Labor Efficiency Emerges as Cost Containment Measure
It's a classic: Supply-chain efficiencies
Nearly one-third (30%) of leaders saw their greatest cost savings in the prior fiscal year from supply-chain efficiencies, and virtually the same percentage expect supply-chain efficiencies to be their biggest contributor to savings in the current year. The savings can be substantial: One-fifth (21%) of respondents reported supply-chain savings in excess of 10%.
Although negotiating with suppliers is hardly new, purchasers have been newly empowered by industry shifts toward value-based purchasing and the certainty of reduced reimbursement. These fundamental shifts prompt healthcare organizations to examine cost factors with new resolve. In addition, changes in reimbursement are prompting a trend toward consolidation, and the resulting larger organizations have more leverage when consolidating their purchases.
Nickolas A. Vitale, executive vice president and chief financial officer of Beaumont Health System—a three-hospital system based in Royal Oak, Mich., with revenue of $2.1 billion—has seen substantial supply-chain savings by implementing a single systemwide pharmacy formulary; previously the three Beaumont hospitals had ordered pharmaceuticals independently. Savings in 2010 were in excess of $1 million. "In 2011," Vitale says, "we were able to negotiate an additional $3.4 million per year by going to a common formulary and bidding it out as a system."
- MU Compliance Announcement Sparks Concern, Confusion
- New G-Codes to Pay Doctors for Broad Array of Non-Face-to-Face Care
- Scary Financial Challenges for 2014
- MGMA Urges 'End-to-End' ICD-10 Testing
- Resisting the Healthcare Consolidation Frenzy
- 1 in 5 CT Screenings for Lung Cancer Results in Overdiagnosis
- LifePoint Bolsters Presence in Michigan's Upper Peninsula
- Give Nurses in Wheelchairs a Chance
- CMS Sets 2014 Pay Rates for Hospital Outpatient and Physician Services
- Telehealth Improves Patient Care in ICUs