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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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Vizient Members Adopt Energy Best Practices to Drive $3.7M in Budget Savings

Posted By HSCA, Wednesday, September 21, 2016

Hospitals are among the most intensive consumers of energy in the United States, with 3 to 5 percent of their annual budget going to energy costs. Yet many continue to overpay for energy supply by relying on traditional purchasing methods. Unfortunately, those methods rarely deliver the best price for the hospital.

Unlike supply chain purchasing for commodity items, the energy market requires a totally different approach that’s more akin to managing market-sensitive assets and liabilities, such as the hospital’s bond portfolio. To be successful, a hospital needs to be able to decide between hedge purchasing versus index decisions (or a combination of both), using financial probability modeling.

“We see many members issuing request for proposals using just their own volume, or in some cases, buying their energy with minimal market intelligence,” said Will Gowan, senior director, contract services for Vizient. “The Vizient energy program, which facilitates the implementation of energy procurement best practices, is helping hospitals realize significant savings.”

Three Vizient members have booked $3.7 million in budget savings by adopting these best practices in energy procurement and management:

·         Use of analytics to manage market risk and capture savings

·         Internal alignment of facilities, finance and supply chain staff around a central strategy that integrates both supply and demand management

·         Aggregation of spend with other hospitals to drive cost savings


WellSpan Health, a growing multihospital network based in south central Pennsylvania, realized a $2.1 million savings over their current contract term by transitioning from a traditional bid-based, fixed-rate procurement method to an actively managed market approach. A first step in the transition was organizing a multidisciplinary committee, consisting of the chief financial officer, chief operating officer, treasury vice president and key facility directors, who actively manage the electricity and natural gas spend across the organization’s facilities.

The committee then made the decision to join an aggregation network with other Vizient members and was able to reduce electricity supplier margins by 50 percent. Additionally, they have begun using statistical market analysis to identify savings opportunities in the forward markets, which led to a new contract design where the health system layers its energy purchasing over time. According to Richard Harley, vice president of corporate treasury services at WellSpan, “Our organization now manages its energy spend much as it does other market-sensitive assets and liabilities.”

Another health system seeing a reduction in costs as a result of adopting best practices and having access to analytics through a Vizient energy partner is Lifespan, one of New England’s leading health systems. Lifespan had already taken steps to more directly control its energy costs by recently building a cogeneration plant at its Rhode Island hospital campus. While that step was yielding cost savings, they wanted to take their energy program to the next level.

“We now have access to the highest level of financial and market analytics available in the industry,” said Tom Magliochetti, vice president of facilities at Lifespan. As a result, Lifespan saved $1 million on an already well-managed energy budget and is continuing to integrate and optimize both its on-campus assets and its market procurement processes to drive savings.

At the same time, OhioHealth, a 12-hospital IDN based in Columbus, has revitalized its energy management by implementing all three best practice principles. “The market forecasting and analytics were the key difference in reducing OhioHealth’s energy procurement costs by more than $600,000 over the past year,” said Alan Nelson, system vice president of treasury at OhioHealth. “Even more importantly, the health system has transitioned to managing energy using a team approach.”

“Vizient’s mission is to drive savings for our members. While we are confident every Vizient member can find benefit regardless of market conditions, we haven’t stopped working to improve," said Gowan. “We're currently conducting an outreach to all Vizient members interested in improving their energy results through our best-practices approach. We would particularly like to hear from member facilities, finance, and supply chain leaders so we can perform an assessment to discover opportunities and drive greater savings for all participants,” said Gowan.

Tags:  Cost  New England  Ohio  Pennsylvania  Savings  Vizient 

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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


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 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.


“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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University of Pittsburgh Medical Center Adds $30 Million to Bottom Line

Posted By HSCA, Thursday, January 14, 2016

In 23 years, University of Pittsburgh Medical Center (UPMC) has aggressively grown from a single medical center to an integrated global health enterprise that boasts 20 hospital locations with 4,500 licensed beds, more than 400 outpatient sites, 55,000 plus employees and $10 billion in annual revenue. In the summer of 2012, UPMC East, a newly constructed hospital near Pittsburgh in Monroeville, Pennsylvania, will open and add another 156 beds and seven operating rooms.

