Staff turnover decreased resulting in $100k of wage savings.

Management at a local hospital was concerned with operations at an outpatient location providing Physical, Occupational, and Speech Therapy due to an increase in staff turnover and productivity issues, missed appointments, and a growing backlog of patients who needed appointments. Pathstone Partners was asked to assist as part of a broader engagement to develop detailed findings about the current state of operations, establish strategies to increase staff productivity, and reduce patient backlogs and the current 30% patient no-show rate.

Pathstone evaluated several different key areas to determine key strategies and anticipated benefit throughout the engagement.

First, management interviews and department walkthroughs were conducted to collect qualitative and quantitative information about the general management of the department and current pain points. The team learned that there is difficulty scheduling current resources with flexible start and end times, which has led to many FTEs falling short of their full-time status. The team also observed that patient scheduling tends to taper off in the early afternoon, with 1:00 – 3:00pm having the most open appointment times.

Staff schedule reviews and staffing to demand analyses were conducted to further evaluate operational challenges. Findings showed that staffing is not equally allocated throughout the week, PT/PTA ratios vary by day, lunches are scheduled at the same times, and a majority of first shift staff staff generally arrive 30 minutes prior to appointments on any given day. Assessment times are currently scheduled randomly throughout the day, and PTAs are not “first up” for non-assessment scheduling. Furthermore, busy days and non-busy days are currently staffed similarly, creating challenges.

The Pathstone team leveraged this information to make several recommendations to the hospital management team. First, we recommended expanding Saturday hours to both allow staff to work up to their full FTE status and to accommodate the current patient backlog that usually builds on Saturdays.

Additionally, patient scheduling adjustments, weekly (and daily) staffing to demand processes, and skill mix realignment has led to significant improvement for the outpatient facility.

By revising staffing schedules and developing assessment blocks where PTs are available, the facility increased throughput by 10%, and created 6 more appointment slots per week. Double scheduling patients during high no-show times (weekday mornings), adding a 24-hour auto-dialer to remind patients vs. the current 72-hour manual reminder process, and adding a $50 no-show penalty saw an additional 15 appointment slots created per week and reduced the vacancy rate from 30% down to 5%.

As the outpatient facility settles in with these new processes, staff turnover decreased resulting in $100k of wage savings, utilization (+10%), revenue (+10%), and productivity (+15%) all increased, and the hospital system achieved a total financial benefit of $350K.

Pathstone was able to reduce the overall annual cost of bulk oxygen by nearly 25%.

A three-hospital Academic Medical Center experiencing financial difficulties identified current agreements that were coming up for expiration. Through this search, it was found that there were multiple agreements for bulk oxygen across each individual hospital location. One of these agreements was up for renewal offering an opportunity to address both contract consolidation and pricing.

Bulk oxygen is unique as it has a facilities function managing the physical storage and delivery of gas and a clinical function involving respiratory therapy. Collaboration between these groups would be necessary for the decision-making process. Through discussion with health system leadership, a cross-functional team was developed to address current and future bulk oxygen strategies. After aligning on the pros and cons of request for proposal (RFP) or price negotiation strategies, it was decided to issue a request for quote (RFQ) to several vendors operating in the region including the incumbent.

After receiving price proposals, each was evaluated, and a new vendor had proposed more competitive pricing than the incumbent by nearly 25%. Typically, this would be an easy change for other product types, however, the storage tanks for this type of gas were owned by the incumbent supplier and attempting to make a change would involve removal of current tanks, installation of new tanks, and other activities which would cause some level of disruption and an overall complex implementation process. The team sought to seek price relief with the current supplier rather than engage in a replacement initiative.

Leveraging the more competitive pricing proposal, Pathstone conducted outreach to the incumbent supplier requesting the pricing per cubic foot to be reduced to the more competitive rate. In addition, Pathstone requested that environmental fees and delivery fees be further reduced in kind. This was incentivized through the competitive process and by allowing the vendor to consolidate three separate agreements with various termination dates under one new 5-year contract. 

Through consolidation and pricing reductions, the team was able to reduce the overall annual cost of bulk oxygen by nearly 25% while avoiding the painful process of changing suppliers and all the physical implementation steps that route would entail. Also, by locking in rates for the next 5 years, the organization can be assured they will receive the best available price for the foreseeable future. Additionally, through the contracting process, Pathstone was able to negotiate a 60-day termination clause for the health system allowing for flexibility to renegotiate rates if the macro conditions around the bulk oxygen price would indicate lower prices may be achieved in the future.

