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HELP WHERE HOSPITALS NEED IT ®

Community Hospital Blog

Supply Spending
Rethinking Supply Costs: Good to Great

by Philip Trent, VP of Business Development, CHC Supply Trust

 

Many rural hospitals today — health care providers whose mission is to serve their community’s health care needs — are apprehensive about their own financial health. Increasing expenses, decreasing reimbursement and declining patient populations and hospital admissions place these hospitals at risk, threatening financial viability.

 

Behind salaries, supplies are the second-highest expense for hospitals. By reducing supply costs and better managing the supply chain, a hospital can move its savings margin from good to great.

 

CHC Supply Trust, the supply chain services arm of Community Hospital Consulting, works with hospitals to help them evaluate potential savings opportunities by uncovering “hidden” dollars to offset shortfalls due to reimbursement cuts and reduced payments. Unlocking supply chain savings can support mission-critical objectives such as equipment upgrades, development projects or hiring additional staff as necessary.

 

Supply chain support services to help hospitals reduce costs while prioritizing clinical quality and patient safety through CHC Supply Trust include:

  • Supply Chain Consulting
  • GPO Access Only (a GPO for community hospitals with preferred pricing formerly available only to their bigger counterparts)
  • Customized Support Services Agreement
  • Outsourced Materials Management.

CHC Supply Trust delivers access, savings, and support

 

Teaming up with community hospitals, CHC Supply Trust offers a Complimentary Supply Spend Analysis. Whereas annual savings have averaged greater than 10 percent, recent CHC supply spend analyses have identified savings opportunities reaching 15 to 20 percent. Along with 100 percent of GPO rebates returned to participating facilities, CHC Supply Trust hospitals can keep their bottom lines healthy.

 

For example, 25-bed Community Hospital in McCook, Nebraska previously bought its supplies and services from a nationwide hospital network. As part of the network’s supply contracting company and GPO, Community Hospital was subject to volume-based tier pricing and paid approximately 35 percent more than larger hospitals for orthopedic implants. By purchasing those same items through CHC Supply Trust in FY 2013, savings on orthopedic implants alone totaled $334,000. Today Community Hospital continues to see approximately 18 percent savings annually on its supply spend.

 

About the Supply Spend Analysis process

 

It’s easy to get started on your Complimentary Supply Spend Analysis. Follow these simple steps:

  1. Sign the CHC Supply Trust confidentiality agreement (we protect the confidentiality of your data).
  2. Provide 12 months of medical and surgical supply data in Excel format (easily available by contacting distributers who have this information in a standardized report already).
  3. Provide 90 days of pharmacy supply data in Excel format (from their wholesaler).

With this information, CHC Supply Trust will conduct your Complimentary Spend Analysis and calculate how much your hospital can save by accessing preferred pricing through our GPO for the exact same items you already buy. No MMIS mining is required. We will provide you with a letter template requesting your pharmaceutical wholesalers’ and med/surg distributors’ reports, which can be generated with a few mouse clicks.

Tags: Hospital Performance Improvement, Supply Chain, Supply Spending
CHC Supply Trust Helps Community Hospitals Achieve Greater Savings

by David Domingue, SVP Business Development, CHC

 

It’s an ongoing challenge for hospitals and health systems — providing quality patient care in the midst of declining reimbursements and increasing patient volumes. This predicament is particularly acute for community hospitals as they strive to maintain their financial health.

 

For larger providers, participating in a group purchasing organization (GPO) to help manage supply costs has been a way to hold the line on expenses. GPOs offer preferred pricing based on volume. Yet smaller community hospitals, often hit the hardest by supply costs, don’t have the purchasing power to secure the pricing discounts larger hospitals can command — until now. CHC Supply Trust is a supply chain solution designed specifically for community hospitals.

 

About CHC Supply Trust

 

An extension of Community Hospital Corporation’s supply chain support services, CHC Supply Trust offers significant supply cost savings to community hospitals through a longtime partnership with HealthTrust. By granting access to HealthTrust’s portfolio of specially priced, clinician-recommended products and services, CHC Supply Trust hospitals obtain deep discounts — savings similar to those of larger hospitals. And smaller hospitals benefit from meaningful savings even when purchasing many of the same items they secured prior to working with CHC. This offering helps community hospitals improve their bottom line with a reduction in supply costs estimated at about 10 percent savings annually — substantial savings for smaller hospitals. Program participants also benefit from additional support services.

 

CHC Supply Trust provides four levels of support to help hospitals reduce costs while prioritizing clinical quality and patient safety:

  • GPO Access Only
  • Supply Chain Consulting
  • Customized Support Services Agreement
  • Outsourced Materials Management

The bottom line: CHC Supply Trust hospitals are able to free up more money to dedicate to patient care or other needs. Preferred supply pricing typically reserved for large hospital systems is now available to community hospitals nationwide. Regardless of size, CHC Supply Trust hospital clients gain access to a higher tier of savings.

