8 (mostly easy) ways to reduce your medical gas spend

Scott Walters
Vizient Senior Consultant, Facilities and Construction Solutions

Every morning, I carve out time to read and answer emails from providers about medical gases. As you might imagine — especially as health systems continue to navigate tight margins and seek ways to transform variable expenses — I receive a lot of queries. The two most common are: When does my contract expire and what is my pricing?

They're good questions, but ones I can't answer since the product supply agreement (PSA) is visible only to the provider and their supplier. So, if you're looking to save money on medical gases, step No. 1 should be …

1. Understand your PSA: You have to know what your contract represents, who signed it and when, its expiration and what opportunities exist for better terms. A lot of times, a PSA is passed on to multiple people within an organization, especially if the employee who was previously in charge of it leaves. If you're not sure how to get a handle on your PSA — or even how to find all the documentation — reach out to your supplier's national account manager (NAM) to pull the relevant information from the supplier database. Keep in mind that some hospitals, especially due to expansion, have dozens of contracts with a medical gas supplier, so it's crucial to understand how the PSA has evolved with the scope of work. Also remember that pricing, service levels and contract expiration dates are specific to your organization and individual PSA. In this industry, it is typical that your agreement automatically renews if a written cancelation is not sent to your supplier. In many instances, cancelation must be sent 12 months in advance. It is very important to understand your cancelation term.
2. Renegotiate terms: Once you understand the PSA, consider how you want to move forward. If you're working with a supplier that isn't on contract with your GPO, should you switch to one that is? Or should you create a whole new PSA with your current supplier that aligns with national agreements? The key is to perform due diligence. Find out if there are penalties for switching suppliers before the term is up or if your contract will be extended by another 12, 24 or 36 months if you add new supplies or services.
3. Consolidate: If you have multiple suppliers for medical gases, there could be an opportunity to consolidate to one supplier. By consolidating, a hospital can potentially receive better pricing and terms, and minimize additional fees such as those for delivery. Consolidation also can provide consistency and minimize disruptions in case of any supply issues. But remember that the decision to consolidate (or not) depends on the specific circumstances and needs of the healthcare organization.

4. Gauge your cylinders: Many hospitals have a written SOP (standard operating procedure) stating that once they use an oxygen cylinder, it automatically goes to the empties — meanwhile it could be 20% to 90% full. Here's a simple fix: Ask your supplier for an all-in-one digital regulator built into the cylinder. That way, you have complete visibility into how much gas is left in the tank, and how much time is left depending on the usage (lpm: liters per minute). However, note that this is not available for helium, carbon dioxide, breathing air and nitrous oxide.
5. "Right size": Have a conversation with your gas supplier to determine if you're using the best gas mode. Some cylinders could be moved to a VGL (vertical gas liquid), dewar (an insulated container used for storing cryogens) or micro-bulk mode. Determine if you have the proper bulk tank size that optimizes your service level. For example, during COVID many hospitals had to increase service levels to six days a week because the tank size was too small. Right sizing can help improve efficiency and reduce costs in the long run. Consider doing a semi-annual or annual business review with your supplier to look at your consumption levels and what adjustments might be needed.
6. Turn the tank off: Here's an easy one — to save money on gases, make sure the valve is closed. That's particularly true for low-level needs, like helium tanks in your gift shop (and really, from a cost-cutting perspective, consider removing those altogether). If you suspect cylinders are leaking, conduct a simple soap-and-water test around all cylinder/regulator connects to see if you view bubbles around the connection. If bubbles are present, tighten the connection and if washers are required, replace them. If you cannot correct the problem, reach out to your supplier for assistance.
7. Consider total gas management: Many suppliers offer a total gas solution, which includes managing cylinders, ensuring cylinder par levels are optimized and loss of use of small cylinders is minimized. This program also reduces risk and liability by eliminating the need for hospital staff to move large tanks within the facility. It's important to note, however, that this solution may not be suitable for every organization, especially smaller health systems since this a fee-for-service program.
8. Communicate: I can't overemphasize the importance of communication between providers and suppliers when it comes to medical gases. Have regular, open conversations with your supplier(s) about reducing costs, improving efficiencies, and minimizing risk and liability. Suppliers have the expertise and resources to assist hospitals in optimizing their gas management processes.

Author

Scott Walters is a senior consultant in Vizient's facilities and construction solutions, which leverages sourcing and advisory capabilities to provide unparalleled breadth and depth of knowledge to Vizient members. He delivers contract and cost-savings expertise; develops performance criteria to optimize lifecycle costs, aggregate anticipated spend and define standards for efficiency and cost control; helps members maximize facility and construction spend; and continually evolves strengths and abilities to deliver exceptional results.