Speaker 1: Rich, you do most of the physician preference item consulting work for our hospitals at Phi HealthCare, and we've kind of coined it PPI fatigue, because everybody always seems to be looking at PPIs as the only way to reduce cost. What are your thoughts? Do you still think there are opportunities for cost reduction in physician preference items?

Speaker 2: Absolutely. I actually just had a recent conversation with one of our clients who's vice president of supply chain for the health system in our state, and the same kind of questions were coming up, because we had worked on a spy and cat program with them two years ago, and those contracts are coming up. They will be expiring over the next couple of months, and the same question is being asked to him from his senior leadership, specifically the CFO, are we going to expect similar or at least some savings out of the renegotiation of these new contracts?

Speaker 1: That's a good point.

Speaker 2: So again, we talked at length, and obviously similar conversations, this has been going on for ... This is the third time going in and negotiating with the same spine vendors, and again, we worked with them two years ago, and we were able to reduce 26% off the bottom line without changing any market share, continuing with the same vendors, which the physicians are very happy about. But this time around, it's what can we expect? So we asked for our simple data requests, important data, but not a lot. We were able to come back and show him that based on the current, again, no change in market share, that there was, I believe, between 11% and 15% opportunity. But they were also looking and having preliminary conversations with their physicians to what's that possibility if we do consolidate? So right now, they had four ... I'm sorry, eight primary full service vendors. Spine vendors. Spine vendors, correct. And they were looking to reduce that to ... Potentially reduce it to four, what would that look like? So we readjusted our analysis based on consolidating to four, which obviously gives more market share, greater volumes, and more opportunity for the four incumbents or the four remaining vendors, and the opportunities rose from, I think, 18% to 22%.

Speaker 1: Wow. So 26% two years ago, and now 15% with no change, but possibly 22% with just really a 50% reduction in standardization or 50% reduction in vendors.

Speaker 2: Right, absolutely. And one of the things that helped in that decision to go down that road is with understanding who the physicians are utilizing. So in some cases, there's ... Let's say there was 15 spine physicians within their program. Nine of them are the ones that are doing most of the volume. Out of those nine, you would probably ... I think there was six of them that were using two vendors. And then the other three were using a mixture of four or five different vendors. So it was really those conversations.

Speaker 1: And showing the data.

Speaker 2: Right. The data was important, obviously, because ultimately, the physicians are scientists. They want to look at the numbers and make sure that it's accurate.

Speaker 1: If you're looking at eight vendors or nine vendors, and just the 30,000 foot view might be overwhelming to say, we have eight or nine, and there's no way we can do it, but if you mine the data ... Right.

Speaker 2: It came down to really one physician that needed to have the conversation, because he was the one that was using these two outlier vendors that nobody else was using. And he was the one that needed to have a sit down with not only the VP of supply chain, but also the CFO that came in, because his volumes were significant, and they wanted to make sure that he understood that this was not a decision against him, it was a decision for the organization, and how they could help him get through this. So that was decided upon. We were able to help.

Speaker 1: And it was a successful meeting.

Speaker 2: Yeah, absolutely. So we're in the process of completing that now for them, and they've changed the form right now, and the final terms and conditions review form.

Speaker 1: That's awesome. It makes sense that there's going to be pricing shifts as the years go on, right? So two years, there's going to be market shifts. So to say, we've done this a few times, there's no more opportunities, might be a misnomer. There's, again, additional opportunities, and also the way you structure looking at your PPI's, I think that's important, and not making any assumptions.

Speaker 2: Right, absolutely. And again, if they had chosen the path of keeping their eight full-service vendors, there would have been opportunity. There were changes within, obviously the market over a course of two years and competitive pricing has gone down. Also there was some gaps that needed to be filled, because newer technology, newer carve-outs and other things that would have resulted in savings for them. But again, with the ability to give insight into what the opportunity was to consolidate the four, that helped them have those conversations, really with the one primary, but all the physicians in general and everyone who's on board.

Speaker 1: So I think the lesson here is, if you worked on a PPI initiative two or three years ago, you can assume, or maybe feel confident that maybe just not renewing or not expecting a small savings, expect maybe like savings or more, and look to achieve those results. So thank you.