a squabble. Physicians attract patients to a hospital, and if using lower-priced brands were the only option, they might leave.

But that laissez-faire attitude seems to be fading as some hospitals double efforts to convince doctors to switch to lower-priced items.

Hospitals' financial impetus is clear. Prices for such big-ticket physician preference items as total hips, pacemakers and stents--all at $1,000 or more and rising--are sopping up hospitals' fixed reimbursements. When doctors use a high-end brand instead of a less costly one that is just as effective, experts say a hospital can lose tens of thousands of dollars a year on certain DRGs.

Getting physicians to switch is "like herding cats, but every hospital that is not going through it is on its way out of business," says David Reines, M.D., Inova Fairfax (Va.) Hospital, who has represented the administration in standardization efforts. "Why would you encourage a surgeon to operate when every time he operates you lose money?"

Standardizing is hard work because hospitals must sort through doctors' reasons not to do so, he says. Lower-priced products have slight differences that in some cases, make them less effective. When a doctor insists a high-end product is better, it can be hard to differentiate between fact and fancy because few objective studies on product effectiveness exist.

Even when a hospital has objective product data, usually from consultants, doctors may refuse to budge, Reines says. They may be responding to an influential colleague or because they want something in return for switching products.

Making a case

Like many hospital systems, Orlando (Fla.) Regional Healthcare System has pressing reasons for launching its first physician standardization effort, which should be completed by year's end.

In conjunction with a $200 million capital improvement campaign, Orlando Regional plans to cut $10 million from operations, half of which will be taken from supplies and pharmaceuticals.

Marc Westerman, corporate director of materials management, says Orlando Regional is looking at physician preference for cuts because most other supplies already have been scrutinized. But past physician standardization efforts weren't successful.

"We have not really pushed (physicians) before," he says. "We've pretty much given them what they wanted. This time, we decided that it was not worth it to do it so quickly."

Orlando Regional hired Cap Gemini Ernst & Young, a consulting firm based in New York, to work with senior administrators and physicians on a standardization committee.

Hospitals don't have many other areas left to cut, says Dan Piro, president of Aspen Healthcare Metrics, a standardization consulting company, Englewood, Colo. Labor is in short supply, capital projects are needed to relieve overcrowding and nonphysician items already have been cut, leaving 35 percent to 40 percent of the supply budget used for physician preference items.

Prices in this area have been escalating. Piro says cardiac and orthopedic implants typically now consume 50 percent to 75 percent of the total DRG payment, including the OR time and hospital stay; and a high-end product can swallow the entire DRG.

An implantable defibrillator costs $25,000 to $30,000 for a DRG payment of $30,000, and a high-end artificial hip actually exceeds its DRG by $300, he says.

Hips also are a good example of the squeeze on hospitals between price and DRG, says Scott Crandall, senior purchasing manager for orthopedic and spinal products, Novation, Irving, Texas. In the past five years, due to consolidation in the industry, the price for artificial hips and knees has been rising significantly while the Medicare DRG has fallen by six percent.

Hospitals that standardize not only reach lower prices, but also are eligible for percent-of-volume discounts that GPOs negotiate with vendors. To be eligible for Novation's discounts, which are in several stages, Crandall says hospitals have to commit anywhere from 25 percent to 95 percent of their purchases in the same category to one product. But because doctors usually insist on at least two or three choices, it's unlikely to get physician items into the 95 percent range.

Supplying compromise

Hospitals hire such consultants as Aspen because it takes a great deal of experience and intense preparation to standardize physician products successfully.

In return, consultants often promise savings in the six-digit range. Piro says Aspen guarantees savings of least three times its fee which, according to one Aspen client, is about $100,000 for six months of intensive work.

Crunching hospital data, Aspen consultants break down the DRG costs, showing where every penny is spent. They also share Aspen's product outcome data from previous client engagements. Also, Aspen officials frequently meet with doctors to address their concerns.

"You have to get physicians to the point where they're listening to the reality of the situation," Piro says. "If I can't nail down where the money is spent, then they've got an out."

Doctors definitely want this kind of detailed information, says Paul Taheri, M.D., chair of the operating room design group, University of Michigan Health System, Ann Arbor.

"You've got to explain how you arrived at this amount, and tell them things like the total number of cases involved," he says. "I would not want to be the administrator who says, 'This is the way it's going to be, thank you for coming, here is your coffee.'" If physicians aren't convinced, "it's not going to happen," he says.

