Physicians
e-Newsletter
Intelligence Unit Special Reports Special Events Subscribe Sponsored Departments Follow Us

Twitter Facebook LinkedIn RSS

Labor Efficiency Emerges as Cost Containment Measure

Michael Zeis, for HealthLeaders Media, October 17, 2012

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."

1 | 2 | 3 | 4 | 5

Comments are moderated. Please be patient.