Learn how benchmarking helped one health system save $1.7 million in cardiology medical supplies.
Medical Center of Central Georgia's heart program, Georgia Heart Center in Macon, is the second-largest heart program in the state, with high volumes of cath lab procedures and open-heart surgeries. In 2005, the heart center faced a challenge: Medical supply costs were very high, and the biggest culprits were the customized medical kits that were tailored according to physician preference. For any given procedure, technologists had to customize the kit according to which physician was performing the procedure.
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The kits were time-consuming to put together and expensive to produce. Supply costs at the heart center were well above those of hospitals with similar cardiac volumes. In working with a benchmarking consultant, MCCG determined that the heart center could save more than $1.7 million by collaborating with physicians to standardize the most expensive supplies.
"The director of the heart center engaged the physicians directly and said, 'Listen, we've got to drive out cost,'" says Joe Lavelle, executive vice president for MCCG. "She involved the physicians in looking at some of the heart center's processes to determine where the heart center could reduce supply costs and improve clinical efficiency. The effort was built on teamwork: The physicians knew that our system was committed to supporting safe, effective care, and that set the stage for us to work together on these issues."
The heart center director sought to eliminate redundant inventory by working with physicians to standardize supplies where possible. She involved physicians in establishing tighter vendor controls and reducing inventory levels of higher-cost supplies, such as drug-eluting stents. In addition, heart center physicians also participated in negotiations with vendors for lower prices on items such as stents, balloons, and intervessel guide wires.
Their efforts paid off: Aggressive contract renegotiations led to a 20 percent savings on drug-eluting stents alone. Georgia Heart Center saved $1.7 million on supply costs in 2006--and MCCG is applying the lessons learned from the heart center's cost savings initiatives to efforts to reduce supply costs in the noninvasive cardiology and endovascular departments.
Today, MCCG continues to foster active dialogue with its heart center physicians as well as other physicians and surgeons throughout the system. The medical center holds regular meetings with physicians to discuss the progress that has been made, both in reducing supply costs and improving overall work processes. The overall cost savings achieved is reinvested in equipment for the heart center and other departments.
"Given the challenges with achieving revenue enhancements, saving cost on the hospital bottom line makes us better-positioned to invest in equipment and new technologies for physicians so that they can better serve the patients of our communities," Lavelle says.
Benchmarking data showed that MCCG's pharmacy department also represented several clear opportunities for reducing costs related to labor and medical supply. Pharmacy labor costs were in the 75th percentile compared with peer hospitals, and medical supply costs were in the 90th percentile. The department set a goal of bringing its labor and medical supply costs down to the 50th percentile or lower.
A professional services team and MCCG pharmacy improvement teams worked together to identify several factors that could help the medical center achieve this goal. For example, team members determined that the department was not consistently charging for or documenting saline flush administration, letting millions of potential revenue dollars go uncaptured. They also realized that pharmacy staff were using syringes that needed to be individually filled with saline before use, rather than using prefilled syringes. Although the initial cost of using prefilled syringes is higher, they are safer, faster, and more nurse-friendly.
The pharmacy department decided to implement the use of prefilled saline syringes and began a new charge capture process. The department's calculations showed that if implemented correctly, this one change could yield $5.7 million in gross revenue, or $3.9 million net revenue.
Today, MCCG success with operational and clinical benchmarking has laid a solid foundation to measure future performance. The medical center is now working toward a goal of attaining ThomsonReuters 100 Top Hospitals® status.
Publication Date: Wednesday, April 01, 2009