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GPOs – Valued Partners in Healthcare
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The healthcare group purchasing organization (GPO) members of HSCA work closely with their provider partners across the continuum of care to reduce cost, add value, and improve outcomes for patients. Below you'll find some narratives that help to demonstrate why GPOs are valued partners in healthcare.

 

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Top tags: Cost  Intalere  Savings  Vizient  Arizona  Premier  Safety/Quality  MedAssets  Pennsylvania  Texas  Arkansas  TPC  Washington  GNYHA  Illinois  Indiana  Innovation  Missouri  Nebraska  Nevada  New England  New York  Ohio  Pharmacy  Texas Purchasing Coalition  Transparency  Virginia 

Unique Provider Allied Services Engages with the Full Value of Intalere to Reduce Costs and Achieve New Levels of Success

Posted By HSCA, Tuesday, August 2, 2016

THE CHALLENGE

Allied Services, the leading provider of healthcare and human services for
northeastern Pennsylvanians with disabilities and chronic illness, is a truly
unique care provider. Founded in 1958, Allied’s 3,200 employees and volunteers
serve nearly 5,000 people in 22 counties, providing:

• Inpatient and outpatient rehabilitation.
• Vocational/community services.
• Home health.
• Homecare.
• Personal care.
• Skilled/long-term care.
• Transitional care.
• Hospice.

“We have been fortunate to grow and serve based on the needs of the
community,” said Vince Splendido, vice president of supply chain at Allied
Services. “Our diversity is challenging. It’s not just the traditional med surg
products and services, but there is lots of variety and special needs.”
When they engaged Intalere as their group purchasing organization in
2013, the first challenge was to learn and leverage as much about each other as
possible in order to maximize the partnership.

“Allied Services is a unique healthcare facility that Intalere hadn’t previously
experienced. It was a learning process for both Allied Services and Intalere
to find a program tailored to our type of care and breadth of services,” said
Splendido. “In addition to the cost reduction and quality of care enhancements
we expected to gain through our association with Intalere, we were looking to
establish a long-lasting, productive partnership that would bring the greatest
benefit to our patients and the communities we serve.”

As with all providers in healthcare’s current landscape, Allied had to find ways
to cut operational costs without decreasing quality of care, while dealing with
implementation of new government mandates for equipment and protocols,
and ever-increasing costs. Allied was also challenged with balancing a large
portion of uncompensated care with the desire to maintain all current services.

THE SOLUTION

The Allied team, led by Splendido, Assistant Director David Caprari and Purchasing
Manager Fred Roughsedge, set up weekly meetings and calls with their Intalere
counterparts, led by director of member solutions Tom Toth, to review Intalere
Savings Roadmaps and Opportunity Reports for cost reduction opportunities.

A dynamic reporting tool, Intalere Savings Roadmap®, analyzes and compares current
spend with the Intalere portfolio. Facilities can analyze and review total spend by:

• Contracts and tier commitment requirements.
• Total spend per contract.
• Current versus Intalere costs.
• Savings opportunities.
• Standardization status.
• Product category.

By identifying realistic and actionable opportunities for savings, the tool helps
prioritize the opportunities by developing the Savings Roadmap – an Excel tool that
maximizes bottom-line impact and provides the staff support to implement the
savings initiatives and the key supply chain dashboards to monitor, track and report
savings through all levels of the organization.

The Opportunity Report is best suited for smaller providers or for providers that may
have received an Intalere Savings Roadmap within the last six months and are looking
to maintain momentum and focus on the available opportunities.

As with the Roadmap, the Opportunity Report highlights areas of opportunity for the
provider. Those opportunities range from savings that can be quickly and easily realized
by signing a Letter of Commitment, to conversion opportunities. All of the information
is contained in an easy-to-read report.

THE OUTCOME

“From the beginning, Intalere showed a genuine interest in our success,” said
Roughsedge. “Using their data tools, they were able to dissect contracts in many
different areas and chart a path to savings.” Allied was able to implement collaborative
initiatives with Intalere in the areas of med surg, construction, nutrition, environmental
services, pharmacy and laboratory. Nutrition was one of the largest areas of spend for
Allied, which operates one of the largest cafeterias in the state of Pennsylvania.

