BoneChat #93: Ortho Device Strategies for Navigating VAC Approvals in Large Hospitals

Let's kick this off. This is Bone Chat number 93 with Joe Colonna. I'm going to let Mark Maloney introduce our speaker today.

Well, thanks, Tiger. It's a pleasure and a proud— a prideful moment to introduce Joe Colonna, who is the Chief of Supply and Logistics since 2008 for Piedmont Healthcare, which is the largest healthcare system in Georgia and most of the Southeast, actually. My relationship with Joe has really not been strictly business. He, I'm proud to say, he's a veteran like myself, and I originally approached him several years ago because we were putting together a nonprofit and he, through his leadership, got Piedmont to be one of our sponsors. And we were focusing on mental health and suicide prevention for veterans. And we did several events and his people joined in and they were fantastic. I would say that on a professional side, His focus has been data-driven value analysis, resilience, cross-functional collaboration. He's been a speaker on podcasts from such luminary networks as Becker's Hospital Review and a few other summits. And I'm real proud to ask him to talk today, and it kind of stemmed from a coffee meeting he and I had a few weeks ago, and I don't often talk about business with him. Actually, we talk mostly about non-business stuff. But I couldn't help but just almost, you know, give a primal scream about my challenges with value analysis and product approval in the last year or two. And he looked at me and he said, I got bad news for you, Mark. He said, it's only going to get worse. And when he said that, I said, I got— I've got to invite him on this channel. So, Joe, it's a pleasure to have you today.

Well, thank you, Mark. The feeling of respect is mutual. And it was interesting because I've been doing this for 40 years. And I will tell you, some things have changed in this business and some things remain the same. And I've got probably— I have a 12-year-old daughter, which means I'm going to be doing this for at least 10 more years to get her out of college. So I'll be around for a bit, but I'm focusing the latter part of my third of my career on, or fourth, or however the math works, on trying to help the industry change in positive ways. And part of that is due actually to a gentleman who early in my career meant a great deal to me and helped me. And he was also the person, happens to be the person that brought value analysis to healthcare. His name is Bill McFall, and he unfortunately passed away a couple of weeks ago. Coincidentally, I had agreed to do this before that, but it really became more meaningful to me to start talking about this because he did bring the whole concept. But I think part of the reason I call this Myth Versus Reality is the original intent and thoughts behind it have changed, and as they should over 40-plus years. But They've also been bastardized and in varying ways they've been bastardized by some of the folks that lead these types of groups, but also by the industry and their perception of it. So my hope is to start to bring some clarity around it. It will unfortunately not keep you all from primal screaming, nor am I going to give you any secrets to how to do business with Piedmont. So if that's your hope, then you get an hour back. You can go do something else. What I do genuinely want to do is try to demystify some of the aspects of it and also tell you some of the reasons why it's likely going to get harder. And that's just a fact. It's getting harder for us too. It's getting harder and harder for us to make easy decisions. We're having to make harder decisions. The financial landscape is changing dramatically. I'll touch on that a little bit and the impact that we anticipate for us. But value analysis, and I'll go to the next slide, is I want to talk a little bit about what it is, right? It really is meant to be a collaborative way to determine the total value of a current or potential product, device, or service, and the ways to manage the cost of same. It is a way to separate need from want. What do I mean by that, right? The goal is to make sure that we always have the right products to take care of the patients in the best possible way.. But if you fill a room full of doctors, you will get different answers to the product they might want to use. And really using the value of value analysis, creating an environment where you can really determine as a group and collaboratively what the need is to meet that care versus the want of the individual.

It does— Joe, your slide's not progressing.

Is it not? Okay, well—

We're on the intro slide still.

All right, well— This is why I'm not— I shouldn't be allowed to do technology.

You can go back, you can take it off, uh, presenter mode. There it is.

There it is.

You see?

Okay. Um, what, what it is not is the design. And I think this is where the perception is, is it's purely a tool to keep new, more expensive products out of the organization or keep us from advancing clinically. That is, you will often hear, unfortunately, excuses in the industry from some providers like The value analysis team won't let us do this. It's not approved by value analysis. You'll also hear the GPO's names used in vain. I can't use you if you're not on a GPO contract. These are all, in my opinion, lame excuses for lazy leaders. You should be willing to give an honest answer as to why something is not approved, and it shouldn't be excuses. Are we still advancing?

Yeah.