In 2005, UPMC selected MedAssets to support its goals for supply chain and revenue cycle management automation. The ability to drive contract compliance and improve productivity using MedAssets Procure-to-Pay Solutions has resulted in exceeding world-class benchmarks and, most important, creating a $30 million positive impact to UPMC’s bottom line. Also, by enabling linkage between the health system’s supply chain to the revenue cycle, MedAssets Cost Analytics support correct and complete billing for optimal revenue enhancement, on a daily basis.


Supply Chain Management

UPMC buys supplies in tremendous volume—with $1.8 billion in spend, 4,000 purchase requisitions processed per week and 70,000 invoices per month all managed by a 370-member team. In addition, 1.1 million packages come through the central distribution center annually. Like many other healthcare purchasing organizations across the country, UPMC was struggling with waste and inefficiency even though they had taken steps toward automation with another vendor’s system. Despite the technology investment, its supply chain remained completely paper-based. Generic descriptions on requisitions frustrated end users and caused a 20-day backlog on purchase orders. Contract compliance was limited with more than 50 percent of UPMC’s purchases occurring outside of the established supply chain processes. UPMC implemented MedAssets Contract Catalog database and Cost Analytics tools to manage data and reporting.

Access and Reimbursement

Related to Revenue Cycle processes, UPMC’s Patient Financial Services department manages the full continuum of services—from pre-registration and patient access, to claims submission and follow up. According to Don Riefner, twenty-three year veteran and UPMC’s chief revenue officer, while collaboration between the supply chain and revenue cycle functions is key to proper reimbursement, little of it existed between these two areas. Riefner asserts that information technology has been the linchpin of the organization’s success in meeting the integration needs necessary to maintain the highest level of care for patients while accommodating the exploding volume.

“The Charge Description Master (CDM) is where the supply chain meets the revenue cycle,” he explains. “The supply item needs the correct billing code (HCPCS) for charges to be captured. The same correct HCPCS code is needed for clean claim processing so that the hospital gets paid. At UPMC, like all hospital revenue cycle departments, we’re dependent on our patient accounting system. Our aging system, however, didn’t offer the functionality for the CDM to be standardized across our 20 different hospitals. Our current technology environment made appropriate coding extremely difficult.”


UPMC conducted a request for proposal and ultimately selected MedAssets based on a proven track record in procurement, supply chain management and revenue cycle management.

Streamline Purchasing Operations

A team was formed to manage content in the MedAssets Contract Catalog to assure contracts were complete and accurate before entering them into the database. Since 2010, Contract Catalog has enabled UPMC to maintain both local negotiated contracts, such as Physician Preference Items (PPI) for spine implants, as well as MedAssets National Contract Portfolio contracts. The improved quality of data enables UPMC to connect its supplier-hosted catalog with the eProcurement Services MarketPlace, powered by Prodigo Solutions®, tool, providing access to 200,000 items in the online tool used by 7,000+ end users. The Web-based technology also provides streamlined reporting for spend analytics, including a single report to compute the compliance rate.

eProcurement Services MarketPlace was deployed as an extension to the existing PeopleSoft ERP eProcurement module enabling UPMC to move from paper-based requisitions to full e-procurement. eProcurement Services MarketPlace provides detailed descriptions and pictures and drives contract compliance with a single online “marketplace” to buy contracted supplies. Today, more than 900 suppliers are connected to the tool, which includes contract compliant content from a number of sources; the UPMC Item Master, supplier punch-out sites and the MedAssets Contract Catalog.

In 2008, UPMC and MedAssets tackled a strategic initiative to reduce food service spend. With $60 million in annualized spend and more than 900 manufacturers supporting 48 cost centers the food service division of UPMC began a vigorous process of standardization. The process included movement from local agreements to distribution agreements, minimizing non-contracted spend, streamlining SKU’s and standardizing the vendor and distribution paths UPMC, with the support of MedAssets, also conducted a collaborative analysis detailing potential areas of opportunity.

