Iowa hospitals save $14M with UHC Supply Chain
A supply chain strategy built on strong customer service and a partnership with UHC Supply Chain has helped UHC member University of Iowa Hospitals and Clinics initiate 35 projects that saved more than $14 million in 18 months.
“With my background in cardiology, I realized how important it is to understand the needs of end users and build relationships with them,” Frank Eischens, RN, director of procurement services said. “My priority was to change the supply chain management paradigm to a customer-based approach and instill in our staff an unrelenting desire to provide excellent customer service.”
The University of Iowa Hospitals and Clinics is Iowa's only comprehensive academic medical center. It comprises a 708-bed hospital and collaboration with University of Iowa Physicians, the state's largest multispecialty medical and surgical group practice.
“The supply chain has been in the forefront of our business strategy for about four years, and everyone's on board,” Sabi Singh, MS, MA, the hospital's assistant vice president for operational excellence and quality/safety said. “We use UHC SpendLINK® data to benchmark our spend against other academic medical centers down to line items. If we're not in the top 10th percentile, Frank and his team will take action.”
The procurement team leveraged their strong relationships with physicians to involve them in cost-cutting efforts, primarily through price negotiations and offering vendors bigger market shares. UHC also collaborated with University of Iowa staff in using data to identify and pursue all savings opportunities in other areas such as contracting, pricing, rebates, and tier optimization. The hospital's successful projects included:
- Mining data from SpendLINK® to identify a savings opportunity for knee implants and sharing this with the department chair and surgeons, who agreed to assist with vendor negotiations. As a result, the organization renegotiated its contract and is saving more than $550,000 a year.
- Standardizing the use of products in the neurovascular arena and consolidating their purchases with 1 vendor instead of 3, which has resulted in annual savings of more than $650,000.
- Using UHC's Clinical Data Base/Resource Manager™ to analyze medication usage and achieve line item savings of more than $1.1 million on pharmacy costs.
Success in supply chain management is nothing new for University of Iowa Hospitals and Clinics. In 2009, it was recognized as one of the top performers in the UHC Supply Chain Performance Excellence Collaborative.
“Frank and his team demonstrate how much can be accomplished by effectively building relationships with physicians and leveraging data to take advantage of numerous savings opportunities,” Jake Groenewold, UHC senior vice president, Supply Chain said. “We are proud to contribute to helping the University of Iowa and other UHC members optimize their supply chain efficiency and achieve sustainable cost reductions.”
Edited by Kevin Scarpati
Will Public Procurement Budgets Increase in 2021?
Procurement is more than just a private enterprise. COVID-19 reminded us that sourcing materials is an essential part of the government’s role. Throughout 2022, tiny departments sourced massive amounts of personal protective equipment (PPE), medical supplies, and emergency vaccines and testing kits. Even non-procurement professionals were pulled into the fray, as frantic timelines demanded nothing less.
According to Celeste Frye, co-founder and CEO of Public Works Partners, the crisis brought procurement to the attention of skilled employees who had never considered it. As non-procurement personnel stepped up to help their coworkers, many found that they’d stumbled upon a critical and rewarding job. “Existing public employees have seen the essential nature of the work”, Frye said. “[They’ve] gained some critical skills and possibly [grown] interested in pursuing procurement as a longer-term career”.
Small, Local Suppliers Take Charge
Frye, whose firm helps organisations engage stakeholders and develop long-term procurement strategies, thinks it well worth the effort to open one’s mind to new opportunities. Cooperative contracts, for instance, can help public departments and municipalities save money, time, and effort. By joining together with other towns or cities in the region, public procurement teams aggregate their purchasing power and can drive better deals.
These cooperative contracts have the added benefit of advancing equity. Smaller suppliers that struggle to compete with established firms for government contracts can act as subcontractors, helping big suppliers fulfil bits of the project. Once they get their foot in the door, small, local, and disadvantaged suppliers can then leverage that government relationship to take on additional projects.
Especially as governments start to pay attention to procurement resilience, public procurement departments must expand their requests for proposals (RFPs) to take into account innovative solutions and diverse suppliers. According to Frye, Public Works Partners—a certified female-owned firm—has benefitted from local and state requirements that specify diversity.
Post-Pandemic Funding Swells Procurement Budgets
And the pandemic won’t be the end of it. City governments need to build sustainable energy infrastructure such as solar panels, charging stations, and recycling plants, ensure that masks and medicines are never in short supply, and source new technologies to keep up with cloud and cybersecurity concerns.
Public procurement budgets will likely increase to match demand. As Peter Ware, Partner and Head of Government at Browne Jacobson, explained, “in a non-pandemic world, the [U.K.] government spends on average around £290 billion on outsourced services, goods, and works...anywhere between 10% and 14% of Gross Domestic Product (GDP). Post-pandemic, city procurement will only increase as national governments provide local divisions with emergency funding.
And in truth, government employees might jump at the opportunity. Frye noted that public procurement could give immediate feedback on new programmes: “[Procurement] is where new laws and policies ‘hit the road’ and are implemented”, she said. “Professionals in these fields get the satisfaction of creating real change and seeing quantifiable outcomes of their work”.