Cut Physician Preference Costs by Building Physician Bonds

UC Health's financial structure plays a role in the PPI success. "To some degree UC Health has a built-in advantage for collaboration … our physicians feel a lot of ownership of our system," says Hinds. "[The hospital and the physicians] share a common bottom line, which drives alignment and we do clinical care, research, and education. So the physicians understand why it's necessary to do [cost reductions], and they feel it's important to generate the right savings to fund the academic mission."

The shared bottom line coupled with the work by the clinical committees are what enabled UC Health to narrow the vendor pool to 23 suppliers, Hinds says. While it generally takes health systems, especially those the size of UC Health, six or more months to implement these types of supply chain changes (which delays savings to a system), UC Health completed most of these transitions in an unheard-of two-week period.

"Having that speed to contract and [staff] contract compliance was an important part of our success—we're able to get the full benefit of a three-year contract. By consolidating our spend with one vendor and doing it with clinical support, we can lock out other vendors and see double-digit savings quickly," Robb explains.

The project has extended into performance improvement projects, with similarly structured committees looking at opportunities to improve overall operations. One key outcome from the early discussions was the decision to sell the organization's rehabilitation center. At the end of 2011, UC Health sold its inpatient rehabilitation facility, Drake Center, to HealthSouth, a national rehabilitation provider, and subleased space for the operation of two patient care units that specialize in treating rehabilitation patients who don't require extensive long-term acute medical care.

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