In this case, and many others, Intalere’s field specialists worked directly with
department directors to identify savings and quality standards. “They engage down to
the department level – that’s where the real value is,” he said. “It’s just not the pricing,
but the value-added services they provide.”

Allied also took full advantage of Intalere’s alliance initiative, taking a board seat on the
Intalere Eastern Alliance. “The culture and cohesiveness of the group has afforded us
the opportunity to reach an even higher level of success, further allowing our size and
volume to reduce operational costs,” said Splendido. Allied served as a test site for a
standardization project around surgical gloves which brought them $65,000 in direct
savings while also engaging the clinical staff in the value analysis initiative to ensure
enhanced product quality.

Allied’s initial goal of reducing operational costs by 2 percent was easily achieved,
and the collaboration to bring savings and efficiency, both individually and through
the Intalere alliance program, continues into other areas. “Now everyone knows,” said
Roughsedge. “The Intalere name is recognized. The value is understood. There has
been a true cultural change and awareness of what this collaboration has brought to
our organization.”

Tags:  Cost  Intalere  Pennsylvania 

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Virginia Mason Medical Center Value Analysis Project Improves Standardization and Intalere Contract Compliance, Results in $766,000 in Cost Savings

Posted By HSCA, Tuesday, August 2, 2016

THE CHALLENGE

Established in 1920, Virginia Mason is a non-profit organization offering a system
of integrated health services, featuring a multispecialty group practice of more
than 460 employed physicians and offering both primary and specialty care as
well as an acute care hospital licensed for 336 beds. Virginia Mason has been
recognized by numerous organizations as one of the top hospitals in the nation
and is one of the first organizations in the world to adapt the Toyota Production
System (TPS) to healthcare. As such, they are no strangers to implementing
process and efficiency improvements that can reduce costs and improve
clinical outcomes.

Traditionally at Virginia Mason Medical Center (VMMC), supply chain
involvement in new product implementation was primarily limited to
financial analysis. The clinicians determined whether to bring in products
without understanding the overall impact to the institution. A new process to
better integrate supply chain and clinical areas was needed to both improve
communication and to align organizational goals.

THE SOLUTION

VMMC initiated a project to enhance the product value analysis function
under the leadership of Bill Knight, value analysis manager, by establishing
value analysis teams (VATs) in areas including operating room, lab,
GI/endoscopy, IR/radiology, nursing and the regional medical centers.
The teams include members from each specific area plus the “core four:”
the value analysis manager, a physician advisor, clinical product review
specialist and a contract utilization analyst (an employee of Intalere
affiliate Health Resource Services (HRS)).

A standard agenda was established for each team, which included
a review of the following:

• Product issues such as safety, recalls and back orders.
• Products in trial.
• New products brought to the team.
• Intalere contract opportunities.
• Questions and concerns.

Each product was assessed according to several different criteria including:

• Quality.
• Functionality.
• Literature to support efficacy/evidence-based practice.
• Availability of replacement product.
• FDA approval/guarantee.
• Infection control issues.
• Environmental impact.
• Availability of Intalere contract.
• Finance/reimbursement analysis.
• Labor savings.
• Price.
• Standardization.
• Association with capital purchase.
• Physician certification.

THE OUTCOME

Although the concept of the value analysis team was not novel, the degree of
involvement of the clinical arenas was innovative.

Previously, almost every clinical area had its own product assessment teams
with only peripheral supply chain involvement. The new, comprehensive
value analysis teams allowed supply chain to be an equal partner in decisions
regarding new products. The collaboration of physician and clinical champions
fully addressed clinical efficacy aspects and also brought a level of credibility to
product choices.

It also allowed for increased visibility of VMMC’s group purchasing partners and
the value of using those contracts. To ensure accountability, all VAT scoreboards
are posted to the intranet for visibility of progress.