 

Savings Results

 

CHC has a history of helping community hospitals achieve cost savings through supply chain support services. Working with CHC, Community Hospital in McCook, Nebraska has achieved yearly savings averaging 18 percent on its supply spend since 2013. Another client, Bert Fish Medical Center in New Smyrna Beach, Florida, has recognized nearly $1.5 million in supply chain savings across several categories since 2011.

Tags: Operational Improvement, Supply Chain, Supply Spending
Supply Savings Invigorate Community Hospitals

By Tony Ybarra, SVP CHC Supply Trust

 

Community-based hospitals are the lifeblood of smaller communities.

These facilities not only provide access to local health care, but they also stimulate the local economy, helping create jobs in the hospital and the community. However, many rural facilities face significant financial and operational challenges. They see a larger share of Medicare and Medicaid patients and operate on thin margins. For these hospitals, examining ways to reduce expenses is critical.

 

Supply spend is the second-largest cost for hospitals behind labor. Nearly 80 percent of providers who participated in a Modern Healthcare survey on supply chain issues said reducing medical and surgical supply costs is a formal part of their organization’s strategic plan. Holding the line on supply chain costs is a top priority.

 

Let’s look at three approaches to help control supply spend.

  1. Collaborate with key stakeholders to negotiate better pricing. The highest percentage of supply costs is often associated with a hospital’s operating room. Get everyone to the table with manufacturers — hospital executives, physicians and surgeons — to negotiate for more favorable prices on physician preference items such as orthopedic implants and cardiac rhythm medical devices.
  2. Evaluate your group purchasing organization (GPO) options to maximize cost reduction. Today almost all hospitals have one or a variety of group purchasing contracts in place, however, the benefits offered vary significantly. For example, size is a disadvantage for smaller hospitals, which often pay more for the same products or supplies because their volume is much smaller, and they cannot access best-tier pricing based on dollar spend. It’s key to understand the savings your hospital can qualify for and select the GPO with the most benefit for your specific needs.
  3. Analyze your materials management practices to get the most savings from your GPO. This process should include monthly or quarterly reviews to ensure your hospital is receiving previously negotiated prices from suppliers. It’s also helpful to cross reference hospital procurement data with your GPO contract list to identify opportunities for greater savings potential by converting to new products. Involving a multi-functional team of department leaders in this process helps ensure buy in.

To access better tier pricing, CHC has partnered with HealthTrust to introduce a new program designed specifically for community hospitals, CHC Supply Trust. This offering helps smaller hospitals to improve their bottom line with a reduction in supply costs, estimated at 10 percent savings annually. Participants also get support with the onboarding process and optional consulting and analysis services to maximize the benefit received.

 

We invite you to learn more about CHC Supply Trust.

 

Tags: Hospital Performance Improvement, Supply Chain, Supply Spending
Supply and Demand: Hospitals Need Supplies, Demand Savings

Supply costs are one of the fastest-growing cost centers for hospitals. These spiraling expenses tend to hit community-based hospitals hard because they don’t wield enough purchasing power to command preferred pricing. But greater strength and savings can be theirs now that CHC has linked our supply chain services with CHC Supply Trust.

 

CHC Supply Trust offers supply chain solutions tailor-made for community hospitals, including GPO access, regardless of size or annual spend. CHC Supply Trust client hospitals tend to save about 10 percent more than they can with other GPOs on the same products and services. In addition, 100 percent of GPO rebates are returned to hospitals monthly—a huge, helpful departure from the industry standard.

 

How much can CHC Supply Trust save your hospital? We offer a Complimentary Supply Spend Analysis to calculate how much you could save simply by purchasing your exact same products and services through CHC Supply Trust.

 

CHC Supply Trust also offers a spectrum of supply chain support, from short-term consulting to full onsite management, including:

  •  Supply chain consulting
  • GPO access
  • Customized support services agreement with GPO access
  • Outsourced materials management with GPO access 

Click for your Complimentary Supply Spend Analysis.

 

Learn more about CHC Supply Trust’s full spectrum of supply chain savings.

 

Read how Community Hospital in McCook, Neb., worked with CHC Consulting to achieve an annual savings of 18 percent on supply spend.

 

Tags: Operational Improvement, Supply Spending
Memorial Health System of East Texas gets ‘stable outlook’ from Moody’s

How CHC Provides Help Where Hospitals Need ItSM

 

CHC was instrumental in developing and implementing a multipronged approach and turnaround plan that improved revenue cycle, supply spending, financial forecasting and other areas of focus for Memorial Health System of East Texas, Lufkin, Texas. In turn, these improvements strengthened MHSET’s financial performance in FY 2012 and garnered a rating update by Moody's Investors Service. In their report released June 28, 2013, Moody’s affirmed their bond rating and stable outlook for MHSET under the direction of management by CHC, noting:

 

“CHC gives MHSET access to market and business data previously unavailable in order to better monitor its performance and benchmarks. With the continued assistance of CHC, management should continue to implement process improvement and growth strategies that will improve performance during the remainder of FY 2013.”

 

Read the full Moody’s report.

 

Read more about the Memorial system and a case study about their financial turnaround.

Tags: Revenue Cycle, Supply Spending

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