Yes. Okay. Ideally, and I'm going to leave this slide up for a minute and talk about it, but ideally, high-functioning value analysis is the coming together of the quality, safety, and service aspect of a product, device, or service, but also the financial stewardship. And if it's a high-functioning one, it means you're having a dynamic conversation where you're including end users, you're, you certainly include the requester of a new product, device, or idea, but you're also having their peers be part of the conversation. And it's similar to what happens with medical procedures where you have specialists in the same area talking about the benefits and negatives and positives of maybe doing a new procedure, or if you have something that goes wrong and you want to talk about why it went wrong. It really is, if it's working really well, then you are, you have a collaboration, you have a partnership, and it never feels adversarial. I won't tell you that's always the case, but that's what we strive for. I will say that this relationship is deep and meaningful at Piedmont, and it has been one that we have fostered in my entire time here, but not just for supply or equipment, but in general, how we want to care for patients and how we want to run as an organization. Piedmont has a leader all the way up to our CEO, and one of the reasons I've been here as long as I've been here, which is 3 times longer than anywhere in my career, is because the leadership, senior leadership down through the rest of the organization sees that if you're going to provide high-quality care and continue to do that, you also have to be good financial stewards. And that the only way you can balance both of those and achieve those, and if you look at Piedmont's, um, uh, the scores we get from LeapFrog and other organizations, our quality scores are very well, are very high, and our financial performance is very strong. And that's because we have a very strong relationship between those, and that is not something you can achieve if you're only talking once in a while. And it is also why we weathered the storm relative to COVID and supply shortages, why we've weathered— had weathered better than most some of the backorder challenges. Even the most recent IV shortages we were able to navigate because of that relationship. You can't— supply chain cannot in a vacuum make decisions about products, nor can you make decisions about products without including all of the analysis relative to quality and financials. So if you're doing that well, that's where the sweet spot is. Just to give you an idea of typically, and this is, this is how we're set up at Piedmont, but you will see that some version of this at almost every organization, a really well-run local value— this is a— each hospital has its own, what we call local value analysis teams, and then we have a system-wide one that comes together in different settings. But really, the purpose should be to provide of a value analysis team should be to provide operational support for ongoing and current quality, safety, service, and stewardship initiatives. So in other words, you're discussing not just saving money, but you're discussing products, challenges with products, shortages, all of those kind of things. New ideas are coming to this group. It does provide a venue through which you can discuss cost savings. That is not a conversation you can avoid anymore in our industry. It is also where you'll review initially a new product request. So if you have a local hospital and a local surgeon who requests a new product, Initially, it'll be discussed locally. It may be approved— that request will go up to the system, which will then review it. But if it's approved at one site, it's approved at one site. Approval at one site does not automatically mean approval at all the sites. And why do I say that? Well, it's because the financial implications from site to site can be different. The goals of an organization can be different. So sometimes a business partner will assume because they have approval at, say, our Fayetteville location, that means they can go to all the other locations and tell the doctors they're free to use it. That is not the case because each one of those sites can decide whether or not they want a new product to come into their organization and have to do their own analytics to decide if it makes sense. They also provide— help us provide oversight of supply expenses at a facility level. So if we see supply costs going up for some reason, which is not always a bad thing because it can mean more volume, it can mean in some cases more profitability., but we do want to make sure that we're discussing what's causing it and making sure we're getting insight. It also includes a cross-section. It's a cross-functional team because rarely is only one department impacted by the use of products or service change or device change. And most importantly, it also provides feedback. So we may drive an initiative at the system level. We may think it's the greatest thing ever and that it's only going to have an upside, but we have a mechanism by which any hospital, any group can come back to us and say, hey, this isn't working for us and let me tell you why. It might be a quality issue. It may be some challenge we anticipate. So this is meant to be a two-way, not just a one-way discussion.

So, so, Joe, you said the local, uh, is— so the value analysis committee decisions are, they're distributed, they're decentralized?

It's not—

the portion of it are. If you want it, a new product request still has to come through the system office. Okay. The initial review is done locally, and I will tell you that 90% of them never make it out of that, that team. So by the time they get to us, there's usually a pretty compelling reason why we should consider it.

Okay.

But again, we, and I'll talk about this next, we also do this in partnership with clinicians. So we have what we call our clinical governance councils, and they are made up of different specialties. So you have an orthopedic clinical governance, you have a neuro clinical governance, you have a cardiology clinical governance group. Et cetera, et cetera. We have, I think, something like 30 of them now. And they, while their primary function actually isn't supply review, we use them. So we'll have a, it's basically a standing committee of peers that we can bring new device requests, new service requests, new equipment requests to, and it's vetted by the peers of the individual making the request. And that requesting individual is invited to that discussion as well to make their case for why they want to use it. This group has a much broader and deeper responsibility, which these groups facilitate physician collaboration across their specialties and interdispecialty, interspecialties. Most importantly, they look at ways to improve patient care and align with our quality and safety strategies, but they also do have a stewardship mission, which is to help make sure that what we're doing makes sense clinically and financially. Oh, and before you ask, no, you can't ask to present directly to them. That has to come through the supply chain process. Because that's what I would ask, but that's not— that's not how process works. Now, the compelling question that started all this, that started Mark to his primal screaming, was, you know, why does it take so long to get review of a new product? And I was kind of surprised that Mark didn't already know the answer to this, but then I thought about it more and I'm like, well, why should you, right? Unless we're not talking to you, if we're only— if we only seem like a roadblock and we're not actually including you and discussing with you what the challenges are, shame on us. So this is my attempt to do that with this group and something I'm trying to communicate more. So It's important to know that we manage over 5,000 contracts, not all of them clinical, but all contracts come through supply chain. You'll say, well, doesn't the GPO do some of that? They do, but we still have to manage the contract even though it's a GPO contract. We often have to make changes to it or customize it to our needs. The team has been dealing with, at this point, almost 10 years of supply disruptions. I mean, yes, they became glaringly obvious during COVID but candidly, the disruptions that occurred because of COVID but also just in general in the industry, are something this team has to deal with. And then we also have to look at ways to reduce cost around the organization, not just on supplies, but we, the team here gets involved with purchase services, IT, and all kinds of things. And that's always been the case. I've never once had our CFO come to me and say, hey, Joe, next year you're going to get more money in the supply budget. So every year we have to look at how we manage the cost, the cost of new technology, but also the just the rising cost of existing technology in the care of patients. Some of the things that we're looking down the barrel of right now is potentially $30 million in tariff-related costs that we're trying to figure out how to offset. And yes, I get that the tariffs are fluctuating, but the fact is the ones that seem to be in place and aren't going anywhere anytime soon are going to cost me at least $30 million if I can't figure out some way to offset it. In addition, with the changes to reimbursement, we're looking down the barrel of potentially $600 million in potential reimbursement costs. So those all become compelling things that, um, we have to deal with. And the second largest spend in any healthcare organization is supplies. First is labor, second is supplies. So supplies are always on the radar when it comes to managing costs. And what I tell the organization is, of all the hard things we have to do when it comes to cost containment, supplies are the easiest hard things. You may have noticed, heard that some local healthcare systems have had some very large layoffs. We've been able to avoid those sort of things in my time here because we've figured out other ways to manage our costs very closely. And the last thing we want to do is lay off folks. We run very leanly so we don't have to do that. So what does that all mean for you guys? Well, you have a new product that you're trying to get in, and I will tell you the first thing we're going to look at once we get around to it is, why is it a priority? Is it clinically significant? By clinically significant, not incrementally better, but significantly better. Is there a compelling reason why we should consider either adding this or using a new product that replaces an existing product? Just being incrementally better is probably not compelling enough. The other, that is obviously if it brings a cost reduction of some kind, it has to be a real cost reduction. You know, the one of the things I've heard since the government started looking at length of stay is that for a long time now, almost every new product came with some sort of promise of a reduction in length of stay. And if I was to buy all those products, we'd be doing drive-through heart transplants. So you really have to be able to prove that your devices are actually going to do what you say they're going to do, and we're going to hold you to it. So once it— if it gets in and it comes with a promise of either cost reduction, cost management, or clinical improvement, we are going to put a new product on the hook. We're going to put things in place to make sure that actually happens. And if it doesn't, we're going to remove it. And that's not just true of products. We do that with new procedures. We do it with other things that we do on the quality front. We are very good at putting mechanisms in place to make sure that they're actually going to do what they say they're going to do.

