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