The value analysis teams improved standardization and Intalere contract
compliance, leading to a documented cost savings of $766,000. This also
decreased inventory and increased quality and safety of product usage. The
teams also respond to product safety issues and are able to identify similar,
higher quality products without increased expenses. Significantly, the value
analysis teams led to collaboration and collegiality between supply chain and
operational areas of the Virginia Mason integrated delivery system.

Tags:  Cost  Intalere  Savings 

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Vizient, Inc. Named to Supply & Demand Chain Executive’s SDCE 100 Top Supply Chain Projects for 2016

Posted By HSCA, Friday, July 15, 2016
IRVING, Texas--()--Supply & Demand Chain Executive, the executive's user manual for successful supply and demand chain transformation, has selected Vizient, Inc. as a recipient of an SDCE 100 Award for 2016.

The SDCE 100 is an annual list of 100 great supply chain projects. These projects can serve as a guide for supply chain executives who are looking for new opportunities to drive improvement in their own operations. These projects show how supply chain solution and service providers help their customers and clients achieve supply chain excellence and prepare their supply chains for success.

Vizient was recognized for its supply chain transformation project with INTEGRIS Health to sustain a $15 million savings realized from a Vizient cost reduction initiative. Vizient enabled the health system to enhance its organizational structure by aligning facilities under a single supply chain operations and assisting in training of skillsets for positions. The organizational improvements generated a sustainable infrastructure across INTEGRIS Health supply chain operations; improved contract and GPO compliance; reduced rogue agreements; provided greater visibility into vendor performance; and delivered more financial value from vendor relationships.

“The challenges around operational improvement and cost reduction facing our industry are significant and gaining efficiencies in the supply chain are in the spotlight,” said Larry Bramble, vice president, Consulting Services – Supply Chain Operations. “Vizient’s approach is rooted in collaboration and creative problem solving that helps supply chain leaders make every aspect of their operations as cost effective as possible with sustainable results. We are extremely proud to have our work recognized by Supply & Demand Chain Executive.”

“Our goal with 2016’s SDCE 100 is to shine the spotlight on successful and innovative transformation projects that deliver bottom-line value to small, medium and large enterprises across the supply chain,” said Ronnie Garrett, editor of Supply & Demand Chain Executive. “The selected projects can serve as a roadmap for supply chain executives looking for new opportunities to drive improvement in their own operations. We congratulate all of our winners for a job well done!”

Tags:  Cost  Savings  Vizient 

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Innovative Companies and Solutions Featured at Intalere’s Emerging Technology Show

Posted By HSCA, Tuesday, June 7, 2016

Intalere, the healthcare industry leader in delivering optimal cost, quality and clinical outcomes, held its annual Emerging Technology Show at the recent 2016 Intalere Member Conference in Las Vegas, Nev. The event showcases emerging technology and diversity suppliers proposing new, enhanced products and services to Intalere members.

“Intalere has always worked diligently to cultivate supplier relationships which deliver optimal outcomes to our members,” said Tom Wessling, vice president, contracting operations. “This event is an important element in ensuring we are consistently evaluating participants with innovative products for inclusion in Intalere contracts.”

Among the diverse mix of solutions presented during the show were:

  • Minimally invasive spinal fusion.
  • Pathogenesis-based therapies.
  • Healthcare continuing education.
  • Vascular access technologies.

“Our objective is to present a portfolio that is very competitive and supports the products that members desire for patient care,” said Wessling. “This event is one example of how Intalere works to provide healthcare providers and patients access to breakthrough technologies and choices among healthcare products.”

Over the past several years, Intalere has contracted with a number of suppliers who participated in previous shows. Several companies that participated in this year’s event are being evaluated for inclusion in Intalere contracts.

Tags:  Innovation  Intalere  Nevada 

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Optimize|Item Master Identifies $500,000 in Billing for Omaha Children’s

Posted By HSCA, Friday, January 15, 2016

The challenges faced by health care providers throughout the United States are daunting. Reimbursements are declining while costs are increasing, and staff is feeling pressure to do more with less. Simply getting paid for the services that are provided is an undertaking that can easily consume a vast amount of resources. In fact, billing and collections can be the most challenging factor in the revenue cycle equation. Health care providers are constantly adjusting their billing and collections methods in an effort to accommodate changing regulations and keep up with industry standards.

