From HFMA: Capital Constraints, Regulatory Challenges Common Theme at HFMA

In another session, Hector Boirie, chief capital management officer for Sisters of Mercy Health System dazzled a room with the system's comprehensive capital planning strategy. Hector said most hospitals say they have a capital planning process and tools, but really it consists of an Excel spreadsheets.

"We have to change the way we do healthcare," he said, in the midst of all the market turmoil, which includes an unemployment rate last month of 9.4%, the highest since the 1980s. To that end, the hospital system has changed its capital planning process.

"It was about individual facilities and they used a spreadsheet and we all competed for same dollars. We had four times the requests as available cash." At the same time, he said, most hospitals don't really know how much they are spending on projects because many are multi-years.

To that end, without going into a lot of detail, all of the system's capital planning processes were streamlined. The system is spending $450 million in capital planning and asset management and has $1.8 billion in planned capital expenditures over the next five years. To drive more efficiency and savings into its operations, the system has done things such as form its own GPO. It also operates its own fleet of trucks that deliver supplies to hospitals and it does bundled buys. For example, said Hector, "no imaging technologies in the health system are purchased individually." While internal stakeholders weigh in on what to buy, Hector said, there is less focus on buying certain brands and more focus on product specifications. He said this strategy saves the system $15 to $20 million a year.

Stay tuned for a final update from Seattle.