Hospitals Save Big When PPI Purchases are Standardized

, June 9, 2014

One Boston medical center cut roughly $9 million from its supply chain spend in 2013 and is on target to cut another $8.5 million in 2014. "We go where the money is, which a lot of the time is physician preference items like knees and hips," says its director of purchasing.



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As hospital CFOs continually look for new ways to rein in spending, the supply chain—which is second only to labor as a cost center for provider organizations—is a natural target.  

Most providers work with a group purchasing organization to contract with vendors at competitive prices, but many are realizing that relying only on this approach isn't going to cut it anymore.

Hospital leaders are now also turning their focus inward and assessing the clinical value of the products they are buying. Through this process, they are standardizing costly physician preference items, such as hip and knee implants, and limiting the selection of these products they bring into their system.

Standardizing care and getting the most bang for the buck with clinical resources are important strategies for improving cost efficiency. In the recent HealthLeaders Media Intelligence Report,The Clinical Strategy for Financial Health: Care Redesign and Standardization, 49% of respondents cite improved utilization of clinical resources and 47% cite care standardization as being among the top three clinical activities that provided the highest dollar value in cost containment contributions this fiscal year.


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