Hello, this is Nick Hopper, Director of Commercial Operations for Novus Healthcare Solutions. Today, we're going to talk about supplier contracts and relationships. This will go along with the purchasing of your DME programs at your practice, evaluating areas from a cost as well as overhead standpoint and how this can affect your DME program as a whole. Learning objectives related to supplier contracts and relationships includes discovering strategies for your practice when selecting a vendor that will supply your DME products, discover GPOs or group purchasing organizations and how to get started for your practice, examine shipping terms, impacts to your DME program, and lastly, learn about purchasing rebates with vendors and possible strategies to implement for your practice. Strategies in selecting a vendor is a key component for your DME program and your practice. One area is just review a vendor catalog of products, ensure that they have the supplies that your providers have protocol for the care of the patients within your practice, obtain pricing for those items, take a look at a group purchasing organization, maybe you're affiliated with one today, examples include Vizient, Premier, or possibly it's an area to get involved in, or possibly just a local discount with that vendor as well. Sometimes this is advantageous for your practice. Word on your shipping terms from the vendor, for example, maybe from a select vendor you get free ground shipping for any orders over $500 or more. What are those shipping terms? Is that another area that can be negotiated or adjusted as your purchasing volume increases? Local sales representative support, you should have those contacts, if not, you can make those contacts, typically they are available on the website of that vendor as well. Do look at quarterly business reviews, you should have those with vendors, whether it's from a purchasing standpoint, where you kind of stand, and can go along with rebates, possibly hit a certain threshold of purchasing, typically over an annual basis, but can be adjusted depending on the vendor, and are there rebate options in conjunction with that GPO, valuation establishment, or possibly a local discount as well. GPOs, what are they, and how do you utilize them? From a definition standpoint, GPOs, or group purchasing organizations, are an entity that helps healthcare providers save money by negotiating discounts with vendors, and really what this is looking at is bulk purchasing across healthcare practices to help optimize the purchasing as well as help with some single source vendor providing as well. The essence of this is helps healthcare providers save money by negotiating discounts with vendors for medical devices, that includes the cost of the items, at times the shipping terms, as well as even can affect some rebate processes as well. This does help aggregate the purchasing volume of healthcare providers, such as practices that we're speaking of as well. This do operate under a vendor-based administrative fee model, and do not keep rebates, rebates would be based off of your practice and rebated back to your practice as a whole. Typically, we see about a 10 to 18% savings on cost by utilizing GPOs once you get past those administrative fees that go along with that. The good thing is these GPOs will negotiate the prices for those healthcare providers as a whole. It kind of takes that negotiation away, but once again, an evaluation point for your practice and evaluating maybe a local coverage discount through that vendor versus this kind of more so national GPO area. Shipping terms, do evaluate those per vendor. Maybe it's a free or discounted shipping, I gave you the example of free ground shipping for orders over 750. One area that at times is deficiency with working with practice throughout the country is that practice doesn't know what their shipping terms are per for every vendor that they do order from. I'm sure you do have that information. One area, review your ambulatory age, your canes, crutches, walkers, those types of device, and there's a negotiated shipping discount. The reason why I bring this up is those items are often shipped in bulk, whether it's four walkers to a case or eight crutches to a case or six to eight canes per case as well, and tend to have pretty high shipping charges. Ensure you have shipping terms that go along with that, maybe criteria met to maybe decrease some of that overhead expense, particularly the ambulatory aids. Do review your invoices for shipping charges. They are an overhead expense, sometimes overlooked and can really affect the profitability of your items. One area to really avoid in today's day and age of shipping charges, avoid any type of overnight, any type of expedited shipping to your practice that can double, triple, or even more from a cost standpoint, cause a lot of overhead expense for your practice that can be avoid, and once again, can affect the profitability of that item you're dispensing. Senior DME program, what these are are negotiated rebates of vendors, can be an integral part of cost savings, and typically it's based off of a purchasing threshold, and looks at year over year growth in purchasing, and allows a certain percentage of a rebate back to your practice as well. They can vary, are typically negotiable, and once again, typically a one-year agreement, particularly from a DME aspect. It is recommended to request that this be incorporated at least one yearly business review with the vendor so that you do understand that. It is best to get some type of quarterly update on how you are progressing with that, and this can go along with the goals of vendor consolidation, product consolidation, according to a certain vendor to really optimize those rebates. Now once again, rebates don't have to be established with every DME vendor, sometimes really concentrating on whether it's a local discount or a GPO, being aligned with can be more advantageous than a rebate, but one area to certainly evaluate with your negotiations with a vendor. Summary, regarding supplier contracts and relationships with vendors, have defined strategies in selecting a vendor for your DME program, and this is ever-changing, ensuring that you have good local representation from that vendor is a key, and utilizing those resources as needed from a pricing and supplying standpoint is key. Utilize your practice's GPO alignments for vendor pricing negotiations, or maybe utilizing the vendor to get to a more advantageous GPO for your practice as well is a good strategy. Let's ensure you understand the shipping terms for a vendor and possibly negotiate these terms. At times, those will be defined by that GPO, or maybe local coverage discount that can occur as well. Lastly, as your DME program grows and purchasing increases, a rebate program is definitely a discussion point, and sometimes even with establishment of a new DME vendor for your practice can be very advantageous from a profit-loss standpoint as well, utilizing a rebate.

supplier contracts

Durable Medical Equipment

Group Purchasing Organizations

vendor management

healthcare profitability