Supply Chain and Purchased Services Cost Reduction

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Situation

The 325-bed flagship hospital of a non-profit, community-directed Wisconsin health system was spending approximately $90 million in supplies, drugs and purchased services. As part of a broader initiative to improve operating margins, the hospital needed to reduce supplies and purchased services costs by $8 million.

Solution

Prism and representatives from key supply departments, such as OR, Cath Lab, Lab, Pharmacy, Radiology and Purchasing, formed a non-labor project team and implemented more than 100 initiatives, including:

  • Reduced supplies and purchased services costs by negotiating better pricing, using more cost effective products and decreasing utilization.
  • Lowered pharmaceutical expenditures by shifting to alternative drugs and applying different usage practices.
  • Negotiated better pricing for surgical items including spine products, orthopedics and endomechanicals.
  • Improved blood utilization and patient safety by implementing new transfusion guidelines.
  • Lowered supply inventory by resetting par levels and adjusting replenishment processes.
  • Developed an Enterprise Project Management Office and scorecard framework to measure performance on a monthly basis.

“The Non-Labor team, in concert with Prism, implemented over $8 million in supply and purchased services savings.”

Flagship Hospital President

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Mukesh Gangwal

President & CEO

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Jan van Londen

Managing Director

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