How Smart Bulk Purchasing of Medical Consumables Protects Practice Margins

However, for independent practices, margin degradation is not likely to be delivered by a single massive invoice. It is more likely to manifest in many little things such as rushed orders for gloves, duplicate products, partially used cases, faster shipments, and shelves full of goods that no one even remembered ordering. The issue is especially relevant in offices located in New York, where costs of storage space are virtually the same as office space costs.

It is especially relevant because, according to MGMA, only 29% of the medical group executives confirmed that they had been provided with the last commercial payer rate increase during the year. Slow-moving reimbursement and increasing operating costs leave little else for a practice but strict procurement policies.

Margin Problems Are Usually in the Middle

While it is easy to estimate the costs of the major device, very few practices know the costs associated with monthly purchase of exam gloves, table paper, dressings, syringes, specimen products, disinfectants, gauze, or disposable diagnostic accessories.

It is the layer that is relevant for repeated consumption, since a slight difference in price, in transportation costs, or in loss is repeated every time the order is placed. Efficient bulk procurement should begin by figuring out the products that are used regularly, and isolating them from occasional or specialized ones.

It is not about making more purchases; it is about making purchases without surprises.

Buy by Usage, Not by Speculation

Find several months’ worth of procurement records, and see how frequently certain products are purchased compared to clinical usage. Identify those items that appear in most invoices, those that require expedited shipping, and those that usually expire or become forgotten in overfilled storerooms.

Then choose a preferred item within each product category, and select an alternative. This helps ensure that only approved items are bought when supplies run low.

While similar Medical Supplies can be needed in a Manhattan dermatology office, in a North Jersey primary care practice, and in a suburban North Carolina clinic, their capacities, number of patients, and schedules can differ entirely. The bulk quantity should correspond to the operation.

A Better Way to Decide What to Buy in Bulk

Go Beyond the Case Price in Your Negotiations

Even if a quote looks like a bargain, it could still be expensive because of the freight costs, minimum order, payment terms, back-order handling, substitution possibilities, and whether the practice qualifies for any rebates.

Using a bulk ordering method would make more sense if the office could procure multiple recurring product lines from the same supplier as opposed to distributing their orders among different suppliers. Working closely with trusted DME wholesale suppliers can streamline this process. HSS Medical Supply provides DME supplies in bulk and a wide array of wholesale medical products for the daily clinical needs of healthcare facilities, including gloves, personal protective equipment (PPE), wound-care supplies, diagnostics, specimen collection materials, and many more. The company caters to hospitals, clinics, and medical facilities in NY, MA, NC, and NJ.

Inventory Is Not Savings

Here is a useful lesson from New York: If it is tying up precious space and no one is using it, then it is not a bargain.

Bulk purchases do not pay off when the savings become the motivating factor behind the purchase. Short-lived consumables that have a short shelf life, uncertain demand, and varied tastes of clinicians can make bulk purchases worthless.

Establish a first-in, first-out system, make expiration dates clear, and designate one person to check on frequently used items. Uniform storage areas are also necessary. Staff tend to order what they cannot find in the office.

Avoid Mixing Equipment Costs into Consumables Spending

Medical Equipment should not be considered alongside disposable items. There is a difference between the equipment and its useful life span compared to gloves and dressings, for instance.

Blending the two budgets will lead to hiding any changes in the cost of consumables. It is important to track your consumables budget separately to identify where the increases come from. In addition, it is important to know which items fall under the consumables category related to specific equipment prior to making an equipment purchase.

Margin Protection Is a Process, not a Sales Promotion

Good volume purchasing isn’t about the sale of the century and stocking the storeroom. It is a process to be repeated: understand the motion, standardize wherever possible, bargain down the total cost, establish reorder points, and assess your inventory of excess goods.

This discipline supports margin protection even in tough reimbursement times without impacting patient care. Volume purchasing is all about volume following consumption rather than vice versa. Purchase what your practice needs on a consistent basis and make sure you manage your Medical Supplies properly. Every purchase is a small financial decision in its own right.

Editor Note:

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