Overview

Aultman Hospital used Vizient PriceLYNX data to convince both physicians and suppliers that they needed better prices on cardiac rhythm management devices — and saved more than $700,000 a year.

Member Profile

Aultman Hospital Canton, Ohio Aultman Hospital, part of the Independent Hospital Network (IHN), is recognized for high performance both locally and nationally. The 808-bed facility serves as a teaching hospital for Northeast Ohio Medical University and offers services in more than 40 specialty areas. The hospital boasts over 650 active physicians and a staff of more than 5,000.

Challenge

Aultman Hospital’s commitment to be the Canton area’s low-cost health care provider is crucial to the management team’s mission. And like all health care organizations, Aultman is faced with reducing costs while improving quality. The hospital’s long-standing mission, based on a low-cost, high-quality philosophy, is critical to its ability to retain market share without losing patients to formidable competitors.

Hospital leaders questioned whether they were getting the best prices on the supplier contracts that account for such a large percentage of the hospital’s operating costs. Looking for ways to get more objective, industrywide pricing information was their starting point. “We really didn’t have the manpower to do it,” said Chris Engmark, Aultman’s director of purchasing. “We would pull from our system in different spreadsheets and then try to coordinate them. The process wasn’t interactive, so we couldn’t know for sure where we were and what else was out there.”

Because of its long history of cost-conscious management, Aultman’s supply chain leaders believed they were doing a good job negotiating with suppliers. “When the contracts neared renewal time, we brought the vendors in and made it clear that we needed a lower price. Eventually, that ran its course,” said Chris Parrish, vice president of supply chain for lab and pharmacy.

Leaders also knew that having physicians on board was critical to success, and that strong data could help get them there.

Solution

To boost its supply chain data and analytics, Aultman incorporated the Vizient PriceLYNX™ solution into its daily supply chain operations. The hospital’s team worked closely with an expert Vizient adviser to make sure they were using their new analytics to its fullest capabilities.

With access to more data than ever before, staff members held bimonthly conference calls with the Vizient adviser to discuss cost-saving ideas and areas to explore. “Based on those discussions, the Vizient PriceLYNX adviser gathered data and created a benchmarking report using Vizient PriceLYNX information. The report benchmarked Aultman’s performance against similar sized competitors that purchased from the same vendors,” said Engmark. The supply chain team then used the report to work with individual departments on cost-saving initiatives.

Supply chain leaders soon learned that they needed to involve physicians before vendor negotiations began. “The physicians were skeptical of Vizient PriceLYNX data at first,” Parrish said. “Being transparent with the physicians was something we realized we had to do from the beginning.” He explained that their overall approach included three components: inform physicians in the beginning, involve them in the negotiations, and inform them of supply chain successes.

 

Results

One of Aultman’s biggest successes was in the cardiac service line. Benchmarking using Vizient PriceLYNX data highlighted cardiac rhythm management (CRM) devices as a supply category with an opportunity for significant savings. The supply chain team, with the Vizient adviser’s guidance, created a storyboard and presented it to the cardiology business manager and the cardiac physician group.

Engmark notes that because there were physicians and clinical managers involved in the process, the realized savings for CRM devices reached more than $700,000 annually.

Across all its supply chain initiatives, Aultman achieved almost $800,000 in annual savings by working with Vizient’s unmatched data and analytics tools and with the help of the Vizient adviser.

Parrish also notes that Aultman’s supply chain staff is more engaged since Vizient PriceLYNX became part of the way they do business. “The staff is more excited about coming to work because they have more tools at their disposal. They’re not going into negotiations blind anymore.” Commenting on the value of Vizient PriceLYNX data to supply chain staff, Parrish said, “I want them to be as prepared, if not more prepared, than the vendors when they go into a negotiation.”

The business intelligence gained from Vizient PriceLYNX increased the supply chain team’s visibility and credibility with the C-suite, too. “We do quarterly presentations on the supply chain and our cost-saving initiatives,” Engmark reported. “The CEO and the COO know what our plans are, where we’re going, and our results. They like seeing the numbers, the real savings that will last over time.”

We realized, in today’s society where we have access to more data than we’ve ever had before, we needed to get past being really tough with the vendors to being transparent with our costs and utilizing the data we had at our fingertips to our advantage.
Chris ParrishVice President of Supply Chain for Lab and Pharmacy