This is certainly true at Children’s Hospital & Medical Center in Omaha, Neb. — the only full-service pediatric specialty health care center in Nebraska. At Children’s, no child in need of medical care is ever turned away because of inability to pay. This may be why, according to Chris Klaiber, materials manager at Children’s, “we’ve always been paid a high percentage of the charges we bill.”

This was the case until fall 2012, that is. Chris and his team began noticing that some insurance payers were requiring that Healthcare Common Procedure Coding System codes be included when billing for certain items. “We’d never had a situation that required us to include HCPCS codes, so this was new to us,” said Lori Kirsch, value analysis nurse at Children’s. “Even if there was only one line item that was missing a HCPCS code, the payer would refuse to pay the entire bill.”

Realizing that these interruptions in their revenue cycle were unsustainable, Children’s began urgently looking for the missing codes to move the revenue process forward. Using every resource they knew of to tackle the problem, resources were stretched thin as their “all hands on deck” approach turned registered nurses into makeshift medical billing coders.

“Vizient helped Children’s bill over $500,000 within a couple of passes through Optimize|Item Master. Just imagine trying to fill a $1 million hole in your budget, and finding over half of it in one place. That’s huge.”  Read the rest of the story here.

Tags:  Cost  Nebraska  Vizient 

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Arkansas Children’s Hospital Implements $1.3 Million in Annual Savings in 90 Days With Predict|Price Performance

Posted By HSCA, Friday, January 15, 2016

Arkansas Children’s Hospital, the only pediatrics medical center in Arkansas, spans nearly 30 city blocks and has 370 beds. ACH has a staff of approximately 500 physicians, 95 residents in pediatrics and pediatric specialties, and more than 4,400 employees. Its physicians are consistently named to local and national “best” and “top” doctors lists.

Arkansas Children’s Hospital set a goal of finding $250,000 in savings in one year. By using Predict|Price Performance, they found $1.3 million in annual savings in just 90 days.  Read more in the attached summary.

Tags:  Arkansas  Cost  Vizient 

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New Lighting Improves Safety, Reduces Costs

Posted By HSCA, Thursday, January 14, 2016

CHALLENGE

As an award-winning Level 1 trauma center, Presence Saint Francis Hospital in Evanston, IL, encourages family involvement in the healing process. Its 24/7 open visitation policy drives a steady flow of vehicular and pedestrian traffic into its parking garage. However, inadequate lighting that resulted in limited visibility in many areas made the environment seem unsafe to visitors and staff. A new lighting solution was needed.

The garage originally had yellow high-pressure sodium (HPS) fixtures, said Joe Stark, regional director, support services for Presence Saint Francis and Saint Joseph hospitals. “The yellow light did not give a sense of safety and security to people. I’m a huge advocate of bright, daylight-like light and the sense of security it gives to people,” he said.

The HPS fixtures also required expensive, ongoing maintenance to replace bulbs and ballasts as well as electricians’ time and that of another person to monitor garage traffic while electricians did their work.

SOLUTION

Stark challenged Grainger, a Premier, Inc. (NASDAQ: PINC) contracted supplier, to help him find the best lighting solution for the garage. Working with a Grainger healthcare account manager, Stark evaluated lighting options. He looked initially at retrofitting existing fixtures with an LED lamp. But he was disappointed with the look of the fixtures and the quality of the light.

“Nothing looked good until we put in the sample Cree® VG Series parking structure and Cree Edge™ area LED luminaries,” Stark said. “The light output, the fixture itself, the different coloration of the lumens – it was completely different, from yellow to white. As the replacement happened level by level, you could clearly see that Cree had the right fixture for the right application.”

RESULT

The new optimal light quality resulted in a greater sense of security for visitors and hospital staff while significantly reducing operating and maintenance costs.

Stark heard right away from the Saint Francis security manager who noted that security camera output was clearer. The white light made it possible to read license plate numbers and see other details easier.

