Peterson Health was not running its supply chain and materials management functions efficiently, nor were they taking advantage of the benefits offered by their group purchasing organization, Intalere. They needed more products on contract, better pricing on those products and better tracking of contracts. They also needed to analyze their complete product formulary to ensure they were using the optimum products and negotiate contracts to cover those where there were no available GPO contracts.
Peterson Health’s Director of Supply Chain met with Intalere representatives to discuss needs with the overall objective being to reduce costs by putting more currently used products on appropriate Intalere contracts, ensure appropriate pricing and tier levels were accessed, and ensure the utilization of those contracts. The Intalere Diagnostix team was engaged to identify areas of opportunity. Peterson Health’s Director of Supply Chain also negotiated contracts and pricing with manufacturers of many currently used products not covered by Intalere contracts. Peterson also analyzed their complete product formulary to ensure they were using the optimum products, thus providing the best value to their patients. Financial analyses were conducted on many possible product changes. All financially sound suggested product changes were taken to the Peterson Value Analysis Team (VAT), which consists of about 25 clinical leaders within Peterson, for trial and eventual approval. Contract terms for the replacement products were negotiated to cover products where there were no available GPO contracts. Peterson made use of all available data analytics for analyzing both capital and supply costs to ensure/negotiate appropriate capital pricing.
The total annual recurring savings achieved during 2018 by putting products on appropriate Intalere contracts and negotiating contract pricing on others was $189,835. The total annual recurring savings achieved during 2018 by implementing VAT-approved product changes was $234,188. Total negotiated savings on capital expenditures in 2018 was $168,455.
About Peterson Health
Peterson Health has been an independent, not-for-profit rural community hospital serving nine neighboring counties since 1949. With approximately 900 full-time employees and 250 medical professionals, Peterson Health is the largest employer in Kerr County. Serenely settled on a scenic 35-acre campus, the 124-bed hospital features comfortably private rooms.