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Hospitals Save Big When PPI Purchases are Standardized

Rene Letourneau, for HealthLeaders Media, June 9, 2014

Driving Down PPI Costs
A big part of reaping the financial benefits of standardization is getting a handle on physician preference item purchases, says Steve Cashton, director of purchasing and contracting at Boston-based Beth Israel Deaconess Medical Center, a teaching hospital of Harvard Medical School with 649 licensed beds and about $1 billion in annual net patient service revenue.

BIDMC 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," Cashton says. "We are not talking about small numbers. These are big opportunities."

Through its clinical quality value analysis program, BIDMC looks at the overall value of each supply it purchases, factoring both clinical outcomes and cost into the equation. Cashton and his team are never satisfied with pricing, however, and always push for a lower unit cost, he says, even when the CQVA process determines the value is strong.

"There are always opportunities to save more money, so we'll go back and do a request for proposal in a particular area," Cashton says, citing a recent example where BIDMC saved $1.2 million on a med-surg product by putting the vendor through the bidding process again.

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