Staff noted the improved visibility. The Presence Network News, the corporate newsletter, did a story on the garage lighting. “They interviewed one of the hospital employees who indicated she felt much safer with the new lighting as she walked from her car during second and third shifts. A sense of security in the parking garage is very important to the hospital employees and to me. I want our staff and visitors to feel safe when they come here.”

The Cree VG Series parking structure and Cree Edge area LED luminaires not only provide optimal light quality, instilling a greater sense of security to hospital staff and visitors, but reduce operating costs and deliver energy savings.

Lighting maintenance has gone from ongoing to minimal, freeing maintenance staff for other projects. “Before the lighting change, maintenance crews were changing out lamps or ballasts at least every other week. Now with Cree, we haven’t been in the garage since,” Stark said.

A multi-level sensor chosen by Presence Saint Francis Hospital automatically lowers output from 100 percent to 25 percent after seven minutes of detecting no vehicle or pedestrian movement. That qualified the project for a large rebate from ComEd, the local electric utility.

Tags:  Cost  Illinois  Premier  Safety/Quality 

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Savings Top $1.5M in Year One With Premier

Posted By HSCA, Thursday, January 14, 2016

CHALLENGE

When Jimmy Robertson joined Bothwell Regional Health Center in April 2013 as chief financial officer, the 145-bed Sedalia, MO, hospital had experienced four straight years of operating losses. The stand-alone, city-chartered facility was struggling. It needed significant cost savings.

“We were losing millions,” Robertson said. “We made money one year but only because of meaningful use dollars. If you can’t make it from operations, you’re not going to be in the game long.”

Robertson’s charge: Find out what needed to be done to ensure the hospital remained financially viable. A task force helped lead the effort.

Robertson realized early on that Bothwell was spending a lot for supplies. There was an established relationship with Amerinet, the primary GPO. “But I felt we really should open it up to bids,” he said. Premier, Inc. (NASDAQ: PINC), Novation, MedAssets and Amerinet were invited to do market baskets. “We found we were paying way too much for a lot of the things we were purchasing,” the CFO said.

SOLUTION

Bothwell chose to join Premier as an affiliate of SSM Health in St. Louis, which also is a part of CCG, a purchasing collaborative within Premier with more than $3 billion in Premier contract purchasing volume.

What impressed me the most,” Robertson said, “is that Premier wanted to partner with us, not just for us to join the GPO under the wing of SSM. I felt Premier wanted to come in here, be our partner and help us improve. That sold me. It means a lot to me as a stand-alone organization.

“I didn’t have a system to rely on,” Robertson continued. “With Premier, I now have a region director, all the other folks at Premier as well as all the folks at SSM. They’re our partners. They want us to be successful.”

RESULT

At thetime of the conversion to Premier, first-year savings projections were about $875,000. “We’re well over that. It’s getting close to $1.5 million in savings,” Robertson said. “Through Premier and SSM Health coming in and scouring through what we buy and working with us on how to make changes, we’ve saved more than $600,000 above that. I have a valuable partner and they’re doing great work. It’s amazing. I couldn’t be happier with what Premier and SSM have been able to do for us.

When Bothwell closed its books in 2014, the net operating loss was $4.6 million on net revenue of $90 million, a negative operating margin of 5.16 percent. Through 11 months of 2015, net positive operating revenue is $4.5 million or a 5.06 percent operating margin on net revenue of $89 million.

“April to April, we’re $9.2 million ahead, about a 10 percent turn. There are lots of reasons behind that,” he said. “It’s not all due to Premier/SSM Health. But $1.6 million of that $9.2 million (more than 17 percent) is because of the work Premier and SSM Health have done.”

Robertson expects savings to continue to grow. The organization will continue to drive savings by using Premier/SSM agreements. Bothwell expects about $400,000 in savings already identified on capital purchases next year.

He expects additional savings by enhancing resource utilization efforts using benchmarking data from PremierConnect® Quality (QualityAdvisor™). Bothwell is reviewing other Premier solutions and services as well.

