Vendor agreements offer cost savings for cardiac catheterization

Hospitals continue to search for ways to save money at the same time they provide their physicians and clinical staffs with the variety and quality of supplies needed to do their jobs. St. Joseph's Medical Center in Stockton, Calif. watched expenditures for its cath lab increase while its activity stabilized. They looked at their high-volume use of balloon catheters, says Gary Boyd, service director. At a cost of $600 to $700 apiece, it made sense to carefully manage their supply. Choosing a prime vendor was the first step in controlling inventory. Materials management, which had previously had a hands-off policy in the cath lab, took an active role in determining choices for this product. Through a lengthy selection process, medical center management and physicians reached a consensus for a single vendor. Having a prime vendor policy may increase the vendor's commitment to the hospital and provide added advantages. For St. Joseph's, selecting a prime vendor has better positioned the hospital to arrange for inventory to be stocked on consignment: the vendor owns the shelved supplies, which the hospital pays for only as they are used. However, some vendors may reduce their discounts when they enter into a consignment agreement. The best way is to get the maximum discount on the invoice price first, and then work with the vendor to manage inventories at the lowest level possible. Smaller facilities have less leverage and less flexibility, but they can often piggy-back onto large bargaining agreements by partnering with a larger institution.