$10 Billion in Surgical Expense Reduction via Instrument Tray Rationalization
Our last two posts have addressed the sheer volume of surgical instruments that can be removed and re-purposed by applying OpFlow’s data-driven, lean methodology to tray rationalization, and the cost savings that can be rendered from that process for a hospital. Now, we would like to dive further into the economics of that process on a national scale.
Re-cap
We have established that on average less than 20% of instruments opened for a case are actually used. Acknowledging that any given instrument tray may be used for a variety of procedures, that still means that at least 30-50% of instruments are being purchased, maintained and processed unnecessarily every day.
Until now, there has not been a way to rapidly identify that group of excess instruments. The power of the OpFlow data analytics platform resides in the ability to collect pertinent data and perform analytics that drive the process of instrument tray rationalization.
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National Scale
There are 51 million surgical procedures performed in the US each year. For every hospital, reducing surgical expense by eliminating unnecessary costs is an imperative. Any amount that is saved on a per-case basis compounds rapidly at that overall annual volume.
When we look into the economics of instrument tray rationalization, the opportunity is dramatic. Most hospitals have a series of 30 to 40 workhorse (‘major’ or ‘fleet’) instrument trays, and on average, each tray contains at least 100 instruments. In order to have sufficient availability to meet surgical case scheduling, there are typically at least 10 copies (or ‘instances’) of those trays.
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The cost to sterile process those instruments varies across systems, and numbers have been published ranging from $0.51 to $3.19 per instrument. Incorporating data for procedure-based usage and patient safety buffers, OpFlow has reliably reduced the instrument count on those trays by 35%. That equates to a recurring hard dollar savings each year of $471,625 per hospital, just by reducing the sterile processing costs.
Purchasing new instruments to replace existing instruments can be reduced by similar ratios. Assuming the average surgical instrument cost of $150 (amortized over the industry-standard 7-year depreciation), the re-purchase savings per hospital is at least $262,500 annually. Further, there remains a surplus of at least 12,000 to 15,000 instruments removed for existing trays that can be re-purposed, bringing us back to the opportunities delineated in our previous posts.
In Summary...
When compounded on a national scale, this equates to over $3.5 billion annually that has gone un-addressed until now. OpFlow was designed by surgeons to reduce surgical expenses by eliminating unnecessary costs through a sustainable and data-driven approach.
Applying our technology for instrument tray rationalization alone represents an opportunity for US hospitals to save more than $10 billion over the next 3 years.