UHC Supply Chain helps University of Iowa Hospitals and Clinics to save $14M in 18 months

Aug 30 2011

A supply chain strategy built on excellence in customer service and a partnership with UHC Supply Chain has helped UHC member University of Iowa Hospitals and Clinics initiate 35 projects that saved more than $14 million in 18 months.

"With my background in cardiology, I realized how important it is to understand the needs of end users and build relationships with them," said Frank Eischens, RN, director of procurement services. "My priority was to change the supply chain management paradigm to a customer-based approach and instill in our staff an unrelenting desire to provide excellent customer service. This approach builds trust among physicians and clinicians and helps us gain their cooperation when we present opportunities such as product standardization."

The University of Iowa Hospitals and Clinics is Iowa's only comprehensive academic medical center. It comprises a 708-bed hospital and collaboration with University of Iowa Physicians, the state's largest multispecialty medical and surgical group practice.

"The supply chain has been in the forefront of our business strategy for about 4 years, and everyone's on board," said Sabi Singh, MS, MA, the hospital's assistant vice president for operational excellence and quality/safety, as well as its associate director for clinical services. "We use UHC SpendLINK® data to benchmark our spend against other academic medical centers down to line items. And if we're not in the top 10th percentile, Frank and his team will take action."

The procurement team leveraged their strong relationships with physicians to involve them in cost-cutting efforts, primarily through price negotiations and offering vendors bigger market shares. UHC also collaborated with University of Iowa staff in using data to identify and pursue all savings opportunities in other areas such as contracting, pricing, rebates, and tier optimization. The hospital's successful projects included:

• Mining data from SpendLINK® to identify a savings opportunity for knee implants and sharing this with the department chair and surgeons, who agreed to assist with vendor negotiations. As a result, the organization renegotiated its contract and is saving more than $550,000 a year.
• Standardizing the use of products in the neurovascular arena and consolidating their purchases with 1 vendor instead of 3, which has resulted in annual savings of more than $650,000.
• Using UHC's Clinical Data Base/Resource Manager™ to analyze medication usage and achieve line item savings of more than $1.1 million on pharmacy costs.

Success in supply chain management is nothing new for University of Iowa Hospitals and Clinics. In 2009, it was recognized as one of the top performers in the UHC Supply Chain Performance Excellence Collaborative.

"Frank and his team demonstrate how much can be accomplished by effectively building relationships with physicians and leveraging data to take advantage of numerous savings opportunities," said Jake Groenewold, UHC senior vice president, Supply Chain. "We are proud to contribute to helping the University of Iowa and other UHC members optimize their supply chain efficiency and achieve sustainable cost reductions."