Physicians understand the importance of saving hospital money, says Susan Kreiss, director of materials management, Hospital for Special Surgery, New York.

"Hospital staff can be afraid to go to the physicians and say, 'Doctor, we're going to get a product at a better price,'" she says. But when doctors are lobbied patiently, she says, "I have found them to be enthusiastic participants in the process."

Taheri advises hospitals to choose a few products with relatively high volume. "If you're using six cases a year of a product, the reality is, you shouldn't even waste my time," he says.

Piro says Aspen starts with 12 to 15 primary items, mostly in orthopedics and cardiology, and then moves to 30 or 50 secondary items with lower potential savings. If physicians object strenuously to a certain proposal, the item is dropped and the process moves forward.

Physicians may agree to use a lower-priced item in many cases, but insist some patients need a high-end product. Westerman says they need to write protocols for this decision which address the criteria for using a $2,000 pacemaker versus one that costs $4,000. Some medical specialty societies have developed protocols for certain products, he says.

For total hips, some orthopedic surgeons agree elderly patients receive lower-priced, low-impact hips, while younger, more athletic patients get high-end, high-demand hips. "You can't put the hip equivalent of a BMW into everybody," says Reines.

But the distinction remains controversial among doctors, and patients and their families. Kreiss recently took her elderly mother out of a hospital where a a high-demand hip was refused to her.

Standardization also can involve moving from disposable to reusable products for laparoscopic equipment or probes on pulse oximeters. Reusables are less expensive in the long run, but doctor approval is crucial because if the item is continually thrown out, the switch will be more expensive.

In negotiations with doctors, it's important the right hospital representatives are chosen. Westerman says involvement of upper management in his program will ensure that decisions stick. Because senior administrators were not involved in past efforts, it was easy for them to rescind decisions when physicians complained to them, he says.

It also helps to have clinicians present who can understand doctors' objections and gain their trust, says Barbara Neely, R.N., value analysis manager, Integris Health, Oklahoma City.

Dr. Feelgood

But as Neely can attest, discussions with doctors can get bogged down even with the best planning. Using intensive surveys and pilot studies with Integris' nonphysician staff, the number of brands of scrub brushes and exam gloves was reduced successfully, saving tens of thousands of dollars. But her discussions with physicians to standardize surgical drains, with potential savings of $50,000 a year, are still in the first stage after more than two months.

"There are strong physician preferences and they may have validity," Neely says. Doctors have come up with many objections--some drains have too little suction, some are not soft enough and others don't drain as quickly.

There is only so much she can do to convince doctors, says Neely. Then she relies on physician peer pressure, which is one of the most effective tools. When doctors are put in a room together and asked to make a decision, those who hold out are under enormous pressure.

Doctors seem to know some of their concerns don't have much merit. Kreiss recalled that at another hospital where she worked, the chief of cardio thoracic surgery insisted on using a particular glove. Shortly after he began working at a different hospital, she found out he agreed to use the brand he had opposed so adamantly at his previous job.

Doctors may withhold consent because they want a reward for switching, such as improved hospital services or more funding for their department. Taheri says these are legitimate concerns. "You want me to do something for you, but why was I sitting for 45 minutes because the OR was closed?"

Westerman says he wouldn't set aside money for special projects because it defeats the purpose of standardization.

But Piro says that special project funding still leaves money for the hospital and it should be an option if the alternative were to have no deal. Doctors may refuse to switch products out of loyalty to vendors and their hospital-based representatives, he says. Vendors have been known to pay doctors for speeches and articles and to secure jobs for physicians' sons.

"I've had physicians say to me that they love their rep more than the hospital," Piro says. Doctors encounter problems with the hospital bureaucracy every day, but reps work hard to make physicians feel special. "If physicians really support the hospital, then the vendor is likely to go along with the decision."

Physicians with ties to manufacturers need to be identified and removed from the decision-making process, Westerman says. They are required to sign disclosure forms, but they may not always do so, he says.

Physician standardization is a less than perfect process. "You can't totally standardize," Neely says. "You're always going to have one surgeon who is married to a product."

Leigh Page is a freelance writer based in Oak Park, Ill.

This article first appeared in the May 2002 issue of Materials Management in Health Care