So, so Joe, how does a little company prove the clinical benefit or a cost savings to your hospital that they don't, they don't have access to your, your bills and your costs?

No, no, we're going to do that. So I would hope that if you're going to promise that you've done your homework, right? Yeah. I mean, yes, we run very leanly. So some more, you may go to some organizations with that product and you legitimately save them money. You may come here and because we run so leanly and we're so accountable to these things, and we've had this happen where I've talked to one facility, they go, we've saved all this money, and we were like, we've already carved that problem out. I mean, our length of stay is very low compared to other organizations, and we manage it very closely. There's other aspects that, so, and it's one of those lengths of stay is one of those really hard things to prove how your device actually reduced my length of stay. Infections are another, right? It's going to reduce infections and readmissions. Well, how do you prove a negative? How are you going to prove to me that you, I really, that patient didn't come back with a hospital-acquired infection or something because of your device? So we're going to want to have fairly stringent ways of proving that. And that's, that's the part that's sometimes disappointing to me is I'll have new device folks or even existing companies come and get the doctors really interested or spun up about something. And then we start to peel the onion on it and find out there's not a whole lot of ways to really prove that device is going to do what you say it's going to do. The other aspect, of course, is reimbursement. And if there's a significant reimbursement increase in reimbursement to offset this new product, then we're willing to listen to that as well. But I will tell you that one of my most frustrating things is when a business partner will say to a doctor, oh yeah, it's reimbursable. And it is at a loss. They forget to tell the physician that. And I've had that happen, right? It's, you know, real— well, they did— well, it's reimbursable. Yeah, but at a loss or they're working on it or right. And it's— and the problem is I incur the cost regardless. I don't get to pass my cost along. In fact, I'm getting less reimbursement going forward. So it's really, it's a, if you're going to claim that it's some sort of revenue benefit, you need to be able to show us the CPT code. You need to be able to show us the real reimbursement and that, and how it's being reimbursed. And it's not, we don't, we don't want to have to jump through a whole lot of hoops. The final thing though that really surprised Mark is I have to do all this work with exactly the same resources. I have to, all of these things that I'm, the team is working on, there is not a special team carve out for the management of the contract. There's not a separate one that deals on the disruptions. There's not a different one that works on savings. And then there's not a different one that looks at new product requests. This is literally the entirety of the organization is focused on all of these problems at the same time. And because we run so leanly, I can't hire additional people just to deal with new product requests. I have to do the priorities. And I know you don't like seeing it, but the reason that last box is a little bit smaller, because the first 3 things are my day-to-day system-wide organizational things that I'm dealing with every year, every day. And so that things like new products have to really be a compelling reason for us to look at them. And I have a tremendous amount of respect for all of our clinicians, but just because the doctor likes it is not a compelling argument. And that is just— I'm just being honest with you. That is the nature of what we're dealing with today. And I know that's not— you don't want to hear that, especially— I've been a small business person in my past, and it's frustrating when you feel like you have a really strong, compelling argument for whatever it is you're selling. But that is the nature of what the healthcare is today. But I will tell you that if it's a well-run value analysis process, we are evaluating all of the aspects of it. I will say, though, sometimes it takes a long time for a new product to get in the queue and then to get through that process because it is something that we do in addition to all of this other work. And the team, I think there's something like almost 100 new product requests in the queue right now that we're trying to get through in addition to all— and getting through the queue means making sure that the savings is real, making sure the quality, the quality aspects are correct or whatever is being claimed that it's going to do, making sure the reimbursement portion that's being claimed, because we don't just go by what the business partner says. We validate and verify that. One of the slowest part is getting folks to agree to the paper, right? I'm not putting anything in a human being at Piedmont Healthcare without having proper documentation that protects Piedmont, that protects the doctor. Most importantly, it protects the patient. So you want to send me up a wall, let me find out that a product got in here without going through supply chain. And mostly because I want to make sure the documentation is correct. Because I don't want a patient harmed because of a product. And even if it's a good product that's used incorrectly, if there's not— I have no recourse other than the patient suing us if there's a problem. But that's almost secondary to me. I don't want anybody hurt. And I'll tell you why I don't want anybody hurt, because I'm a customer, right? My parents are customers. My daughter was born at Piedmont Atlanta. My dad has 2 new knees. My Grandmother has a new hip. My late stepfather had a pacemaker and an LVAD. So we're customers as well. So it's not like I have some all-consuming hatred of new and advanced healthcare. I'm, you know, I have two, I have severe arthritis in both my knees. One day I'm going to have to get a knee replacement. So in fact, my orthopaedic told me that we can only keep you going with shots for just so long. So, you know, it's, I want new products. I want technology. I'm not, but I just, there's a stewardship component and a care of the patient component that I have to be responsible for. And any organization that isn't honest with you about that is just not telling the truth. And more importantly, they should be educating their physicians about it. The other is just a piece of advice. A rep calling us and saying, hey, Dr. Smith is interested in this, can I put it in the process, is a nonstarter. It has to come from a physician who has to work with local leadership, who has to enter it in the process so we know there's a legitimate interest. It is true that you all do a very good job of developing relationships and friendships with physicians, and sometimes they don't want to be the bad guy, so they'll say, "Yes, why don't you call so-and-so?" That's their polite way of saying, "I don't want to tell you no," right? If they really cared and thought it was super exciting, they'd be willing to champion it. If they're not willing to do that, it's a nonstarter. Why would I do that? That just doesn't make any sense, and it's sort of a waste of time for you guys and a waste of time for us and a lot of frustration for everybody involved.

