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Orthopedic procedures are increasingly shifting to ambulatory surgery centers (ASCs), creating a new market dynamic for orthopedic companies. Numerous factors are contributing to this shift, including advances in technology, patient and physician preference, and regulatory and reimbursement changes. The movement of cases to outpatient facilities presents challenges and opportunities for orthopedic companies that will need to understand the unique requirements of ASCs to experience success in this evolving landscape.
Orthopedic companies that seek to play in this space should consider the following when developing their strategy: change in demand for supplies and equipment, increased cost pressures, the need for more innovative products, distribution coordination and representative coverage.
Supply Demands
ASCs perform a growing number of surgical procedures that cover a wide range of specialties. This increased volume and variety of surgeries creates a higher demand for unique medical supplies and equipment.
Vendors must understand the specific needs and preferences of ASCs to effectively meet their product demands. Further, companies must adapt to these changes and ensure they have the right products and services, including surgical instruments, implants, disposables and anesthesia supplies. Orthopedic companies play a critical role in ensuring that a consistent supply of these items is available to meet provider demand for effective patient care.
Increasing Cost Pressures
Reimbursement rates are typically lower for ASCs than hospitals, placing pressure on vendors to reduce pricing to remain competitive. Companies must understand the ASC reimbursement environment because it impacts decision-making in different ways than in the acute care setting.
Orthopedic companies need to find ways to drive value and create partnerships — such as collaboration on product research and development, education and training or value-based contracting — that go beyond price and allow ASCs to continue to innovate. Of course, companies need to provide high-quality, competitively priced products, which may involve negotiating pricing agreements, providing volume discounts or offering bundled packages that align with the budgetary constraints of ASCs.
The cost pressures in the ASC environment require that companies streamline their operations to maintain profitability. Orthopedic companies need to remain aware of the reimbursement differences across markets and payors and strategize production and delivery accordingly.
Innovative Products
Orthopedic procedure shifts to ASCs have created a demand for products that are specifically designed for outpatient settings. It is important to actively engage with ASCs to understand their pain points, such as cost control, workflow efficiency, scalability and growth. You can then collaborate to identify specific needs and opportunities for innovation. This ensures that developed products align with the evolving requirements of ASCs and contribute to improved patient care and operational efficiency.
Vendors should invest in research and development to create innovative products, such as smaller and more portable equipment and disposable instruments, and enable these new products to provide customized solutions that differentiate their companies in the market.
Distribution Coordination
Orthopedic vendors need to assess the specific requirements and capabilities of ASCs when selecting a distribution coordination model. ASCs often have limited space, which reduces their ability to store large volumes of products and supplies. Close collaboration, effective communication and a deep understanding of ASCs’ operational workflows are key to successfully implementing these models and ensuring efficient supply chain management.
Vendors need to optimize their inventory management processes to ensure timely delivery of supplies while minimizing excess inventory. This may involve implementing just-in-time inventory systems, leveraging a consigned inventory model, providing real-time visibility and tracking of supplies, and collaborating with ASCs to forecast demand accurately.
A just-in-time inventory model allows vendors to deliver products to ASCs at the exact time they are needed, minimizing inventory carrying costs and reducing the risk of product expiration. This model helps ASCs maintain lean inventory levels while ensuring that supplies are available when required.
Consignment inventory involves vendors placing their products directly with ASCs and receiving payment only when the products are used. This model reduces the financial burden and ensures a continuous supply of products. An ASC president once told me, “Finding a cadence of when to consign instruments to be left at a center versus being brought into the facility for a particular surgery day could help free up critical space to accommodate more trays and supplies and allow us to diversify the types of procedures performed at the center.”
Vendor Representation
Vendor representative coverage plays a crucial role in establishing strong relationships between orthopedic companies and ASCs. Representative coverage ensures the necessary support and guidance from the orthopedic company, leading to more effective collaboration with the ASC and improved customer satisfaction. The coverage is typically measured by the number of available representatives who act as a liaison between the vendor and the ASC compared to the total number of potential customers.
Companies may need to adapt coverage strategies to accommodate the growing number of procedures that are performed in ASCs and optimize efficiency within the limited operating time. By understanding and responding to these changes, orthopedic companies can ensure that they provide appropriate support.
The changing demands for ASCs require orthopedic companies to be more responsive, adaptable and customer oriented. By understanding facility preferences, companies can develop tailored solutions, optimize their inventory management processes, and build collaborative partnerships to meet the needs of this growing market effectively.
Orthopedic procedures are increasingly shifting to ambulatory surgery centers (ASCs), creating a new market dynamic for orthopedic companies. Numerous factors are contributing to this shift, including advances in technology, patient and physician preference, and regulatory and reimbursement changes. The movement of cases to outpatient...
