Delve deeper into supply chain expenses

Mike Alkire of Premier Purchasing Partners outlines how hospitals can use technology solutions to provide efficient and cost-effective healthcare delivery.

Powerful tools that turn data into actionable information set the Premier healthcare alliance apart. Armed with strong analytics, hospitals can safely reduce costs and optimize their bottom line.

Enabling technology is a must for any healthcare supply chain partner. At Premier, we integrate the power of data and technology into the healthcare environment – in patient care, quality and safety, and in the supply chain. The value of technology-enabled supply chain solutions for our members, specifically spend analytics, was nearly $72 million in the last 9 months alone. As a result, we can help our members push performance far beyond today’s levels. Our tech-savvy members, who are using the tools to their fullest, are seeing supply chain ratios in the area of 14 to 15 percent of total operating expense.

On the cutting edge
One of our primary roles is to bring cutting-edge technology solutions to systemic problems that inhibit the efficient and cost-effective delivery of healthcare to the communities our members serve. Spend management decision support tools, such as web-based SpendAdvisor – particularly the MySpend module – unlock the improvement potential in our partnership with our alliance members.

SpendAdvisor’s sophisticated enabling technology helps our members accelerate financial performance. It is a mechanism through which total spend can be aggregated, standardized, streamlined and then analyzed; it is the key to identifying and prioritizing opportunities for savings.

Twenty Child Health Corporation of America (CHCA) hospitals across the country are currently implementing SpendAdvisor with projected first year savings expected to exceed $10 million. Using an outside consultant, a task force of 20 CHCA hospitals evaluated the tool for seven months against competitors. The task force chose the SpendAdvisor MySpend module based on cost, ease of use, ROI and our commitment to supporting their needs, according to Karla Vialle, Director of Operations, CHCA Group Purchasing Services.

Alan Edwards, Director, Materials Management at Children’s Medical Center in Dallas, says, “The implementation of SpendAdvisor forced us to look not only at our processes but at our structure as well. The tool was instrumental in our decision to re-engineer our department with a focus on strategic sourcing using the data in SpendAdvisor as our roadmap.”

Saving time and money
Alamance Regional Medical Center and independent hospital in Burlington, NC, saved more than $2 million on supplies last year, doubling its annual savings goal of $1 million, by aggressively using SpendAdvisor.

As significant as those savings are, Supply Chain Director Wendell Osborne says he is even more impressed by the time he saved doing his job. “SpendAdvisor has saved me a ton of time. It used to take me about 20 hours to produce information that I now get out of SpendAdvisor in less than 10 minutes."
Another function Osborne likes is national benchmarking. That caught the attention of his medical staff. “We’ve been able to tie the information from SpendAdvisor with finance and reimbursement so our physicians know what their spending habits are and how they affect the hospital.”

Osborne said he gave physicians information about some high-spend implant areas. “This whetted their appetite. Now they’re calling and wanting more information. As more doctors know that we now have this information available, they will call, and that’s good. Before SpendAdvisor, I did not have a way to pull this data.”

More than 100 IDNs representing nearly 600 facilities are successfully using SpendAdvisor. We expect more than $15 billion in medical, surgical and pharmacy spend volume will be in SpendAdvisor next year. Our members who use SpendAdvisor are driving contract savings of between four percent and eight percent.
In today’s environment of reduced reimbursement, intense competition, high costs of technology, pharmaceuticals and more, hospitals need creative and supportive ways to manage their margins. SpendAdvisor is a technology solution that truly helps our members understand their spending and proactively identify savings. By strategically analyzing data and driving savings to the bottom line, Premier is working hand-in-hand with our not-for-profit hospitals to keep them financially healthy in the future.

As President of Premier Purchasing Partners, Mike Alkire has responsibility for an organization that offers comprehensive supply chain services to more the than 1600 US hospitals and nearly 50,000 other healthcare sites in the Premier healthcare alliance. Under Alkire’s leadership, Purchasing Partners has driven an estimated $1.1 billion in financial value to stakeholders in 2007 alone.