Hey Joe, let's pause right here and open up.

We could listen to you all day, but I, well, that's my last slide so you don't have to. Yeah.

All right, Kyle's up first.

So that last comment you made, Joe, is fascinating to me. Does that mean that if a physician has an input and goes through the proper channels that their voice will be heard? Or is there a screening process to where they maybe aren't senior enough, they don't have enough volume of what they're talking about? Or how was that? How does that go?

No, that's, I mean, I don't look at those things. It really, that's why it starts locally. The, you know, the relation, I don't, we have, back when we were 4 hospitals, it was easier for me to get to know all the doctors. We're 40,000 employees and 22 hospitals and real estate all over the place. So that's why the process starts locally with a local value analysis team who can have that discussion with the physician. And their voice should be heard in that process. And then if it gets, if the locally the leadership says we'd like to entertain this, then it gets kicked up to the system level, and we feel like it's a viable, potentially viable, we'll bounce it off of our clinical governance committees who then typically one of those members will be in contact with the physician and get their opinion on it. But I will tell you again, 90% of these things typically don't make it out of the local value analysis. But that's where the relationship with the physician is, right? It's not, in most cases, in some it is, but in most cases it's not at the system level, it's at the local hospital level, and that's, That's really where that evaluation should start, or that consideration and conversation should start.

Hey, Joe, drop your slides so we can see each other a little better during the Q&A.

Thank you.

Sure. Thanks, Joe.

I'll try not to accidentally exit myself out of the conversation.

We kind of need you for—

Is that better?

Well, you're—

no, you just got to stop sharing.

Stop the share.

Oh, well, okay, hold on. That's your— I'm technically challenged. Let's see.

Tiger, you can take away his host.

All right, there we go.

He's— there we go.

Thanks, thanks, Alyssa. Well, next plan B. All right, well, next, I'm sure everybody's wheels are turning, so questions.

Maloney, Yes, so my takeaway is that I'm shocked at how incredibly inept I am at this process of product approval. Come, you know, if you're listening to you in the last meeting and actually going through this for the last several years, I really feel like I, I feel like this is a real specialty now of putting together a package that speaks to your needs, to hospital's needs in the modern world. And I think it's probably only one person on this call that does that well. And we'll probably hear from him if he's still there, Mark Copeland. But I, you know, I in the last year have actually gotten one or two products tossed back because with the comment, yeah, I know he's your buddy. We hear from every— he puts everything you have in. And that's what you were addressing. And you said sometimes these guys just don't want to say no. So now I have come to the point where if there's something new and I'm at a dinner, I lean in and I say, listen, if this is not— this doesn't really move your needle, let's not waste any more time on it.

Yeah, I mean, I would say that the one thing I'll never claim is that I'm a medical device expert. If you see me coming at you with a medical device, something's gone horribly wrong with the healthcare system. So I default, often default, and include, and through my career have learned and teach my team, include the clinical folks in the conversation, not just the requester, but the other experts as well.

And the next thing I'll say is that the due diligence required now to truly understand whether a new widget is more than just faster, better, cheaper is actually so far beyond the capabilities of your average independent distributor, which is the traditional kind of conduit This is a function which I have been yelling for years that should be at the corporate level, at the marketing level, and it's been almost completely abdicated and thrust down to the field at a level to just, it's just beyond their ability.

Yeah, I, I will say that one of the things having done this a while now is, is I find, and having been on both sides of the table when I worked for a GPO, I would go out and sell our services. So I've been on both sides. I worked for a, medical supply distributor when I got out of the Air Force for a while. So I understand that some of the pains on both— I wasn't a salesperson, I was actually in ops, but as a sales rep, and I've seen this with companies where they're loaded up, they're, they go to whatever the sales meeting is, they're told how great their product is, it'll sell itself, right? They come in, they're jazzed up, they're fired up, they can't imagine failing because they've been told how great it is. And nobody's taken the time to tell them, these are the potential things you're going to run into. And some of these are legitimate and you need to be prepared to have these conversations. And it can be very frustrating. And candidly, once in a while you have a rep who's so excited and so aggressive that you end up banning them from the organization because they just don't listen. And I mean, I've only had to do it a couple of times, but there's been a few times when it's really been very aggressive and no listening involved whatsoever. But in part, I blame the fact that they went to their— whatever their sales team has been telling them is this, you know, there's— you can't fail. And they believe that. And then they just think that it's our fault that we don't understand how great it is.

Yeah, I just have one last comment. I'm going to shut up. Once upon a time, you know, as a VP of sales, I remember telling the sales force, if you haven't been banned from at least one hospital, you're not working hard enough.

Well, just remember for us, that's 22 hospitals. That's not one anymore. It's 22. Oh, yes. Because we'll ban you from all of them. You don't get to get banned from one. You get the privilege of not being able to visit Piedmont at all anymore.

All right, Raymond's up and then Copeland.

Um, first, thank you for carving time out for us. Um, I'm trying to understand whether you treat, um, situations from a product-specific point of view or company-specific. So for example, you mentioned you need a knee replacement and Zimmer Biomet sells, let's say, a Gen 1 version of a knee replacement, and then 2 years later they— if that's on contract at Piedmont, but 2 years later they come out with a Gen 2. Does Zimmer Biomet need to resubmit to Piedmont to get the Gen 2 product approved?