Tags:  Cost  Missouri  Premier 

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Labor Solution Helps TX Hospital Save $500K a Month

Posted By HSCA, Thursday, January 14, 2016

CHALLENGE

“It’s a fast-paced, quick-change environment,” said Charles N. Rivera, director, financial operations at Doctors Hospital at Renaissance (DHR). The large hospital was using an ineffective home-grown tool to help manage labor. “We needed a tool to ensure that we were getting relevant data in front of our department heads so they didn’t lose sight of key metrics as the hospital was going through a growth mode.”

SOLUTION

DHR joined the Premier, Inc. (NASDAQ: PINC) GPO in September 2012 as an affiliate of SSM Health in St Louis. In short order, the organization quickly signed up for most other services and solutions that Premier offers. DHR began using the PremierConnect® Operations (OperationsAdvisor®) solution in September 2014.

“We went from not knowing much at all about Premier to having just about everything Premier offers,” Rivera said.

But it was a slow process in the beginning as the labor solution was installed and staff were introduced, trained and got comfortable using it, Rivera recalled. DHR began with a biweekly reporting model but found that the data was three weeks old before it got into department managers’ hands. “It was useful for identifying trends but not so useful in day-to-day labor management,” he said.

“We really started gaining traction and making significant productivity improvement when we adopted daily productivity reporting,” Rivera said. “That was the absolute key to having OperationsAdvisor work for our directors.”

The rollout of daily reporting began in mid-January with a handful of departments including two that were “struggling in a major way.” The process went so well that within two months all 110 departments were using daily productivity reporting. “It’s made all the difference,” he noted.

RESULT

In the past five months, savings have averaged about $500,000 a month. That was the goal. “Going forward, we want to sustain it,” Rivera said. And soon there will be 12 months of data, which will be helpful in setting targets and benchmarking during budgeting.

The home-grown Excel-based system was not well-understood and there was little buy-in from managers. “It was just another report from accounting that usually ended up in the delete box,” Rivera said.

“We now have a system they see as value-added,” he continued. “They were brought in at the beginning and have bought in over time. They are being held accountable too. They see my team adding value in a consultative role to help ensure they meet their productivity goals and stay off the list for improvement. That’s a great motivator.”

In addition to the daily productivity reports from PremierConnect Operations, Rivera and his team also provide managers with census reports every four hours. “That made the point that staffing is an ongoing process,” he said. “Light bulbs went off. Productivity changed after those reports started to go out. They started to manage to census. Productivity started to creep back up.”

The high level data provided throughout the day helps them make changes “on the fly” that they can see the next day in productivity reports, he explained. Rivera cited other dividends. Patient throughput has increased, especially in areas where procedures are performed and productivity is tied to volume. It has not only helped improve labor management but also helped increase revenue because managers pay closer attention to charge entry.

“There are no buy-in issues now. Most comments today are positive. They see it as a tool in their toolbox to help them manage their departments,” Rivera said. “Yes, we’ve done well over the past 12 months. We’ll celebrate the good job by everyone, then we’ll begin to focus on the next 12 months.”

*     *     *

Doctors Hospital at Renaissance in Edinburg, TX, is a 530-bed physician-owned health system that offers some of the most comprehensive medical care on the U.S. southern border. Founded in 1997, DHR has plans to add 300 beds and significantly expand services including graduate medical education. The service area includes more than 1.3 million residents. Services include a full continuum of care in more than 70 different sub-specialties.

Tags:  Cost  Premier  Texas 

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Engaging Clinicians Helps TPC to Save $107.6 Million in Underlying Cost Structure—and Still Counting

Posted By HSCA, Thursday, January 14, 2016

As health systems seek cost reduction strategies, one area of focus is supplies. Second to labor in the expense categories, supplies and drugs can represent typically as much as 25 percent of a hospital’s total operating budget.

Traditionally, hospitals and healthcare organizations relied on their group purchasing organization (GPO) to maximize supply purchasing efficiency and reduce supply expense. To drive low pricing, traditional GPOs negotiate contracts with suppliers and distributors that take into account the collective purchasing volume of the GPO members. With the emergence of risk-based reimbursement, declining revenues and additional Medicare rate cuts, an inability to reduce supply expense from current state has far-reaching implications. Only those healthcare organizations that reduce the underlying cost structure of resources used in delivering patient care can achieve the care and cost improvements needed to sustain financial viability.

