Better care@lower cost

It’s possible, but only with alignment of strategic supply chain thinkers and the clinician teams

As healthcare providers, we work diligently to reduce unnecessary costs in the wake of ongoing funding cuts and the growing movement toward reimbursements based on quality. And it’s proving to be a real learning experience.
However, leaders are uncovering opportunities to reduce expenses without undermining care quality – and they continue to find opportunities they didn’t know existed.
We’re also seeing that in order to simultaneously improve care consistency and quality while driving out unnecessary costs, both supply chain and clinical processes have to be integrated.

The clinically integrated supply chain
The model we use at Presbyterian Healthcare Services (Albuquerque, N.M.), called the “Clinically Integrated Supply Chain,” stresses the idea that success must rely on the strategic and operational alignment of an organization’s clinical and business goals. Specifically:
Executive leadership needs to change its view of supply chain from an operational department to a strategic arm critical to the financial and clinical success of the organization. Leadership must also commit to fundamental change and provide the necessary resources to enable it.

The supply chain team itself must commit to change and be prepared to take “center stage” for organizational evolution. As non-labor costs continue to escalate, the need for strategically focused supply chain leaders who can innovate beyond the best price is more important than ever before.

Physicians, other clinicians and supply chain management must closely collaborate to change processes, with a shared goal that improves quality outcomes and reduces costs. This represents a culture shift for most organizations, in which supply chain management and clinical operations can often operate in silos.

A focus on value analysis
Successful clinically integrated supply chains include value analysis, that is, a process and methodology for selecting the highest valued supplies and services – including physician preference items – to be used in fulfilling our patient care mission. They adopt the most effective methods to acquire all medical and non-medical supplies, equipment and services. And they work with clinicians – by providing tools and data sets – to reduce resources consumed in providing services.

Presbyterian’s value analysis process has the full support of executive leadership. An ongoing – not ad hoc – structure, including seven value analysis teams, currently exists, with oversight from a steering committee led by physicians, senior leaders and executives. The process is service line – not supply chain – driven, with a constant focus on clinical outcomes and value.

The importance of data
We all know doctors are data-driven. In order to effectively gain their buy-in, we need to have actionable data that physicians can relate to, appreciate and respect. As a Premier healthcare alliance member, Presbyterian has access to integrated cost and quality improvement applications to identify outliers, opportunities for improvement and high-volume diagnoses for each of its business lines.
In analyzing our data, we compared our costs to top performers nationwide and found a number of opportunities in the high-volume cardiac surgery APR DRGs. We learned we were using an expensive anticoagulant for nearly 60 percent of our cardiac valve patients, compared to less than 1 percent of similar patients in its peer group. This one drug added about $11,500 per patient, but it wasn’t adding any clinical benefit.

Today, our use of the drug is in line with Premier’s top-performing hospitals and contributes nearly $2 million a year to the health system’s bottom line without affecting clinical outcomes. Other savings include an orthopedic implant capitation program that has saved $2.2 million, and a spine implant capitation program that has saved $745K.

In pharmacy utilization, drug conversions to generic alternatives in Presbyterian’s medical group and health plan have resulted in $5.8 million of savings.

All told, Presbyterian’s clinically integrated supply chain program has documented a three-year total of $43.2 million from 648 initiatives. This includes $18.4 million in savings in 2009 alone. To date, our supply cost per adjusted day has declined from $348 to $291, and supply cost per acute adjusted discharge has dropped from $1,654 to $1,447. The latter figure surpassed the 2011 goal of $1,453 per acute adjusted discharge.

Change like this is no quick fix. But it’s this type of change that can lead our nation’s healthcare system toward achieving the goal of balancing and improving not only the cost of care, but also care quality and access. More important, it can provide the type of care our communities need and deserve.


Matthew Pehrson is vice president of supply chain management, Presbyterian Healthcare Services (Albuquerque, N.M.)

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