Yeah, I would say if you're an existing vendor, then we— yes, you still have to tell— you don't automatically get to add your products. You still have to go through a process of of looking at it, but you do have a head start if you're an existing vendor. That's, that's the truth of the matter.

And so it's part number specific at Piedmont?

It's so that when we award the contract, we're likely going to award your entire portfolio at that time. But if you come out with yet another, like, another device or an advancement or something, we're going to— it's not an automatic add. There is a, there is a criteria that you're going to have to meet. But yes, I would mean it's— I'd be lying to say that you don't have an edge if you already have a relationship with us. But it's a double-edged sword because we're going to hold you accountable to all the same terms. So where you might actually do better with that new product at a place where you don't have a relationship because we've already got inside baseball on a lot of aspects of your model.

Okay. Thanks.

Good question.

Cope? Joe, thanks. I think a lot of people on here are shocked that you, like, there isn't flames behind you and you don't have horns. Trident.

The way some people—

Mark, the feeling is mutual. No, I'm kidding.

I actually do have them. So no, uh, uh, but thanks for coming on here. I had a, I mean, I had a bunch of questions for you, but I want to sort of like— you coming on here is an opportunity for us to learn what does a good value analysis proposal look like and how does it get there? Like, You know, 'cause I think frankly, these guys have heard me say it a million times. I think the days of having one single surgeon or whomever like your product and get it approved are deader than Elvis. Apologies to Elvis fans. But what's a good one look like? Is it multiple clinicians, cross-specialties, multiple facilities, and come to you? 'Cause you've seen good ones, right? What do they look like?

Yeah, I don't know. I agree with you. I mean, I think the days of, and with all due respect, because I do think there's surgeons, I mean, we have some at Piedmont who are cutting edge. They're literally help developing technologies and things of that nature. So that may come with a little bit more compelling conversation. But I think the conversation of I want this thing and if you don't give it to me, I'm going across the street is sort of a non-starter these days. And I mean, I'm old enough to remember and I mean, I started my career in hospitals at 49-bed hospitals and, you know, right, and where that was more meaningful 40 years ago. I think we respect it based on the kind of question that's being asked. We've championed a single one. We will bounce it then off of the larger group, the CGC or some larger group, and say, is this something that we should be considering? Because it's hard for me to think that this, in this day and age, that there's a device that only brings value to a single organization. So if your argument is, this device brings inherent new value, be it price or quality, why wouldn't I bounce that off a larger group and say, is this something that we think— and as part of our— if we do allow it at a single place, part of it will be, okay, come back to us and tell us if you got the outcomes that you wanted. We may want to bring this to a larger audience and say, hey, why aren't we all considering this? And we've done that before. We've had— and sometimes we'll say, let's try it someplace else just to make sure this isn't an anomaly. It really is device specific and specialties. You know, we do a lot of heart at Atlanta. We don't do very much heart at some of our smaller facilities. So it's also, you know, organizational specific, right? We do all the transplants. I think we do everything but head transplants at Atlanta now. So, right, we're going to have things that are unique to Atlanta. But we're— but it's also interesting because I'll have— that's one of the reasons why we don't allow, even though it may be in a right-of-master, just because you see it in there doesn't necessarily mean you automatically use it at, say, a smaller facility because the metrics in a smaller facility, the cost impact on a smaller facility just may not make sense, nor maybe the strategy may not make sense. So, so that's why we don't automatically say, yeah, everybody can use it now. I don't know if that answered your question or not, but that's—

It does. It's actually great. And I'll see it because I see a bunch of other hands up. But I was going to ask you, suggest that if you can, I know that you talked about your schedule. The more you do this, the better. And I'm going to be sending this video to hundreds of people because people need to hear what you're talking to see.

You're not, you know, some, you're, you're not a devil, which is what, you know, because you probably get, you probably get some people that would disagree with you. I'm pretty sure.

So there's that part. But I think like you just describing the process, what you're, what you guys deal like the CGC is something I want to understand a little bit more. I'd love to talk to you offline about that. But what you describe is the, you've, congratulations, you've demystified some of this. And I think that's important because vendors do want to get you what you want. They're struggling to understand what you as an organization is and you doing this. Is probably more helpful than you may even know. So thank you. And now I'll send it over to whoever Tiger Buford wants to.

I think that part of it is we're stuck. And then this is one of those things that, you know, I was actually in the room the first time this was ever said publicly. You've seen one IDN, you've seen one IDN. I'd love to tell you I said it. It wasn't me. But a gentleman by the name of Nick Toscano said it. It was 25, 30 years ago at a I think it— I forget what the meeting was, but it is true, right? I mean, you're going to see different people using tools in different ways, but I do think the more we can demystify without, you know, we're not going to share pricing, we're not going to share, right? There's things you're not going to share. I'm not going to give you a lot of detail on CGC because that's a Piedmont thing that we do, but it's important, but it's not a mystery that we have them, and we'd be stupid not to use them. Before we had the CGCs, we would pull together physicians around the system because I don't ever— again, I don't want to make an orthopedic decision without the orthopods being part of it. Now, does that mean Does that mean every single doctor gets a vote? No, that's a lie, right? But we get a good cross-section. We try to make sure all the facilities are represented. We feel so that we feel comfortable when we ask the people maybe who weren't in the room to make the change, but we also ask the committee members to champion. So when we get pushback that I'm not the one necessarily going to the doctor and say, you have to make this change. It's the doctors who made the decision who are doing it. So it's very, it works really well. You got to, but you also got to be willing to deal with the downside of it, which is everybody, and we've had this happen. We try something and they come back, "Oh, wow, this product really stinks." And you got to be willing to back off of it, right? And even though you thought it was a great idea because that's how you build credibility, right? I mean, it's all about— ultimately, it's about credibility. I mean, I'm nothing if not pretty transparent. As long as it's not anything that's detrimental to the organization, I'm going to be as honest about it as I can be. But— and sometimes to my detriment because I think sometimes people are surprised. But we're not going to get better if we all— I mean, Bill, my mentor, God rest his soul, He was incredibly transparent. He delivered a lot of tough love early in his career to both sides of the industry, and we're better for it.

