Capitated Medical Supply Program

Description
With medical supplies being the fourth largest expense category for long term care facilities, an expense reduction program designed to reduce medical supply expense is paramount. By establishing a formulary, a budget and monitored usage system, our “CAP” program is an invaluable tool to today’s management personnel.

Long Term Care Sales Per Category
The chart below shows the average percent of monies spent per supply category

Inclusions/Exclusions
• Inclusions: Routine medical supplies and wound care, ostomy, urological supplies for non-Part B covered residents
• Exclusions: Enteral supplies, DME, Oral nutritionals, and wound care, ostomy, urological supplies for Part B residents

Advantages
By staying within formulary and budget, you will experience a 10 –15% reduction of medical supply expenses. In addition, medical supply expenses will be consistent and predictable while administrative overhead costs will be reduced due to one monthly invoice.

Methodology
Step 1: Establish Budget by developing formulary and monthly budget
[(Total beds x days/month) x capitated rate per patient] x average census

Beds	Days	CAP Rate	Average Census	Monthly Total
180	30	3.35	93%	$16,824

Step 2: Monitor Budget by working together to identify and correct purchasing patterns that exceed budget. In addition, real time monitoring of budget to actual expense each time order is placed as well as single invoice issued monthly.

Step 3: Quarterly reconciliation of actually spending to budget. Savings in one quarter can be applied to a deficit in another quarter within a 12 month period. Also, the capitation rate is reviewed annually based on inflation and formulary as well as a sharing of 50/50 risk/reward between Standard Medical and facility. Comparison of Before/After Capitated Program A comparison of routine medical supply expenditures revealed a 10-15% average reduction in expense. See graphs below based on 180 bed facility.

Standard Medical Supply has developed this program in response to pressures in the health care industry to lower costs. This tremendously successful program utilizes a cost management approach to reduce expenses, decrease inventory, and formalize protocols. Based on a capitation formula, it enables facilities to budget and track costs much more efficiently. This program is revolutionizing the way long-term care facilities purchase their products. Your Standard Medical representative can discuss how this program can help your facility.