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Finding Deeper Supply-Chain Savings

Rene Letourneau, for HealthLeaders Media, April 11, 2014
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Baiocco says that the financial realities of value-based purchasing have encouraged physicians to be more open-minded than ever about trimming supply chain expenses, but he acknowledges that this new outlook only goes so far.

"Physicians are more receptive because they know they are facing the same financial pressure as the hospitals due to rising costs and declining reimbursements," he says. "At a high level, there is no one who argues with the need to cut costs, but when you go a little deeper, it's a lot like a town wanting a landfill but everyone's attitude is 'Not in my backyard.' They know we need to cut costs, but they don't want it to be on the items they like to have."

To overcome this resistance to giving up certain items in the interest of the organization's overall fiscal health, EIRMC's administrative leadership spends time discussing each decision with physicians.

"It takes a lot of time with the medical staff to partner with them and really reevaluate whether we are using certain items because they really do offer a superior clinical effect," Baiocco says. "Ultimately, physicians are responsible for that patient outcome, and the surgeons need to be actively involved in selecting the items they are using."

Reprocessing reduces waste and cost

Demonstrating success in cutting costs without hurting outcomes is one way to win over skeptical clinicians, Baiocco says, citing EIRMC's recent decision to reprocess OR trocars as a success story. By cleaning, disinfecting, and sterilizing reusable medical devices on the carts rather than replacing them with new products, EIRMC has seen considerable savings without impacting the quality of patient care.

"We consolidated to one vendor, and we've gone with a vendor that allows us to reprocess," he says. "We had that vendor come in and work with physicians to get them comfortable. We are saving between $30,000 and $50,000 on an annual basis."

Cheapest is not always best

Reducing supply-chain spending is also an organizationwide initiative for Main Line Health, a 1,295-licensed-bed health system with $1.4 billion in annual operating revenue based in Bryn Mawr, Pa.

"Every year we have a target to cut somewhere between 5% and 7% of our spend," says Chris Torres, MLH's vice president of supply-chain management.

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