5 Steps to Physician Preference Item Optimization

by | Jun 12, 2020 | Physician Preference Items, VIE Healthcare Blogs

This article was written by Lisa Miller.

Physician preference items (PPIs) are often comprised of the most expensive products ordered by hospitals and can have a negative impact on your hospital’s operating margins.

In this blog, I outline 5 key steps to physician preference item optimization.

The True Cost of Physician Preference Items

The most successful healthcare organizations know how to optimize the purchasing process for every product. But for most hospitals, some purchases are more challenging than others.

Physician preference items constitute anywhere between 40% and 60% of a hospital’s total supply costs and can potentially lead to your hospital spending millions of excess dollars every year.

Physician preference items comprise between 40-60% of a hospital’s total supply costs. Click To Tweet
Several problems exist for hospitals when managing the cost impact of PPIs:

  • They are often expensive items and vary widely in terms of quality.
  • The price variation makes it difficult to streamline their purchasing.
  • PPIs also involve influential stakeholders in the hospital, such as physicians, which make them challenging to manage at times.

Hospitals can focus on areas including pricing, process improvement, resource utilization, data continuity and product visibility.

The Untapped Cost Savings in Your Hospital’s PPIs

For most hospitals, however, PPIs offer significant untapped potential for margin improvement.

Building on our expertise in this critical area, VIE Healthcare Consulting has created a comprehensive five-step approach to PPI optimization.

Step 1: Physician Engagement

Initiating discussions with physicians early and often is critical for hospitals. Their expertise forms a vital part of this process which must also include providing clinician education on supply chain and cost-savings initiatives. When engaging with physicians, hospitals must clearly be able to demonstrate the impact of their decision on both clinical outcomes and operating margins.

Step 2: Data Gathering

At VIE Healthcare we operate on the maxim “what can be measured, can be improved.” This data-based approach gives purchasing managers a complete understanding of current spend.

Step 3: Data Analysis

In addition to gathering data, we carry out extensive research and analysis to optimize opportunities for cost savings.

Step 4: Negotiation

The challenge we frequently see at VIE Healthcare is that vendors receive extensive negotiation training to protect their margins. In health systems, this training is rare, creating an unequal playing field which can cost your hospital tens of millions of dollars. Our team of experts is unrivaled in our field at negotiating with suppliers, achieving the best market pricing for our clients. In addition, we provide negotiation training for health systems to build your own in-house negotiating team.

Step 5: Implementation

We follow through meticulously on all engagements, ensuring successful implementation of new products and contracts.

VIE Healthcare can effectively reduce and manage your physician preference items to reduce unnecessary costs while improving your patient care.

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simple 3 step process

Step 1

Schedule a Call

On your initial consultation call, we will want to learn about your goals and how VIE Healthcare® can support you and your team.

Step 2

We Analyze Your Data

The team at VIE Healthcare® will create a customized solution specifically focused on your hospital's needs and the outcomes you want to achieve.

Step 3

You Achieve Rapid Results

VIE Healthcare® will dedicate expertise and resources that support you and your team to become a high performing hospital.

Step 1

Schedule a Call

On your initial consultation call, we will want to learn about your goals and how VIE Healthcare® can support you and your team.

Step 2

We Analyze Your Data

The team at VIE Healthcare® will create a customized solution specifically focused on your hospital's needs and the outcomes you want to achieve.

Step 3

You Achieve Rapid Results

VIE Healthcare® will dedicate expertise and resources that support you and your team to become a high performing hospital.

Maximize your hospital’s profitability and enhance patient care.

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Maximize your hospital’s profitability and enhance patient care.

Subscribe to The Cost Advantage for Healthcare Leaders and receive this special report with 15 Effective Cost Savings Strategies

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