So, okay, Alyssa's up and then Mauricio.

Hi, Joe. Thank you so much. There are a lot of major advances coming down the pipeline. I'm assuming Piedmont is aware of them. Is there a budget focused on, on these? So you're going to have to really push hard on the commoditized products.

You're going to have to tap into the same dollars everybody else is. There's not a special, hey, this thing is unique and cutting edge, especially now in this environment. It's got to make it, it's got to figure out, is it going to carve something out? Is it, that's where I think it's important to be able to, I think Mark or somebody asked the question about putting a complete package together, doing your homework and understanding that if you're going to make a reimbursement claim, for instance, it's going to offset it.. And because here's the thing, I mean, we're not afraid to spend money on new cutting-edge technology, but if it doesn't come with reimbursement or then it, then, then it's a negative. I mean, it's, we'll, we'll invest in it because it's a positive outcome for the patient. Financially, we're going to have to offset it somewhere else. Yeah. Which is why, you know, people say, well, there's not a tariff on my products. Yeah. But there's a tariff on $30 million worth of other people's products. Right. And I've got, I don't get to carve out just certain things and say, I'm only going to focus on this. I have to, I'm responsible to the entire non-labor. In fact, my role is responsible for the entire non-labor spend for the entire organization. So I have to be cognizant of all the spend that is not labor-related. And that means that anything that costs us something has to have an offset somewhere.

Absolutely. And I've been in through the channels quite a bit, actually, and negotiated a lot of the multiple variable contracts. For exclusivity. Mike, I have one more question. Would it be valuable if the society started endorsing extraordinary technology?

What do you mean?

Meaning, like the North American Spine Society, surgeons are starting to work on their own products, and as a society, they can advocate for certain technologies, potentially we're talking about this.

I think if they could get the government to increase reimbursement or get reimbursement, yes. Otherwise, it's still the same pot of money, right? I mean, it's still— I don't— nobody's magically going to produce more money for a better technology. Not saying they shouldn't advocate. If it's a good technology that brings a real difference, you should advocate for it, right? I mean, but again, I have the exact— there is no more money coming our way unless the government or the payers give us more money to be able to spend on it. Otherwise, you know, we have to go down the road of figuring out the offset somewhere else, and we may do that. I'm not saying we never do that, but it is the same pot of money.

Thank you.

Mauricio. Oh, you're on mute, probably solving cancer, and we just can't hear it.

I wish, I wish. No, thank you. Thank you very much. Really, I, Whenever I went out with reps and I went out to talk to doctors, I always counted the, oh, contact this person at supply chain and try to get your product approved as a win. Now I'm going to reevaluate that. So it's given me an extra, an extra tool. Another thing, and this goes, you were mentioning and connects a little bit with what Alyssa was saying, some of your doctors are participating actively with us to design new products, to improve them. Do you guys have like an innovation arm or a tech transfer arm, or is there a way to get the studies done in your facilities, or are you—

There's not a— we do studies. I mean, it has to be a legitimate study, right? There's studies that are just for a single physician 'cause they want to do it. And then there's some studies that the organization gets involved in. There is a process for that. I don't— I'm not directly involved in— we keep arm's length for a reason on that. But I will say the other part of that though is if a physician owns, has a financial ownership in a device, then they can't be the one requesting the new device. That's a compliance issue. So that's just something to bear in mind because we sometimes run up against that and it's sometimes it's out of ignorance of people just don't understand that, but we can't— compliance, the government doesn't like it if we're using a device that a doctor— if a doctor is using a device on patients that they have a financial interest in. So there has to be another mechanism by which we're validating that that's product we want to use. But we do some of that. I don't have that information. The physicians could fairly easily find out. They can contact their local CMO and if that's something they're interested in, but that they got to be really— you got to be extremely transparent in those situations.

Perfect.

Thank you. Hey, to follow up on Mauricio's question, most BoneChat members are running startups. A lot of times there's physicians that are equity holders in these startups. Do you guys have a threshold? I've heard 5%, you know, hospitals don't like work with.

So there's some compliance ones, but from just to keep everything clean and even, if you have only any financial interest whatsoever, then you have to declare that and you cannot be the physician requesting the product be used. Okay. It is because I, that way I negate anybody searching loopholes. There are physicians do have to employ physicians have to declare through, we have a mechanism for that. Unemployed don't necessarily have to declare it officially, but I would— my recommendation is don't let me find out later, right? Declare it up front and let's have a conversation about it. Candidly, right or wrong, it just makes us think maybe there's something else going on that they're requesting it, and it devalues maybe the clinical value of the product in the eyes of a lot of people. And I'm just being honest, in the eyes of a lot of folks.

Joe, question for you. Is your budget also allocating the pharmacy budget?

What do you mean?

Meaning, for example, if a device had the ability to deliver therapeutics through the device, but they could be compounded in the pharmacy versus buying them from a pharmaceutical company for 12x more, would the hospital find value in that?

Potentially. I mean, we champion— so we manage the contracts and the, that viewpoint on all of that. If again, if that to me is when I talk about bringing the, looking at the total value of a new device or a product, that would be part of the discussion. Now then the other part of that though is do you operationally have the resources to do the compounding? Right? So there's a cost to that, right? So there's a, and so, so that we look at the total, not that we don't do those sort of things. We do. We, you know, we have our own specialty pharmacy and some others. Is, but we're going to look at the total impact of that because we've had, you know, we've had people that they only want us to look in that narrow space and not pay attention to all of the add-on costs. And so we've gotten very good at when we talk about that value analysis, okay, what's the complete cost of ownership? Includes the clinical value as well, but what is the total impact on the organization going to be? So if, I mean, it may be something we do, But we're going to look at the total cost of that.

