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.
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.
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
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.
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.
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”
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.
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.
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:
- Purchased Services – $94 million
- Medical Supplies – $94 million
- Physician Preference Items – $92 million
- Capital Equipment – $79 million
- 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.
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.
XYZ Alliance is a newly formed alliance based in northeastern United States made up of eight independent hospitals in four different health systems that came together for the purpose of seeking collaborative solutions to reduce health care expenses and improve quality. Through the alliance they wanted to quickly drive savings, increase member participation in cost savings programs and ultimately improve the cohesion of the alliance over time. As one way to approach this, XYZ Alliance wanted to implement a process to identify opportunities to reduce, consolidate and manage their Purchased Services spending.
It is extremely difficult to bring together several independent hospitals with disparate leadership structures, systems and supply chain departments while trying to uncover synergies. Since hospitals struggle every day to find ways to reduce costs and optimize their system performance it was important for XYZ Alliance to overcome these roadblocks quickly and bring the most value for its members in the shortest timeframe possible.
In addition, although XYZ Alliance recognized that Purchased Services represented a significantly untapped source of savings; it is also an area that is notoriously difficult to define, track and source, especially when there are multiple hospitals involved. And without access to reliable Purchased Services benchmark data, they would be unable to calculate realistic cost savings.
Not having the internal expertise, resources and capacity necessary to tackle Purchased Services, XYZ Alliance needed a partner to help in this effort. Medpricer was selected because it has a strong analytics solution combined with expertise in Purchased Services and an extensive database of more than $14 billion in sourcing bid data to help XYZ Alliance to quickly maximize results.
Using the Medpricer Discovery™ solution provided XYZ Alliance with enhanced visibility into their Purchased Services spend with a detailed analysis of spend data classified by hospital, stakeholder group, category and vendor (See Exhibit 1). Medpricer used their proprietary benchmark database to provide projected savings opportunities and develop a project roadmap to estimate and drive savings over the next three years.
The results of this process were significant. Over $60 million in potential Purchased Services cost savings were identified in over 300 sourcing categories. Working with Medpricer, XYZ Alliance was able to reduce costs, consolidate vendors and to build consensus across their member hospitals while giving them the ability to maintain autonomy in the decision making process. In addition, over $430 million of Purchased Services spend was classified across four health systems. A project pipeline was developed to drive $18 million in savings over the next year across 34 sourcing categories. The success of this project helped XYZ alliance to get member buy-in at the hospital level all the way up through executive leadership resulting in cohesion across the board.
Healthcare providers are under constant pressure to keep up with continuously declining reimbursements and need to find creative ways to reduce costs that will positively impact their bottom line. Also faced with this challenge, XYZ University Hospital, a southeast based academic health center with almost 1,000 beds, decided to embark on an initiative to tackle purchased services to supplement some of their existing cost saving endeavors and uncover even more savings. With several contracting strategies already in place to reduce costs and get visibility into their purchased services spend, XYZ University Hospital now needed a way to compliment these efforts and add additional value.
Purchased services, which make up roughly 40% of an average health system’s total operating costs, represents an untapped opportunity to extract significant savings. This is also an area that is notoriously difficult to define, track and source. Unlike products, money spent on outsourced services is not always easy to extract from finance systems, making it difficult to get the information needed to identity and prioritize savings opportunities. With these challenges in mind, XYZ University Hospital wanted to find additional ways to make an impact in purchased services.
XYZ University Hospital decided to partner with Medpricer to help gain additional visibility into their purchased services spend and monitor this spend over time with the goal to standardize their vendors, reduce costs and track savings. Using Medpricer Analytics™, the Supply Chain Manager at XYZ University Hospital, was able to use the visual reports as a way to share this information with internal stakeholders and increase the effectiveness of those conversations.
Using this powerful tool, the Supply Chain Manager sits down, meets with stakeholders, and visually shows them how much is being spent by cost center, by vendor and by department. In addition, Medpricer’s project execution “level of difficulty ratings” help to prioritize the projects with the best savings opportunities.
“The reports I can access with Medpricer Analytics™ speak volumes. I am able to use this tool to have a clear understanding on what we are spending and where and this opens up the door for me to have meaningful discussions with my stakeholders and more effective collaborations.”
Another advantage of using a tool like this is that it helps to take the emotion out of the process and build a business case for change, especially when dealing with entrenched supplier relationships. By making this a more transparent process, internal customers are able to recognize the opportunities and move forward in a particular category to negotiate the best services and prices.
“During this process, I put the message out there that we recognize that our internal customers are the subject matter experts and our purpose is to collaborate with them and find savings opportunities together. They know their departments inside out and we just want to sit down and work together with them to increase results. We have some great tools to be able to do that.”
As a part of their purchased services initiative, XYZ University Hospital uses Medpricer’s proprietary eSourcing solution to streamline and maximize the negotiation process. This platform provides real-time negotiations and the ability to leverage one vendor’s proposal against another in a live timed event that results in immediate cost reductions and favorable contract terms. This process can be done in as little as two hours.
“Medpricer’s eBid platform encompasses the latest technology and increases the efficiency process! Plus Medpricer is very customer oriented and helps us to feel comfortable and empowered during the process. The broad range and breadth of experience Medpricer brings to the table is a powerful asset for an organization”