TPC is a provider-owned partnership comprised of eight independent health systems who decided to respond to this challenge by rethinking their traditional GPO services. The coalition enables member health systems to gain access to economies of scale and clinical redesign expertise that they would not be able to afford as an independent community health system. By banding together, TPC members were able to transform expense management and implement procurement functions to control costs. The goal was to reduce costs not only for commodity supplies and pharmaceuticals, but also purchased services, medical equipment and implantable medical devices/physician preference items (PPI)—which can represent as much as 40 percent of a hospital’s supply budget.

Challenge

In 2009, TPC conducted a request for proposal to find the best economic solution for its supply chain needs. In addition to traditional GPO services, two key capabilities were PPI consulting and technology for analytics to package existing supply chain data into actionable information. The coalition deemed the PPI consulting services as the largest potential savings opportunity.

According to Geoff Brenner, president and chief executive officer, TPC’s choice of MedAssets in January 2010 was based on the company’s proven strengths in each capability category and strong industry references.

“I spoke with the CEO of a large healthcare system, who commented that in the area of physician preference items, while everyone else in the industry holds a candle, MedAssets holds a searchlight,” says Brenner. “It made a difference that other providers were validating the PPI advantage MedAssets held in capabilities, systems and tools.”

Solution

In 2010, TPC members converted their respective existing GPO relationships and realized immediate benefit. The sourcing of custom contracts extended to both individual members and the coalition as a whole. Taking advantage of scale, TPC drove change across the health systems.

Centralized Distribution Management

MedAssets worked in collaboration with each provider to consolidate and standardize distribution spend for med/surg, laboratory and pharmacy under a single, custom contracting umbrella. Fueled by each member’s pre-commitment to convert to the recommended distributor, this comprehensive agreement generated a swift $6.5 million in savings.

“I believe that it’s the best distribution agreement in the country,” says Todd DeRoo, chief resource officer, Trinity Mother Frances Health System. “Converting three major areas simultaneously was a major effort, but the expertise of the MedAssets team helped us develop the terms and conditions, evaluate the responses and complete tough negotiations with the finalist. Every TPC member received an immediate benefit from the conversion process, and our cost-plus pricing decreased substantially.”

MedAssets also provided members with decision support analytics, for complete visibility into all aspects of supply spend. As a result, the coalition generated $35.7 million in savings through distribution and clinical sourcing initiatives by leveraging the knowledge and experience of the MedAssets Operational Analytics teams.

“My quarterly report details ongoing savings that have been audited and agreed upon by our hospital and MedAssets. I always know how current performance compares to our guaranteed savings—and what is in the pipeline,” notes Stephen Bowerman, chief financial officer, Midland Memorial Hospital. “I can track my facility’s progress and also gauge our results against other TPC hospitals. It’s all very transparent and creates a friendly spirit of competition, even though we know that we’re all working together to hit the overall TPC savings target.”

Converting PPI through Clinical Value Analysis

Consulting services focused on the challenging area of PPI. MedAssets clinical resource management experts reviewed coalition member utilization to capture total costs then provided comparative analysis variables including reimbursement, supply cost, utilization and clinical resource data. The on-site MedAssets team then engaged TPC physicians in a distinct analytical review to present insight on PPI cost drivers and savings opportunities. The physician engagement resulted in converting usage and more standardization for a total savings of more than $63.5 million.

According to Brenner, the ability to share data and collaborate with physicians in a scientific manner is essential to successful PPI conversions. It affirms to physicians it’s possible to maintain high quality patient outcomes while being mindful of how medical device selections impact financial results. “Thanks to clinical input and consensus we’re having great success in areas that seemed unmovable in the past, and the results have drawn favorable reviews, both in terms of perception and bottom-line results,” he says.