Yeah, next. I know there's— I know there's questions brewing. Kyle's up.

All right.

So you gave an example before of reduced blood loss or something related to a clinical value that maybe then you'll ask for follow-up or evidence of. What else falls into that type of category that helps tell a compelling score story? I mean, we see examples of the story that's being told from marketing spin all the time. I'm curious if any of it lands. Reduced blood loss, shorter hospital stay, faster recovery time, less likelihood of hardware removal, fewer instrument trays in the set, less SKUs. What, what are types of things that actually can be reasonable?

I think that it being realistic about will you actually do it, right? So will you, will you actually make sure that there's less instruments in the tray? And does it matter, right? Does how much more expensive is it to clean and process a few? And I'm being facetious here, a few more drill bits or whatever it is relative to the, that's not, that's not a huge cost, right? Additive. You're going to do it anyway. You're going to clean the instruments anyway. You're going to run them through the washer. You're going to run them through the sterilizer. So is it a whole less tray? That might be more compelling, right? Is it a whole— is it a significant— whatever it is, when you say blood loss, are we talking— and again, I'm being facetious— you're talking a few ounces, which is really hard to prove one way or the other? Are you talking whole units of blood that you can actually not even bring to the OR? Because that— I've had that happen before where the claim is you don't need it, but the doctors don't believe it, so they still bring out the units and the units are sitting in the OR and then the units are wasted. So how do you, you know, bring the story of how you would suggest we manage that and bring that benefit to fruition? And then we have to be honest amongst ourselves. What's the likelihood that we will actually do that? Does that answer your question?

Yep. That's great. That's great. Because, and I think there's a, there's a layer to that because if the story is I've got a new knee system and it only requires 2 trays, it's better than your other knee systems that take 10 trays. But if the doctor demands that your backup 8 trays are in there, it's a total wash. So probably, yeah, is hardware removal a story that you have spun?

I haven't heard it as much. And again, we'd have to be able to quantify it, right? Would you have not— can you truly prove that you wouldn't have done that because of the device? The problem is there's a longer thread on that, right? I mean, it's, um, are you saying that you don't need to remove it? A year later than you would have had to with somebody. And I'm not— you're going to laugh at me because I'm not a clinician, right, when you say that. But what is the timeline that you're dealing with to prove whether or not that's true? Got it. And you've got it. And I will say my suggestion would be is if you really feel like you have a compelling but complex solution, suggest to the doctor that he bring other people, instead of going in and, I don't mean it this way, demanding that he wants to try this new thing, instead say, hey, can we get together with whoever needs to be involved early to see if this is a likelihood of something we'll see value in and let's have a conversation about it. And most of the time those people are in the hospital. So then it's the doc, it'd be refreshing to have the doctor say to the OR person, hey, can we get a meeting with the financial folks and the sterilization folks and the lab and vet what this vendor is talking about, sort of a mini value analysis team before I, before I'm even willing to bring it to the table. Let's have a meeting where you guys kick the tires on this thing. And together we talk about, because that's going to be an education for the physician. The physician may not be aware of some of the challenges or the fact that those 2 units of blood are going to now be wasted. They're not going back to the, the, if they've been out too long, they're not going back in the refrigerator, right? And so, that learning, that mutual learning may work against you, but it may also work for you because you've created an inclusive process at the beginning, not later. Because what happens and is frustrating to all of us, and I had a slide, I decided not to show it, but one of the things I ask my team to do is I don't expect everybody to be an expert on all of the aspects of something like this. So, we will try to pull in, be it legal or if there's a technical aspect of it, the imaging or whatever it is. But that's later in the process when that— some of those questions could have been answered, the thing could have been kicked around locally, and that's the goal of— the reason why that team has so many other areas represented on it is that's maybe the first time some of those folks have ever been engaged in that conversation. The first time the lab may have heard that there's a claim that we're going to use less blood may be in that value analysis meeting, which is what that local value analysis meeting. My suggestion would be have the surgeon reach out to the leaders in those areas early on and present it with your representation, maybe. Although they may not want them in the room, to be honest. But is let's kick the tires on this thing and let's understand holistically the benefits, but also the costs and the extra work potentially associated with this.

Got it.

So I want to respect Joe's time. We're coming up on the end of the hour. Let's do 3 quick questions. Raymond Copeland, Maloney.

Go.

Okay.

Is there any data that's available to companies for Piedmont? For example, in particular, what my product does is reduce the surgery termination rate. In other words, how many surgeries have to get aborted? But I have no idea what Piedmont's rate is to be able to show a benefit. Now, I could do your pre-VAC discussion, which is a pretty good idea, but it'd be great if there was some kind of data that I could come in and say, well, our product changes it from a, a 2% rate down to a 1% rate. Yeah.

We're, we're probably not gonna present, we're not gonna share what's not publicly available for lots of reasons. But if you present that as an idea and you have a surgeon who believes it may be true, they can certainly vet that. We, we tend to, No matter what is claimed, we tend to want to vet that ourselves anyway. So what's incredibly frustrating to me is when people come in, they've already spun people up with claims of savings, but they don't really know what goes on inside the four walls. They're just using some sort of generic, we reduce the cost of X by 10%. And I'm like, well, you have no clue how we do things within Piedmont. You're just throwing that number, but you've already got a bunch of people spun up about the millions they're going to save. And then we vet it and we're like, No, not going to happen. We've already addressed that or we've addressed it in some other way. So the preference on our part would be present the idea, get somebody to believe that that's possible, and then we'll vet it internally. Again, it's going to— it's not going to be our number one priority, Raymond. It's going to take time.

Okay.

Cope.

The senator from Pennsylvania cedes his time to Senator Maloney from Georgia.

Mark can talk to me anytime he wants.

So you go ahead.