Overall, the client was extremely pleased with the result of this initiative as it addressed multiple concerns by utilizing several value levers with little to no disruption to the day-to-day operations.

The final configuration of internal and external resources and scheduled routes versus on-demand services resulted in a 22% overall reduction in cost.

An academic medical center and health system had a fragmented current state of Courier Services, with a mix of multiple external providers and internal staff.  Pathstone partnered with the organization with a goal to reduce total courier spend through pricing and utilization while maintaining high quality services.

Pathstone set out with 4 primary guiding questions:

• How much is the client currently spending annually on courier services?
• Is current outsourced route and STAT/On-Demand pricing market competitive?
• Is current internal route and STAT/On-Demand pricing market competitive?
• Are there opportunities for increased efficiencies by consolidated all courier services to one supplier?

To answer these questions, Pathstone’s non-clinical purchase service consultants collected data from both the external suppliers and internal teams to develop a comprehensive picture of the current state. External data included detailed route information, on-demand call volumes, and associated costs. Internal data components included labor costs (salary and benefits/overhead) and non-labor costs (e.g. vehicles, maintenance, fuel).

Pathstone found the internal couriers did not have the infrastructure, such as GPS tracking, to be as effective as external providers and capital holds limited ability to acquire new vehicles, resulting in running through to end of life.

Ultimately, the team decided to move forward with a competitive request for proposal (RFP) process for all courier services activities.  Development of the RFP required understanding the materials being transported to ensure vendors have the appropriate qualifications.  For example, Department of Transportation certification is needed if couriers are used to transfer hazardous materials.

Supplier RFP responses were evaluated based on vendor qualifications, compliance with bid requirements, service level agreement (SLA) proposals, and financial proposals/route configurations.

The supplier proposals led to strategic discussions around the optimal mix of STAT/On-Demand calls versus scheduled routes to manage end user needs and appropriate expectations for the services offered by the courier program.

One incumbent external supplier presented the strongest overall proposal and end users confirmed their satisfaction with their services in the past. This supplier was selected to serve as the primary supplier, with all other external business and a portion of internal business to be transitioned under their support.

Pathstone also learned this was an area in which end users were leveraging courier services for an enhanced scope of activities, such as running to the local grocery store to pick up cakes for employee birthdays.  While this may not be traditional, it was deemed important to the client team for the initial transition phase and kept within scope to maintain that supportive culture. The client opted to retain a subset of internal resources to complete these more niche on-demand activities. The remaining internal resources were able to be reassigned to other internal operational activities.

The final configuration of internal and external resources and scheduled routes versus on-demand services resulted in a 22% overall reduction in cost while maintaining high-service levels. 

A large health system on the West Coast spends $1M annually on outsourced lithotripsy and laser services.

A large health system on the West Coast spends $1M annually on outsourced lithotripsy and laser services. Ten unique suppliers are utilized to serve 11 different markets and six of the markets leverage multiple vendors. The contracts in place with lithotripsy and laser providers have a variety of pricing and service models. Fully outsourced model with usage-based pricing structure and equipment lease service model with tiered pricing structure and volume commitments.

The health system was experiencing three major challenges sourcing lithotripsy services:

• Physician-Ownership: Urologists have ties to local lithotripsy services providers, which may result in significant sensitivities and increased pushback from clinical stakeholders.
• Remote Locations: Many of the client’s hospitals are located in remote areas making access to labor and standardization efforts more challenging
• Laser Services: Some lithotripsy vendors bundle laser services into lithotripsy contracts and others do not; this can complicate true conversion opportunities

Pathstone launched initiative efforts by reaching out and holding meetings with the health system’s Chief Nursing Officers and Chief Finance Officers to identify the appropriate stakeholders to join the lithotripsy services project work team.

After meeting with work teams to confirm our understanding of lithotripsy services at each hospital, Pathstone issued a detailed data request to all lithotripsy and laser vendors servicing the health system. The pricing and utilization data collected was then analyzed to generate meaningful insights and to build a business case highlighting significant discrepancies across the health system.

