Overview

Arkansas Children’s Hospital aimed to find $250,000 in supply savings in one year with Vizient PriceLYNX™. But the hospital found more than five times that amount in just 90 days.

Member profile

Arkansas Children’s Hospital, the only pediatric medical center in the state, spans nearly 30 city blocks and has 370 beds. The hospital staff includes approximately 500 physicians, 95 residents in pediatrics and pediatric specialties, and more than 4,400 employee

Challenge

Lisa Farmer is the first to admit she’s a skeptic. Her job as director of materials management at Arkansas Children’s Hospital (ACH) requires such acute judgment. “I listen to people all day every day tell me how great things are—that’s the nature of sales,” she said. “But I’m always questioning things. If I believed it all, we would buy everything from everybody. My job is to find the melody within the noise.”

When ACH switched to the Vizient group purchasing organization in July 2012, Farmer learned about Vizient PriceLYNX. This industry-leading benchmarking solution helps users gain control of their supply chain, negotiate better prices, and increase cash flow.

But Farmer had her doubts. ACH had never used a price benchmarking tool, and her team members hadn’t had time to get used to Vizient. “I wanted to do everything we could on our own and then see where the dust settled,” said Farmer.

Would hearing her peers’ comments about Vizient PriceLYNX and seeing some of the tool’s results in the coming months be enough to change Farmer’s mind?

Solution

Indeed it was. By May 2014, Farmer saw things very differently. “I started seeing examples of savings from other hospitals,” she said. “When I saw what some of our suppliers were negotiating with other hospitals, knowing our compliance levels were at least the same if not better, I realized then that there was something to Vizient PriceLYNX.”

The data intelligence offered by Vizient PriceLYNX quickly made Farmer a believer. “I can look at line-item detail and determine exactly where we fall in the grid—whether that’s in the 10th percentile, the 50th, or the 75th,” she said. “And knowing where you fall tells you if there’s any room to negotiate.”

Vizient PriceLYNX had already dramatically improved the physician engagement process at ACH, particularly with spinal implants. “When I met with the physician, he was blown away by the data,” said Farmer. “I have to explain to physicians that although their relationships with vendors are valued, those same relationships may be costing our hospital money.”

Previously working with Vizient’s other pricing solutions made PriceLYNX even more valuable for ACH. “We had implemented everything we could within Vizient itself before we moved to this tool, so that allows us to strategically negotiate with vendors even further,” said Farmer. “Overall, we were right in the middle of the bubble graph, so we didn’t have the best pricing or the worst. Knowing where our opportunity is, I can negotiate to move us further to the left on that grid.”

Results

Farmer’s initial goal for ACH was saving $250,000 in the first year. But Vizient PriceLYNX helped ACH save $1.3 million in just 90 days, including $804,000 in spinal implants and $354,000 in cochlear implants.

“We had several other savings examples of $40,000 and $50,000, and we’ve had some that were $5,000. But whether it’s a dollar or a million dollars, it’s better than what we were previously paying,” she said. “As we continue to position ourselves for health care changes, this is something we all have to do. Vizient PriceLYNX just allows us to do it in a much more strategic fashion.”

Vizient PriceLYNX has already saved ACH enough to pay for the organization’s subscription several times over, and hospital leaders are thrilled. “Any time I can put hard dollar savings back on the table for them, it’s a great thing,” said Farmer. “Vizient PriceLYNX allows me to break it down by line item so that I can actually show them what we buy, how many, our old price, and our new price. It’s not soft dollars—it’s real.”

Nothing beats the feeling Farmer has now when she enters vendor negotiations. “When I walked in before, I was blind. I had no idea what constituted a good price or a good percentage to go after,” she said.

Vizient PriceLYNX is a no-brainer if you are willing to put the effort into it, according to Farmer. “You do have to work the tool,” she said. “It’s not a fountain where someone has tossed in coins and you just pick them up off the ground—but it’s pretty darn close!”

In my mind, if we saved $400,000, that was a good savings. What Vizient PriceLYNX helped me realize was that there was $800,000 still on the table.
Lisa FarmerDirector of Materials Mgt, Arkansas Children’s Hospital