Jim McManus, vice president of finance at St. Joseph Health System, in Orange, California, needed more – more cost savings across the board on supplies, a better way to deal with physician preference items, a more customized relationship with his GPO partner, and he wanted it all supported by an IT platform and e-catalog system that would increase his group’s productivity, not destroy it.

"What it came down to," said McManus, "is I needed a team made up of people who understand the supply chain and the specific needs of the provider community."

For the St. Joseph Health Care System, this meant a deep understanding of how an integrated healthcare delivery system providing a broad range of medical services in four states can survive and compete in today’s healthcare environment. The St. Joseph Health System consists of 14 acute care hospitals, as well as home health agencies, hospice care, outpatient services, skilled nursing facilities, community clinics, and physician organizations. Its 18,000+ employees cared for almost 3 million people last year, and at the same time supported a wide variety of initiatives that put some $220 million back into the communities it serves.

"When you have that kind of responsibility, you need to do everything you can to manage your costs and enhance your revenues," said McManus, "and to do that, we needed a new kind of partner."

When McManus presented MedAssets to his executive team, they had only one direction: Get results now. McManus noted he had no concerns about delivering on that direction because of the speed and flexibility shown during contract negotiations, and the systematic approach that was laid out to get the IDN converted.

Contract negotiations
and flexibility

McManus identified three things that set the stage for his ultimate selection of MedAssets:

• Ability to deal directly with the MedAssets management team

• Flexibility related to existing contracts and local contracts that provided better results for the St. Joseph Health System

• Compatibility with the mission, vision and values of the Health System

"The St. Joseph Health System is an organization that places the highest value on people and their ability to act with compassion and justice. We highly value partners who bring transparency and accountability to their business dealings," said McManus. "From the very first encounter with MedAssets, the team demonstrated exactly the same principles. It’s hard to put a dollar value on that."

Strategic information
and implementation

But MedAssets moved quickly to implement the contract conversion process. Through partnering with the St. Joseph team and engaging immediately its Strategic Information Tool, referred to as SI, MedAssets has been collecting, consolidating and analyzing materials management data across the organization. About $28M of savings that could be generated from higher compliance was identified, and about $8.5M of those savings had been realized in the first six months of the contract. This process is still ongoing, but the early impact has been promising.

CDQuick Electronic Catalogs

Just identifying the savings isn’t enough, however. The data has to be turned into meaningful information and then delivered in real-time to the people who need it most. Enter the Consolidated Contract Catalog and Formulary (3CF) that provides to St. Joseph access to its contracts and each line item product as well as options and opportunities for improving the pricing positions. Uniquely customized for St. Joseph, the Internet based on-line master catalog has begun improving productivity and compliance. Its advanced reports program also allows St. Joseph to monitor a variety of key indicator metrics so results can be reported in meaningful terms.

Physician preference items

Physician preference items are one area of purchasing that goes beyond price and item negotiations. Those who hold life in their hands want the best tools possible, but in many cases best is not always the most expensive. Aligning physicians around better decisions in this category is another area where MedAssets, through its partnership with Aspen Health Metrics, assists St. Joseph. Stents, spinal implants, assembled cath lab supplies, cardiac rhythm management devices and orthopedic implants are areas being addressed immediately. Already, St. Joseph has realized significant savings in this area. To date, savings on physician preference items have reached approximately $15.2 million on an $83.3 million spend, a savings of 18.3%. In addition, supply expense, as a percentage of net patient revenue, was reduced from 16% to 14.7%.

Results