Health Care Purchased Services Success Stories

MaineHealth

Summary:

MaineHealth partnered with Medpricer to analyze Purchased Services spend categories and to execute strategies to reduce the total costs. To date, Medpricer has helped MaineHealth source over $5 million in Purchased Services spend and realize over $1 million or 25% in savings. Categories have included clinical services such as custom packs and translation and interpretation services and facilities services such as EVS supply. By working with Medpricer, MaineHealth has developed a local sourcing capability that has improved their contract managers spend under management and competitive bidding cycle time while diversifying their sources of savings.

Background:

MaineHealth is a $2 billion in revenue, not-for-profit family of leading high-quality providers. Ranked among the nation’s top 100 integrated healthcare delivery networks, MaineHealth member organizations include Maine Medical Center and five other acute care facilities. MaineHealth sought ways to expand the amount of spend under management for each of their contract manager, improve the cycle time for competitive bids and to diversify their savings methods and initiatives. MaineHealth’s primary GPO is VHA.

Results:

A large health system with a robust internal sourcing department and a partnership with a large GPO, MaineHealth was able to achieve remarkable savings on very complex projects by using Medpricer.

MaineHealth started with a pilot for custom procedure packs where Medpricer earned a 32% savings, twice the savings the health system expected. Two other initial sourcing projects followed – translation and interpretation services and EVS supply. In total, MaineHealth realized $1 million in savings on $5 million of Purchased Services spend.

Commenting on how Medpricer supports his contract managers, Luis Soto, Maine’s VP of Sourcing, said:

“MedPricer has served as an additional resource and provided tools to empower and support our Contract Managers. Our Contract Managers have been trained on MedPricer platform and jointly lead negotiation with Medpricer. This has been especially helpful on savings projects that are not performed frequently by us, but Medpricer may have done several times within one year. Therefore, Medpricer can guide us on what to look out for but more importantly what questions to ask”

Mr. Soto continued highlighting cycle time improvements:

“Another great benefit is the reduced time to develop an electronic RFP and to put this out to bid. It is extremely fast compared to the traditional paper model which can take several months to complete. In contrast, using the MedPricer platform, the negotiation can take only a few hours while achieving much higher savings due to a more competitive live bidding process.”

Mr. Soto also commented on how Medpricer enabled Maine to strategically develop greater local sourcing capabilities:

“Leveraging the Medpricer process and technology is extremely important in terms of savings diversification. The typical evolution of supply chain first relies heavily on GPO contracting and then moves to add more local contracting eventually becoming heavily diversified with different business partners and initiatives to maximize and to achieve the highest level of savings.”

Medpricer’s formal process, documentation, live negotiation and side-by-side comparison analysis before, during and after the negotiation simplified the purchase of thousands of items and made it a streamlined, orderly process that exceeded savings expectations.

Hennepin County Medical Center

Summary:

In partnership with Medpricer, Hennepin County Medical Center has achieved high percentage savings – including 30% on one project – and evolved their in-house sourcing team to do more great work faster. The partnership with Medpricer is an opportunity for HCMC to continue to grow their in-house sourcing by learning through an experienced partner and bring even more value to the organization.

Background:

Hennepin County Medical Center (HCMC): Is a 472 bed county-owned health system based in Minneapolis with approximately $50 million in purchased services spend – an amount higher than HCMC’s estimated non-purchased services spend. VHA is Hennepin’s primary GPO.

When Hennepin County Medical Center (HCMC) shifted its purchasing from a county-run group to one in-house, the in-house team began working immediately to incorporate the business goals of the medical center into the purchasing process.

HCMC initially worked with Medpricer to achieve three sourcing objectives: 1) identify and realize cost-savings 2) engage stakeholders in sourcing projects to increase value and service levels 3) implement a transparent and competitive negotiation process.

“We want to provide value to the organization,” said Luis Valadez, HCMC’s Director of Supply Chain Management.

Mr. Valadez initially used Medpricer to increase sourcing capacity to achieve savings targets without sacrificing stakeholder value or compromising the process. He also saw an opportunity for Medpricer to help them evolve their internal sourcing team skills by bringing in and transferring category expertise.

The need arose quickly for additional expertise in healthcare sourcing, and the young purchasing team looked to Medpricer’s experience and expertise to help evolve their own sourcing know-how and get results equal to those of much larger health systems.

“We are able to demonstrate value to the organization because of the value we get from Medpricer,” said Valadez. “Medpricer is able to provide us with benchmarking analytics to show us how we compare. We are able to use best practices to get the best value and quality,” he said.

Results:

The first project for transcription services resulted in 30% savings, and the process led to a 67% reduction in sourcing cycle time and less time-consuming administrative work for the team, freeing them to do more contract management and implementation. And the team is gaining skills they can use in the future.

“Medpricer helped us to do a lot of great work fast. The volume is more than we’ve ever done before,” said HCMC Portfolio Manager Lisa Ackerman. “My team gets great ideas on how to do our RFP projects better.”