Orthopedic procedures are increasingly shifting to ambulatory surgery centers (ASCs), creating a new market dynamic for orthopedic companies. Numerous factors are contributing to this shift, including advances in technology, patient and physician preference, and regulatory and reimbursement changes. The movement of cases to outpatient facilities presents challenges and opportunities for orthopedic companies that will need to understand the unique requirements of ASCs to experience success in this evolving landscape.
Orthopedic companies that seek to play in this space should consider the following when developing their strategy: change in demand for supplies and equipment, increased cost pressures, the need for more innovative products, distribution coordination and representative coverage.
Supply Demands
ASCs perform a growing number of surgical procedures that cover a wide range of specialties. This increased volume and variety of surgeries creates a higher demand for unique medical supplies and equipment.
Vendors must understand the specific needs and preferences of ASCs to effectively meet their product demands. Further, companies must adapt to these changes and ensure they have the right products and services, including surgical instruments, implants, disposables and anesthesia supplies. Orthopedic companies play a critical role in ensuring that a consistent supply of these items is available to meet provider demand for effective patient care.
Increasing Cost Pressures
Reimbursement rates are typically lower for ASCs than hospitals, placing pressure on vendors to reduce pricing to remain competitive. Companies must understand the ASC reimbursement environment because it impacts decision-making in different ways than in the acute care setting.
Orthopedic companies need to find ways to drive value and create partnerships — such as collaboration on product research and development, education and training or value-based contracting — that go beyond price and allow ASCs to continue to innovate. Of course, companies need to provide high-quality, competitively priced products, which may involve negotiating pricing agreements, providing volume discounts or offering bundled packages that align with the budgetary constraints of ASCs.
The cost pressures in the ASC environment require that companies streamline their operations to maintain profitability. Orthopedic companies need to remain aware of the reimbursement differences across markets and payors and strategize production and delivery accordingly.
Innovative Products
Orthopedic procedure shifts to ASCs have created a demand for products that are specifically designed for outpatient settings. It is important to actively engage with ASCs to understand their pain points, such as cost control, workflow efficiency, scalability and growth. You can then collaborate to identify specific needs and opportunities for innovation. This ensures that developed products align with the evolving requirements of ASCs and contribute to improved patient care and operational efficiency.
Vendors should invest in research and development to create innovative products, such as smaller and more portable equipment and disposable instruments, and enable these new products to provide customized solutions that differentiate their companies in the market.
Distribution Coordination
Orthopedic vendors need to assess the specific requirements and capabilities of ASCs when selecting a distribution coordination model. ASCs often have limited space, which reduces their ability to store large volumes of products and supplies. Close collaboration, effective communication and a deep understanding of ASCs’ operational workflows are key to successfully implementing these models and ensuring efficient supply chain management.
Vendors need to optimize their inventory management processes to ensure timely delivery of supplies while minimizing excess inventory. This may involve implementing just-in-time inventory systems, leveraging a consigned inventory model, providing real-time visibility and tracking of supplies, and collaborating with ASCs to forecast demand accurately.
A just-in-time inventory model allows vendors to deliver products to ASCs at the exact time they are needed, minimizing inventory carrying costs and reducing the risk of product expiration. This model helps ASCs maintain lean inventory levels while ensuring that supplies are available when required.
Consignment inventory involves vendors placing their products directly with ASCs and receiving payment only when the products are used. This model reduces the financial burden and ensures a continuous supply of products. An ASC president once told me, “Finding a cadence of when to consign instruments to be left at a center versus being brought into the facility for a particular surgery day could help free up critical space to accommodate more trays and supplies and allow us to diversify the types of procedures performed at the center.”
Vendor Representation
Vendor representative coverage plays a crucial role in establishing strong relationships between orthopedic companies and ASCs. Representative coverage ensures the necessary support and guidance from the orthopedic company, leading to more effective collaboration with the ASC and improved customer satisfaction. The coverage is typically measured by the number of available representatives who act as a liaison between the vendor and the ASC compared to the total number of potential customers.
Companies may need to adapt coverage strategies to accommodate the growing number of procedures that are performed in ASCs and optimize efficiency within the limited operating time. By understanding and responding to these changes, orthopedic companies can ensure that they provide appropriate support.
The changing demands for ASCs require orthopedic companies to be more responsive, adaptable and customer oriented. By understanding facility preferences, companies can develop tailored solutions, optimize their inventory management processes, and build collaborative partnerships to meet the needs of this growing market effectively.
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Lucretia Lyttle is a Vizient Principal and an experienced healthcare consultant with over 30 years of expertise in orthopedic and neuroscience services and supply chain management. Her focus is on clinical process improvement, cost reduction and driving efficiency through standardization, utilization and value analysis strategies in acute and non-acute settings. She is a member of the American College of Healthcare Executives and the National Association of Health Services Executives.
