Supply chain savings

Within the context of the healthcare supply chain, Business Intelligence (BI) technology can offer chief financial officers, supply chain executives and other hospital personnel an automated way to obtain end-to-end visibility of service line management, according to Group Purchasing Organizations (GPOs).
Here are five tips to help point providers in the right direction.

Use BI technology to achieve good pricing on day one, instead of having to fix it later.
The best way to get a handle on reimbursement shortfalls is to obtain a deeper understanding of the cost of items, says Leigh Anderson, Information & Technology Services chief operating officer at Premier healthcare alliance. "The goal is to allow providers to map and crosswalk reimbursement codes to supplies and other costs to the revenue lines."

Guard against cost shifting and keep an eye on contracts and relationships along the way.
According to John Finger, system director of Corporate Supply Chain at Baptist Memorial Health Care in Memphis, Tenn., BI technology provided by VHA has helped reduce expenses across four suppliers and three product categories with a total savings of $2.3 million in just nine months. "I see us using it more as a spend management solution. Rather than catching the higher price on the back end, we can make sure we negotiate the fair price on the front end."

Use the peer-to-peer component in BI technology to harvest answers to questions that you cannot see in your own hospital.
"(The peer-to-peer perspective) can add context that will be almost indispensible to operations," said Ernest Bunata, senior director at VHA's Advisory Services. "It's a less common service component. If one hospital could talk to a peer hospital that has already figured out something, it could accelerate their learning curve."
VHA currently has an online community, run by its customer base, to share experiences and it has been successful, he said.

Take advantage of the supply chain BI technology platforms offered.
A hospital customer is armed in ways that they never were in the past, according to Bunata. There are even mobile apps that a hospital can use in meetings with vendors.
Charles Binkowitz, manager of corporate contracts at Baptist Memorial, said that Premier's BI technology gives the organization an advantage when negotiating with suppliers. "Information we can present to the vendors eventually results in a successful negotiation," he said. "It's given us
the ammunition to refute any arguments that the vendors might have."

Get the physicians on board.
Docs don't like to hear about lower-priced things with marginal outcomes, but with BI technology appropriately positioned with the physician, they can see where the money would be going, to achieve the organization's operational and financial goals.
Another Premier member, Western Maryland Health System, identified significant and sustainable savings opportunities across labor, supply chain, pharmacy and purchased services by using the Premier apps together, said Anderson. The health system saved nearly $9 million, including $1.3 million through an aggressive physician preference initiative that targeted orthopedic total joint replacement procedures.