Driving savings and value through standardization and physician partnership

Prior to 2013, Kentucky-based Baptist Health had a decentralized supply management structure for med/surg supplies. Although purchasing was done using one consolidated item master, efforts to standardize products across the system were difficult, which meant each hospital could order its own products. This increased product costs, creating expensive clinical variations.

In this decentralized system, every hospital managed its own inventory, had its own buyers and conducted its own product contracting. If a hospital had an expertise in a certain area, such as cardiology, it would negotiate a product contract for the entire health system. Since there was no process in place to control product standardization from a supply chain management standpoint, system contracts were not enforced or adhered to at all locations, which resulted in higher costs.

Separately, the way physician preference items (PPI) were purchased, received and distributed created three main challenges: little control over product availability; inefficient product delivery to facilities as a result of overnight and second day deliveries to facilities throughout the day; and elevated costs due to high product prices, expensive freight costs and high inventory costs.

In this article, you'll hear how Baptist Health Supply Chain leaders are addressing these challenges by:

• Centralizing supply chain services, resulting in more control over product availability and delivery, improved contract negotiation process, and a more efficient work flow
• Standardizing supplies across system, resulting in distributed med/surg supply cost reductions of $8 million over 4 years
• Implementing a new streamlined PPI logistics model, expected to save $500K - $1 million in first year and more in the years ahead