As hospitals face mounting financial pressure, supply chain leaders are ideating beyond traditional product-contracting strategies to unlock their next wave of savings.
Across health systems, purchased services, contingent labor, contract standardization and utilization management are emerging as some of the biggest opportunities to reduce non-labor expenses over the next 12 months.
Purchased services as the primary target
Carlos Maceda, vice president and chief supply chain officer at New York City-based Mount Sinai Health System, said purchased services remain “a large area of opportunity,” and his team is pairing that effort with a push to tie supply utilization data to individual patients — a move designed to surface outliers and clinical variation that PAR-level replenishment alone can’t catch.
At Urbana, Ill.-based Carle Health, Senior Vice President of Financial Operations and Supply Chain Aron Klein said inorganic growth over the past several years left the organization with a variation it is only now turning to address. Carle is focused on benchmarking, SKU rationalization and disciplined management of purchased services contracts across a larger, integrated system.
“We are no longer accepting historical norms,” Michael Alfaro, director of materials management at Ventura, Calif.-based Community Memorial Healthcare, echoed. He described a comprehensive audit of legacy supplier contracts in partnership with the system’s GPO. His team’s standard: If an agreement is not delivering systemwide return on investment, it forces a conversation.
Nalin Kulasekara, system vice president of ancillary operations and supply chain management at Springfield, Ill.-based Hospital Sisters Health System, is pushing that logic further — into physician service agreements. His team is conducting forensic reviews of outsourced services that extend well beyond food service or environmental services to include emergency medicine, hospitalist, anesthesia, radiology and pathology contracts. Renegotiating those agreements, he argued, can reduce total expense while improving care quality.
Contingent labor: still a supply chain problem
Several leaders framed contingent and contract labor — clinical, nonclinical and locum tenens — as fundamentally a supply chain challenge, and one that is far from solved.
At Richmond, Va.-based VCU Health, Associate Vice President of Supply Chain Joshua Plauny said his team’s largest active initiative is a managed services solicitation covering roughly $73 million in contingent labor spend, with projected savings of $5 million to $13 million. The process is scheduled to wrap up in July.
Vini Manchanda, vice president of supply chain services at Bloomington, Minn.-based HealthPartners, described a similar move: onboarding a managed service provider to bring visibility and governance to contract labor sourcing. His organization has not pursued that structure before, but Mr. Manchanda said the expected savings are in the seven figures.
Baptist Health is pursuing the same goal from a different angle. Cindy Gueltzow, vice president of supply chain services said the system is building an internal float pool of nursing staff to reduce dependence on agency vendors and working with a new aggregator focused on increasing permanent placements.
The data and redundancy opportunity
Beyond contracts, a few leaders pointed to clinical documentation and technology redundancy as their next frontier. Mr. Manchanda said HealthPartners is working to map overlapping clinical documentation products, understand how each is assessed for ROI and identify candidates for elimination. It is less tangible than a renegotiated contract, he acknowledged, but the opportunity is real.
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