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Coordination Across Fragmented Hyperbaric Oxygen Programs

Pathstone affected $120K+ annual savings for the highest-cost program via management fee reduction and program director cost reduction.
Health Care Financial Consultant Hyperbaric Oxygen
Identify 2

The Challenge

A west coast health system engaged our firm to review Wound Care Hyperbaric Oxygen (HBOT) programs across their organization. Hyperbaric Oxygen programs represented a $9M spend category on a mix of outsource and insourced staff, equipment, software, and corresponding supplies. Each hospital that has a Hyperbaric Oxygen program is in a distinct geographical setting from each other, varies by program maturity, and relies on an outsourced vendor to provide treatments for their patients.

Pathstone was introduced to this spend category due to lack of visibility into program structure across the health system and an ongoing negotiation between one hospital with the primary outsourced vendor of the system. This health system did not have supply chain members that oversaw HBOT contracts, and the health system desired to work as one system to standardize operations and drive efficiencies from a financial and service-level perspective.

Implement 2

Solutions

Each strategy is driven by data – in conjunction with financial leadership at each location, Pathstone formed a robust framework to collect and organize data regarding the financial and service–level performance of each program. Comparisons of revenue, reimbursement, cost, and staffing between each program were built to drive program stakeholders towards actionable insights (i.e., why does my program have less treatment volume, but more nurses? How is that program able to drive X% revenue more than my program? Why are our staffing costs higher than the other programs?).

A market roadshow with the clinical and operational teams followed with each hospital to understand key pain points, opportunities for improvement, and level of category expertise. We found there were significant differences across programs in two categories:

  • Overall outsourced costs: outsourced staffing of program directors was more expensive than insourced program directors
  • FTEs per case volume: two programs were more efficient than the other two programs.

We aligned with system and local leadership to issue a request for quote (RFQ) in efforts to reduce costs and set up system knowledge sharing to improve efficiency across each program. The RFQ was constructed for the primary incumbent supplier (75% of programs) intended to improve cost competitiveness, initiate knowledge sharing across the programs, and align program category expertise using mature programs and the primary outsourced vendor.

Sustain 2

Results

Pathstone affected $120K+ annual savings for the highest-cost program via management fee reduction and program director cost reduction, representing 33% of outsourced program spend. This program was mature in nature, yet still relied heavily on their outsourced provider. The goal will be to eventually insource the director of this program for additional cost savings.

More than cost-improvement, our client was interested in how other programs were able to manage volumes without as many outsourced staffing members. The RFQ focused on areas where the outsourced provider could provide synergies from a staffing perspective and outsourced management was removed from the agreement. The primary outsourced vendor will now provide semi-annual reviews to discuss reimbursement improvement, cost reduction, and service level improvement opportunities for all their programs in the system. Also, Pathstone helped initiate and create an internal engagement platform for best practice, knowledge sharing to drive utilization, revenue, cost, and service-level efficiencies through an online platform for program stakeholders to discuss and share data across the system.

Before our engagement, HBOT programs at this integrated delivery network were fragmented and costly. After, HBOT stakeholders across the organization can discuss best practices and share data, have an outsourced category expert provider leading semi-annual discussions geared towards improvement opportunities, and have achieved cost reduction at the target program.

Key Takeaways

Savings are attained through a holistic approach

Collect the data and connect with operational, day-to-day leadership to understand program maturity, pain points, and opportunities for improvement

Stakeholder engagement drives value

Insightful comparisons open space for a desired state to be described by stakeholders – from there, strategy and then value can be achieved

Technology can overcome geographical barriers

Identify opportunities to drive synergies and knowledge sharing across like programs in different geographical areas

Pathstone was able to reduce the overall annual cost of bulk oxygen by nearly 25%.
Staff turnover decreased resulting in $100k of wage savings.
Through collaboration with physicians and the supply chain team, Pathstone achieved an estimated ~$630K in annual savings.
Over a 6 month period of working with the client, Pathstone was able to drive $1.1M in fixed fee savings.