Physicians as partners
A VHA consultant works on site at the hospital two days a week and was instrumental in helping Abington develop a physician-engaged materials management program. The hospital began by engaging a physician champion for the program, which was instrumental to the program’s success. John J. Kelly, M.D., the hospital’s chief of staff and chief patient safety officer, formed two physician-led work groups, which also include VHA experts, to explore and recommend standard utilization and device practices.

• Value assessment team - Looked at how materials are used and identified opportunities for standardization and utilization management

• Medical team - Examined how materials are used and enhanced physician integration by identifying cost-saving opportunities that would not impair the quality of medical care.

In addition, hospital executives, department heads and physicians formed teams to review the purchasing practices of its service lines, including surgery and cardiology, to identify opportunities for savings. The teams conducted line item analysis, price tier optimization, standardization analysis and contract enhancement review. With the hospital’s leaders sitting at the same table, consensus was reached faster and everyone felt like they were part of the solution.

"We worked closely with our medical staff to explain the negotiation process," said Nancy Arena-Gogal, manager for Abington’s cardiac catheterization lab. "Their involvement was instrumental in the program’s success."

VHA worked with Jane Cartwright, Abington’s operating room materials manager, to uncover a number of cost-saving opportunities through product standardization and outsourcing, including:

• Saving more than $712,000 in one year by working with the operating room materials manager to negotiate a better price for automatic implantable cardioverter defibrillators and pacemakers

• Saving $340,000 in one year by outsourcing the sterilization, refurbishing and repairing of laparoscopic equipment and switching from disposable to cloth gowns.

Another key cost-saving initiative involved negotiating a better price for the stents used in the cardiac catheterization lab. This enabled the hospital to save $350,000 over a two-year period, or $600 to $800 per stent.

In 2004, the hospital continued to develop cost-saving programs, including:

• Saving $82,000 by outsourcing the sterilization and packaging of cystourethroscopy instruments

• Saving $561,000 over a three-year period by renegotiating its radio pharmaceutical contract

• Saving $255,000 in one year by negotiating a 50-50 market share agreement with two of the leading stent manufacturers for disposable cardiac interventional products (i.e. stents and balloons)

• Saving $51,000 by having one Boston Scientific stent moved to a Novation contract.

According to Bruce Reuther, Abington’s director of patient care support, "At Abington, there is a genuine desire to manage the hospital’s financial resources in a responsible way. The hospital’s administration provided the resources necessary to overcome any hurdles that would delay or sideline supply savings projects."

In addition, each group involved in the process got what they wanted. For example, by negotiating with vendors for automatic implantable cardioverter defibrillators, the hospital was able to purchase the devices at a better rate, the physicians got the medical devices they wanted, and the vendors were assured of selling a certain amount of product.