Two food distributors were added to eProcurement Services MarketPlace and the MedAssets Cost Analytics tool was used to aid in contract management, compliance, consistency and pricing validation. Buying patterns of the internal staff were adjusted and a reverse order guide was implemented. “UPMC and MedAssets are managing food costs like no other hospital system,” says Brenda Jones, UPMC’s senior sourcing agent. “We’re a healthcare system that thinks like world class retailers leveraging all our buying power. MedAssets enabled the process for success—UPMC’s ability to purchase in volume, minimize the manufacturer base and standardize products. Enhanced management of the distribution chain results in better control of purchasing decisions and lowering costs while not compromising quality or patient satisfaction.”

Revenue Performance Improvement

Related to revenue cycle, MedAssets also led the UPMC Patient Financial Services team through standardization of the charge description master. UPMC used MedAssets CDM Master® solution to transition from multi-hospital charge description masters to a single corporate standard to make it easier to access appropriate coding for correct billing. In addition, a built-in repository serves as a reference manual to look up Medicare CPT codes. By finding missing codes, MedAssets technology is supporting UPMC staff to know that anything that can be charged will be charged, providing additional revenue enhancement.


“UPMC’s supply chain is highly automated,” states James A. Szilagy, UPMC’s chief supply chain officer. “Technology is enabling us to drive more automated transactions and to dedicate fewer FTEs to tactical activity than other companies. We can point to 25 FTEs, at a minimum, that were redeployed or eliminated because of automated processes. In all, MedAssets procurement automation tools supported the ability to enforce contract compliance have delivered $30 million to UPMC’s bottom line.”

UPMC went from a 20-day backlog on purchase orders to less than a two-day turnaround, which far exceeds the industry standard. Within 10 months, UPMC’s purchase order transactional productivity rose to a level that is more than 245 percent above the industry average and 58 percent above the world-class benchmark. Invoice transactional productivity, the cost to process an invoice, also tops the highest industry benchmarks. Because the process is now electronic, UPMC’s rate is more than 40 percent below the world-class benchmark. Processing cost per purchase order has improved by 18 percent and is significantly lower than both the cross-industry average and the world-class benchmark.

As a result of eProcurement Services MarketPlace, UPMC processes 100,000 purchase order lines per month and 81 percent of those are now processed from requisitions that start in eProcurement Services MarketPlace, effectively creating contract compliance at the point of requisition. In addition, 45 percent of the purchase orders automatically generated from those requisitions are sent electronically via electronic data interchange (EDI) exchange directly to the vendor without any buyer involvement. Since the creation of the catalog team, and new processes to support data integrity, UPMC has reduced the EDI pricing discrepancy rate by 92 percent. The error rate of 1.54 percent translates to fewer vendor invoices failing as a match exception on the ERP system.

“MedAssets technology coupled with improved processes has given us more efficient and reliable spend analytics coming out of the Spend Analytics Basic tool,” states Lynn Koziak, UPMC’s director of finance for supply chain management.

“UPMC’s overall objective is to drive supply chain efficiencies by rationalizing spend, lowering purchasing and products costs such that more volume flows through high quality preferred suppliers, while increasing patient satisfaction. Food costs cannot be overlooked,” states Jones. “Working with MedAssets and changing internal processes is the driving force to our ability to lower costs.” In 2010, successes of this methodology yielded UPMC $2.4 million in MedAssets contract savings and $1.4 million in locally negotiated contract savings. Further, 100+ manufacturers were reduced to seven (7) yielding an additional $800,000 in savings.

Cost Analytics provided visibility into spending on food contracting services to realize $2.4 million in contract opportunities and  $1.4 million in rebates with locally negotiated vendors. Examples can be seen in many of UPMC’s market basket, one significant area reviewed was the protein line. Eighty-six manufacturers were utilized at a spend of $3.2 million, today UPMC uses five manufacturers and successfully realized a savings of $335,000. UPMC has many examples where standardization and streamlining have “paid-off.” In 2010 UPMC successfully remained 2 percent below the inflationary rate of 5 percent throughout the year.

“MedAssets is a perfect fit for UPMC into the future,” adds Riefner. “Hospitals rely on specialized technology, like CDM Master, to automate the functionality of today’s aging patient account systems. MedAssets has been key to our ability at UPMC to meet our mission of integration.”

Tags:  Cost  MedAssets  Pennsylvania 

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