Baptist Health South Florida's use of MySpend™ nets $5.25M in savings
Baptist Health South Florida is the largest faith-based, not-for-profit healthcare organization in the region. Its service network extends throughout Miami-Dade, Broward and Monroe counties with Baptist, Baptist Children's, South Miami, Homestead, Mariners and Doctors hospitals, the Baptist Cardiac & Vascular Institute and West Kendall Baptist Hospital opening in spring 2011. Baptist Outpatient Services include diagnostic, urgent care and surgical facilities as well as home health care. The International Center of Miami is one of the nation’s largest hospital-based international programs. www.baptisthealth.net
Challenge:
Successful healthcare systems manage their supply expenses carefully. For not-for-profit hospitals, “no margin, no mission” has always been true, but it is doubly so today in light of recently passed healthcare reform legislation. With significant cuts to reimbursements expected, the imperative to cut expenses is even more urgent. To ensure it was doing all it could, Baptist Health South Florida (BHSF) turned to the Premier healthcare alliance, its purchasing partner, for help.
Solution:
With supply expenses of $238 million in fiscal 2009, in May 2009 BHSF began using SpendAdvisor® MySpend™, Premier’s spend management decision-support solution, to analyze and benchmark supply spend and to identify savings opportunities. The supply chain unit established formal processes for analyzing and acting on information derived from MySpend™. The process was lead by a team that met twice monthly and includes the assistant vice president of Supply Chain (team leader), contracting management, buyers, and contract analysts as well as the Premier region director. Premier MySpend™ support personnel joined as needed.
Result:
- MySpend™ identified $205,000-plus in potential “tier optimization”
savings. The
team price-activated eligible tiers for annualized savings of about $196,000. - Given BHSF’s rapid expansion, the team believed contracted suppliers
would
accept “next-best stretch tiers” in situations where Baptist was within 10 percent
of next tier. Surprisingly, only one item fell into that category. The supplier –
already scheduled for a business review – identified the same opportunity and
volunteered to move Baptist to the next tier for annualized savings of $3,700-plus. - In April, 2010, a second “tier optimization” review was performed in
MySpend™.
Additional price activations on optimized tiers resulted in projected annualized
savings of $58,000-plus. - The Supply Chain Contracting Team used MySpend’s price benchmarking data to formulate strategies that locally negotiate contracts for physician preference items, yielding savings of $5 million-plus over the term of agreements.
- The BHSF team now meets monthly to review findings.
- Formal “tier optimization” processes have been established.
- Conversion opportunities are the next target and will be analyzed at first-available opportunity to convert; BHSF follows pricing agreements and contracts to term.
"Premier’s MySpend™ has been an invaluable tool for our Supply Chain Team as we
focus on lowering our supply costs in anticipation of looming healthcare reform.
MySpend™ has allowed us to institute a formal, ongoing, evidence-based,
data-driven process to systematically and proactively analyze our supply
expenses and drive costs down for our organization.”
Frank Fernandez, Assistant VP
Supply Chain Services
Baptist Health South Florida
Coral Gables, FL
Read or print the story (.pdf)