How Scripps Health Brewed Up a Plan That Saved $350K
It was a big wake-up call for one major hospital system in pursuit of value and quality. Last year Scripps Health in San Diego discovered enormous variation and expense throughout its five hospitals in just one little perk.
Scripps' bean counters, in consort with the hospital system's food service, decided to, well, count beans. And they discovered that various departments were spending $675,000 per year supplying caffeine throughout the 1,323-bed healthcare system.
Areas of some hospitals were getting free coffee while the same areas in other hospitals weren't. Many were slurping expensive "pod" style coffees in gourmet flavors, while others were swilling cheaper drip. Some areas had special "toppings," but not others.
Adding to the cost, there was considerable waste because expensive less popular coffee flavors just sat on the shelves.
Scripps' coffee quandary sounds a lot like the overall healthcare industry’s struggle, doesn't it?
"We had three master vendors and at least 15 types of coffee available," explains Tim Collins, Scripps' horizontal lead of support services. The choices, he says, "were overwhelming."
Scripps needed to know: is there a best coffee for the price? Committees and focus groups were formed, part of a much larger overhaul of the entire Scripps system to reduce costs and variability in major and minor healthcare expenses such as orthopedic knees, purchases of rubber gloves or medication.
"We need to look closely at our processes and ask ourselves why, from one Scripps site to another, there is so much variation in how we deliver care to our patients and run our facilities," noted Chris Van Gorder, Scripps' CEO in the hospital's internal newsletter. "Is there a best practice? If so, why isn't everyone doing it?"
The hospital's coffee task force went to work. "Our food and nutritional service directors all compared the prices of coffee – price per cup, price per pound, cost per day were all evaluated by the team," Collins says.
After this "deep comparison," they asked, "did it make sense to buy beans and grind? How complex is the package? How do we get this to work and what are the implications to the staff?" Collins says.
Lo and behold, after analyzing all the variation, Scripps realized it could save up to $350,000 in the first year by consolidating its caffeine delivery systems into one – the type that serves coffee on a per cup basis, or "on demand." They picked coffee from the Javo Beverage Co.