“The PPI process is a real eye-opener for physicians, and MedAssets analytics have been a strong selling point,” adds DeRoo. “During the negotiating process, our doctors told vendors that volume would be moved elsewhere if fair market prices weren’t met. In a recent initiative for heart valves, when the number-one vendor in that market would not meet the recommended price point, physicians chose instead to use two other vendors that would meet it.”

Concluding DeRoo says, “As supply chain executives and materials managers, we didn’t spend much time with physicians five years ago, but now we do. Data from MedAssets is helping us cross the goal line together.”

“It’s a great process to go through, just culturally, to meet with our physicians, examine data, evaluate clinical acceptance and outcomes and determine how we can get equivalent products at better prices,” says Bowerman. “Having that level of engagement with physicians is valuable to help us learn more about their practices and it has been a great savings opportunity.”

Results

The move to retain local identities and independent ownership structures enabled TPC members to gain access to price points and business intelligence usually reserved for the largest IDNs, including expert resources and benchmark data, generally cost prohibitive to develop and own.

Over the span of its engagement with MedAssets, TPC has experienced value-driven savings of $107.6 million, achieving $54 million in the first 18 months, beating its guarantee from MedAssets nearly three months early. The coalition generated approximately $35.7 million in savings through distribution and clinical sourcing initiatives, including $6.5 million in savings from a new system-wide distribution agreement, which consolidated members’ combined volume in med/surg, laboratory and pharmacy to one distributor. TPC also generated $8.4 million in savings from MedAssets Strategic Sourcing services. The PPI engagement resulted in converting usage and more standardization for a total savings of $63.5 million. Within that figure TPC realized $18.5 million in pharmacy services savings. Due to the success of the TPC’s relationship with MedAssets, a former Premier member (Hendrick Health System) chose to join TPC to benefit in the demonstrated supply chain cost reductions and clinical process improvements.

“After reviewing our options, we realized that joining this coalition also would give us access to MedAssets knowledge, technology and experts to control costs at a whole new level,” says Tim Lancaster, president and chief executive officer, Hendrick Health System. “Acting on our own we could never afford a staff to conduct a comprehensive value analysis on the total costs of care. This agreement is an essential step toward sustaining our financial viability and ability to continue to provide excellent patient care in our community.”

Brenner adds, “MedAssets has brought structure, process and predictability to an otherwise challenging and disparate supply chain process. Our members are benefiting from aggressive pricing programs combined with flexibility in contracting to maximize benefits. Our results to date demonstrate we have made the right choice.”

Features

  • Leveraged the combined strength of a “virtual IDN” business model to create economies of scale and significant financial benefit to the coalition and individual members
  • Introduced Operational Analytics as the next step in achieving greater cost reductions in clinical supplies, based on standardizing and reducing variability in supply usage by procedure, physician and service line
  • Worked with all TPC members to consolidate distribution spend for med/surg, laboratory and pharmacy under a single custom-contracting agreement
  • Used custom-contracting strategies to craft agreements at the facility level for PPI categories such as orthopedics
  • Converted member usage of sutures, endomechanicals, trocars, surgical mesh and topical skin adhesives to one supplier—and achieved significant savings
  • Applied proven methodologies to create structure and processes to create an informed clinical voice into PPI purchasing decisions

Optimize Cost Management Performance

  • Experienced value-driven savings of $107.6 million, achieving $54 million within the first 18 months
  • Generated $6.5 million in savings by consolidating members’ combined volume in med/surg, laboratory and pharmacy to one distributor
  • Utilized pharmacy services to gain another $18.5 million in savings
  • Generated GPO savings of $8.4 million
  • Gained an additional 10 percent savings on contracts for non-clinical products through pre-commitment strategies

Optimize Clinical Resource Utilization

  • $63.5 million in PPI savings
  • Hendrick Health System and Mission Regional Medical Center chose to join TPC to benefit in the demonstrated supply chain cost reductions and clinical process improvements

Optimize Clinical Resource Management

  • Generated $52.4 million in savings by converting usage of PPI
  • Premier member (Hendrick Health System) chose to join TPC to benefit in the demonstrated supply chain cost reductions and clinical process improvements

Tags:  Cost  MedAssets  Texas  Texas Purchasing Coalition 

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