The project work team selected to issue a competitive request for proposal (RFP) to all incumbent providers to test the market and to ensure all hospitals were receiving best-in-class pricing and service levels. Pathstone reviewed and consolidated supplier proposals into a presentation that empowered stakeholders to make data-driven decisions on the future state of lithotripsy services at his or her facility.

Pathstone’s clinical purchased service consultants achieved value for the health system in two ways. First, negotiating with incumbent providers to achieve more competitive pricing and increased service levels. Second, transitioning low-volume hospitals from contracts where pricing was contingent on volume commitments to contracts with usage-based pricing models.

Due to geographic location, supplier proposals revealed that standardization and consolidation efforts would not yield significant financial value for the health system.

Enhancements in service quality, the selected supplier was projected to drive a 36% reduction in annual spend.

The two financial components to a remote language or interpretations services program are the services and the hardware used for remote interpretation. Services are typically billed on a per minute basis while hardware can be provided by the interpretation services provider or purchased outright by the hospital. Our client had multiple providers across the health system with various financial models in place.  One supplier was providing hardware in exchange for a commitment to a monthly minimum amount of interpretation minutes, which was typically higher than the actual volumes needed by the system resulting in significantly increased costs

Our clinical purchased service consultants formed a system-wide, cross functional evaluation committee including representation from end users, risk, IT, finance, and supply chain to participate in a competitive request for proposal process.  Suppliers providing services across the system were evaluated for organizational capability, interpretation quality, service delivery, and financial model.

The evaluation committee selected the supplier that offered the most competitive comprehensive proposal. In addition to enhancements in service quality, the selected supplier was projected to drive a 36% reduction in annual spend by eliminating monthly minimums and reducing service rates.

The team achieved increased insurance limits and implemented $150K or 15% cost savings.

A multi-hospital health system did not have visibility into system Intraoperative Neuromonitoring (IONM) Services. Our cursory look identified the following:

• Multiple vendors providing similar services
• Delivery models outside recommended clinical scope of practice
• Several contentious legal cases on vendor billing practices occurring at a national level

Pathstone’s clinical supplies consultants spearheaded a deep-dive review of supplier relationships, delivery models, and industry best practices. The team synthesized all relevant information into three primary opportunities:

• Compliance: all IONM cases must include a monitoring technologist (IONM-T) and supervising professional (IONM-P) with appropriate hospital credentialing
• Quality: IONM suppliers must carry appropriate general and products liability given litigation risk
• Cost: IONM suppliers must provide equitable pricing given hospital geography and case load

Pathstone formed a cross-functional team of C-Suite, Physician, Supply Chain, and Credentialing stakeholders to triage opportunities in an appropriate manner:

• Pathstone partnered with a physician team to develop a system standard delivery model in compliance with The American Society of Neurophysiological Monitoring. Pathstone then worked closely with Medical Staff Services to operationalize the delivery model and credential all vendor IONM-Ps at relevant hospitals
• Pathstone simultaneously conducted an RFP process to address quality and price variation and strengthen contractual terms around fair patient billing. The team achieved increased insurance limits and implemented $150K or 15% cost savings.

Pathstone formed a system-wide, cross-functional evaluation committee including representation from all executives on the premise.

A large and growing west coast IDN utilizes seven (7) vendors with eleven (11) separate agreements across eleven (11) hospitals.

Vendor relationships vary from small and local players to market giants DaVita and Fresenius and vendor satisfaction from high (joint venture) to low (exploring insourcing). There is a desire to work as one health system and standardize operations but no visibility into service quality and cost competitiveness at the market level.

Pathstone formed a system-wide, cross-functional evaluation committee including representation from executives (Nursing, Medicine, Finance, and Operations) and RN leadership on the premise that Pathstone’s clinical supplies consulting team would review market competitiveness and the team would drive all decision-making. The Pathstone team built a business case highlighting significant service-level and pricing discrepancies and the team decided to conduct a competitive Request for Proposal (RFP) process. Incumbent suppliers were evaluated for organizational capability, service quality, staffing model, and financial benefit.

Pathstone was able to secure market-competitive rates, eliminate an outlier contract penalty, and navigate a vendor change to achieve $1.2M in recurring annual cost savings. Hospitals then leveraged the savings to buy capital equipment.

The evaluation committee selected a supplier mix that offered the best combination of service quality and cost. A key outcome included formalizing a detailed set of service level metrics for vendors to track and report on a quarterly basis.