Medpricer started with a pilot sourcing project – Transcription Services – where Medpricer helped HCMC:

  • Complete the Sourcing process 67% faster
  • Identify savings of 30% than the current cost for comparable services
  • Award to a new vendor with a superior software and vastly improved service levels compared to incumbent at 24% savings with the majority of transition and implementation costs included

After the pilot, Medpricer has continued to help HCMC’s team drive higher sourcing project volume more rapidly with high savings. In the first eight months of partnership, Medpricer has helped HCMC complete five projects with a combined average savings of 30% including:

  • Electronic Eligibility Software
  • Reference Lab Testing Services
  • Managed Print Services
  • Interpretation Services

Other projects planned and on-going include:

  • Linen Service
  • Cleaning Services
  • HVAC Repair Services
  • Collection Services
  • Waste Management
  • Landscaping Services

“East Coast Health System”

Summary:

For the past eight years, Johns Hopkins has partnered with Medpricer to source more than $444 million in spend across 106 projects saving over $82 million in Purchased Services, medical-supplies, commodities, capital and construction and physician preference items. In Purchased Services alone, Johns Hopkins has processed $94 million in spend saving $13.3 million across 14 projects. Not only has Medpricer delivered necessary cost savings for the Hopkins organization, but has also supported efforts to standardize suppliers, where appropriate, resulting in substantial value for JHHS beyond savings alone.

Johns Hopkins was able to do more with less and find significant savings by using Medpricer to augment its staff and source more categories than ever before. Johns Hopkins relied on Medpricer’s category expertise to effectively communicate the needs of their stakeholders, ensuring necessary service levels at the best value. Medpricer’s moderated real-time e-negotiation platform enabled them to find savings from their preferred suppliers not available in other ways. By supporting all of the heavy lifting in a sourcing engagement, Medpricer was able to free up the Johns Hopkins’ Supply Chain team so that they could focus on other important areas such as category and contract management, maintaining vendor relationships, and supporting stakeholders in day-to-day operations.

Background:

Johns Hopkins Health System (JHHS) is a $7.7 billion integrated global health enterprise and has been ranked number one in the nation by U.S. News & World Report for 22 years of the survey’s 26-year history. Johns Hopkins Medicine operates six academic and community hospitals with 2,798 patient beds, four suburban health care and surgery centers, and has more than 2.8 million outpatient encounters per year. Premier is Johns Hopkins primary GPO.

Johns Hopkins had the following challenges:

  • Speed & Efficiencies: Reduce sourcing project cycle-time by reducing administrative tasks such as multiple in-person and e-mail communications.
  • Staff Augmentation: Conduct more competitive bids with their limited staff and higher savings targets.
  • Expertise: Gain expertise in infrequently sourced categories which their limited size sourcing team did not have in-house.
  • New Facility Sourcing: Source capital equipment required for a 550 bed critical care and children’s tower on top of their existing workload.

Results:

Medpricer began with a Purchased Services pilot project for specialty bed rental services. Johns Hopkins saved an unexpected $560,000 through the project.

Beyond the savings, Johns Hopkins maintained complete control and had the freedom to manage contracts and implement new contracts while Medpricer did the most difficult and time-consuming tasks of sourcing.

“We all felt very supported and secure that the patients’ best interests were at heart in a complicated and expensive contract,” said a wound care nurse in the JHHS Department of Medicine, after a bid. “Within two hours, the whole thing was done.”

Johns Hopkins found Medpricer’s technology eliminated the long, drawn-out process of paper-based negotiations and accelerated the process significantly by conducting a live, moderated negotiation where stakeholders and supply chain could participate and work directly with vendors in real-time to obtain the best value. Medpricer’s unique negotiation process generates a level of competition that isn’t typically found through traditional negotiation methods. This process drives cost down while simultaneously ensuring stakeholder’s unique needs are met while improving the existing service levels for each facility.

After the initial bid bid, Medpricer has continued since 2008 to support Johns Hopkins across the full-spectrum of categories including projects totaling the following in total contractual spend:

  1. Purchased Services – $94 million
  2. Medical supplies – $94 million
  3. Physician Preference Items – $92 million
  4. Capital Equipment – $79 million
  5. Commodities – $41 million

A special project not included in above amounts is where Medpricer provided new facility construction eSourcing and the process to source all of the capital equipment that went into the new John’s Hopkins’s 550 bed critical care and children’s tower. Medpricer processed $43.5 million of the capital equipment with estimated savings of $12.9 million or 30% savings.

All told, since 2008 Medpricer has supported Johns Hopkins in 106 projects saving them over $82 million.

Outcome:

Since 2008, Medpricer has partnered with Johns Hopkins to help them source more than $444 million in spend across 106 projects saving over $82 million through Medpricer’s unique blend of services, technology and market intelligence.

Johns Hopkins was able to do more with less and find significant savings by using Medpricer technology and services to augment its staff and source more categories than ever before. Johns Hopkins found savings from their preferred suppliers not available previously by using Medpricer’s moderated real-time e-negotiation platform.

By supporting all of the heavy lifting in their sourcing projects, Medpricer freed up the Hopkins’ Supply Chain team to focus on category and contract management, vendor relationships, and stakeholder support.

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“We purposely kept the purchasing for the new facility out of the purchasing department so we wouldn’t impact their workload. MedPricer was a good solution because they have the expertise to locate the right suppliers for the equipment needed.

We would have had to send out hundreds of RFPs, which would have been overwhelming. The time savings alone were tremendous. In days instead of weeks, MedPricer shows you the low and preferred supplier’s bids and makes it easy to compare them side by side, with just a few pieces of paper.”

Charles Payne, Sr. Former Director of Materials Management for Alabama Children’s Hospital