Well, I was going to quick ask about— I'm seeing some products now that are sometimes operating room or sometimes floor ICU, and they're designed so that patients are coming back to clinics less, um, either through remote or just perhaps better healing capabilities. Is that so? Like, when, when you guys look at something that's coming to you, that I would assume is a component to how you decide what's valuable, right?

Like, well, we're certainly going to vet it, not just financially, but clinically, right? I mean, we do, we do some remote stuff in the heart area. I don't know about all the other areas, but I know in heart, because I was back when I was more directly involved in some of these discussions on a regular basis, there's some of that remote monitoring for pacemakers, right? That didn't exist. You used to have to come in the clinic, right? You can now use— well, we've even advanced beyond putting the phone up to your pacemaker. We've gotten even more advanced than that. We've got— so I do think there's a way to— I do think there's a way to vet that. We also have clinics. We have our own clinics, right? So we can— not that we exclusively do business with our own clinics, but we could certainly vet it through our own clinics. We have clinics that represent almost all of our specialties. I mean, I think— and then we have both employed and non-employed. I think we have something like 5,000 members of the clinic now. So there are ways to vet that.

So perfect. Thank you.

Yep.

So two good questions. One, in the world of grouping of what we might perceive to be commodities from the outside, unless it's your baby, of course, do you track intraoperative failures that separate the winners from the losers from a financial standpoint? And I remember you telling me once that if somebody brings me something, it doesn't swing the needle by at least $1 million, I don't want to see it. Is that because you're a regional, big system? And would that answer be different at a small hospital or a national network?

Okay, so the number might not be a million, right? But it has to be significant, right? Yeah. It's, I mean, we're a $1.4 billion supply spend. Right. Being faced with $30 million in price increases and $600 million of potential revenue cuts. I, you know, I'm not gonna, I'm not gonna wow anybody in leadership with a $100,000 savings. Right, right.

That makes sense. So is there any way though to track intraoperative failures of, you know, instrumentation products, suture products, screw products? Is that even a thing? I'm curious.

Yeah, I mean, I think it is, and if it becomes significant, we do have— I mean, our QSS, the reason why our quality scores are so high is that we're not afraid, you know, we capture a lot of that information in Epic. We can, if we start to see a trend, we can call that up. Do we, you know, every single failure? No, right? But we do, but we do if we start to see a significant trend, we will definitely call it out. Because we are, we are curious about more so from a patient quality standpoint than necessarily the product failed, but what was the outcome for the patient?

Wow. Thanks a million, Joe.

Yep. You're welcome.

Okay.

We got in the, we have Bill Richards in the, in the wings with a question. I hope we can hear you on audio. Are you there, Bill? Uh, maybe not. All right.

I, I, I saw Bill's question. Basically, he was asking whether product approvals in the world of trauma are on hold. I think he was, I think he was specific to Piedmont.

Yeah, no, we do have, as we figure out what the financial implications are, We do have a hold. There has to be a compelling argument for it even to get into the queue right now, because we're trying to figure out what the— trying to figure out what the— so if it— I mean, if there's a compelling quality, if we have a safety issue, if we have something that we feel like is really significant, we're not shut down completely. But my— the resources we have are focused on trying to figure out how to offset some of the things that are happening right now so we can make sure that we can stay in business. And keep delivering high-quality care.

So there's certain categories sometimes where you will sort of put things on pause?

Oh no, we don't do it by category. I'm a universal offender. I don't pick on any one group. I mean, there are mechanisms by which somebody, if they felt very strongly about something that they felt like would bring a real— so it's not like we don't have anything new being in, but it's a very small micron filter at this point. And I don't— until we know exactly what this new landscape is gonna do to us, I don't see that changing. And that's not unique to products. We're, we're being very deliberate in our cost management right now. And those things that, that—

Great. Yeah. Good. Here, last question. We hear from a lot of hospitals that sterile processing is a bottleneck. You know, there's, especially in orthopedics, there's so many trays. And surgeries get canceled sometimes. There's just not enough people in sterile processing. They're, they, you know, it's a more of a transient job. Is that, do you, do you see that in your 22 hospitals or?

Oh yeah.

I mean, we, it's, it's, there's, it's not unique to sterile processing. I mean, I still think there is a challenge with labor in general. That, and then specialized labor is even more difficult. And then people that want to clean gunk off of devices all day and, and do it correctly. And, own it is even more challenging. So yeah, I mean, we have ways to augment it. I don't— I'm not aware of any cases being canceled, but I do think— and I would say that the other part of it is own, and maybe y'all as smaller companies aren't as guilty of this, but the rep that brings and leaves 40 trays in my areas is not helping, especially when none of those trays are for a case at my hospitals. So I think, you know, and making sure that you're being accountable to what you're bringing into the facility is helpful as well. And so I think that's, but yeah, I think it, and it's not unique to, there's still labor challenges across healthcare in lots of areas that we're, that's another piece that we're trying to deal with, right? There's a cost, there's an increased cost in labor to keep good people. And that's a, you know, contract labor is still a big piece of the puzzle for a lot of healthcare organizations. So that doesn't help y'all's challenge in bringing a new hire, new device at all, even if it's not higher priced, but a new higher priced product into an organization.

Got it. So a labor-saving device is interesting. A new labor-saving device.

Yeah, but it has to be legit, right? It can't— I mean, the ones where they go, well, it's going to save 5 minutes of your time incrementally is not going to move the needle. I'm not going to fire somebody because, you know, I save 5 minutes here. Not that I want to fire anybody anyway, but it's not— it has to be a real, meaningful labor savings. Got it. I remember years ago somebody bringing in a forehead thermometer and they said it's going to save 3 minutes every time you take a temperature. Like, okay, even if I add all those up, that's like one person.

Yeah. All right. Well, thanks, Joe. This— thanks for your time. This has been a great hour. Really appreciate it. You've opened our eyes.

All right. Well, thank y'all.

Okay.