Hackensack University Medical Center, Hackensack, N.J.
775-bed acute care/trauma medical center. Purchasing department handles expense purchases and agreements exceeding $260 million annually.
The Journal of Healthcare Contracting: What has been the most challenging and rewarding project you have been involved in recently?
Richard Killeen: Last March, we changed group purchasing organizations and have identified potential cost reductions upwards of $13.3 million dollars for the year 2011. Annualized for the year 2012, we anticipate realizing $20 million in cost reductions. This initiative has required modification of 45,000 items in our item master (including data such as vendor, manufacturer, part numbers and unit pricing). In the upcoming months, several thousand additional items will need to be passed through our value analysis process in order to determine whether additional items can be converted in order to maximize savings opportunities.
JHC: What is the biggest change we can expect to see in healthcare contracting in the next five years?
Killeen: We can continue to expect shrinking reimbursement from insurance providers, as well as state and federal healthcare [payers]. As margins continue to be tighter for both of these healthcare systems, supplier opportunities will be found through greater implementation of technology. The overall cost of doing business will be reduced by electronic data interchange transmission of orders, advanced delivery notification, electronic invoicing, standardized bar coding and electronic funds transfer payments. Both insurance providers and state and federal healthcare providers will reap the benefits of these initiatives.