Driving Value in Recurring Pharmacy Revenue

Health Care Financial Consultant Pharmacy
Over a 9-month period of working with our client, Pathstone was able to drive $5.56M in recurring revenue enhancements.

A large 4-campus health system in the southern region recognized the need for external support to identify and implement sustainable solutions to increase & maximize revenues within pharmacy. Pathstone was initially engaged to conduct a full-scale business case to identify opportunities within the pharmacy space, of which, 3 specific areas of pharmacy revenue cycle were moved to implementation.

Initial opportunity was identified at over $3.0M in recurring annual value through focusing on the following workstreams:

  • Rx Strategic Pricing: Restructuring pharmacy pricing methodology to be more transparent, more easily maintained and make up lost revenue during the client’s transition to charge on administration.
  • NDC Cost Update: Optimizing NDC cost updates through an evaluation and mapping of the current drug update processes and current technology capabilities.
    Rx Revenue Capture: Maximizing the revenue simultaneously improving on missed revenues

Pathstone formed a comprehensive team of stakeholders throughout the organization consisting of key leaders and operational owners within: Pharmacy, Revenue Cycle, Finance and Supply Chain. Recurring touchpoints with this team and other subcommittees generated the necessary momentum and buy-in to achieve maximum value and sustainable success.

Pathstone’s original business case gave excellent insight into the historical performance of this client, but ever-changing regulations and innovations made it necessary to garner new and refreshed data around billing & claims detail, charge master, drug database, revenue & usage, wholesaler catalog(s) and other policies and procedures.

Within each of the identified 3 workstreams the Pathstone pharmacy consulting team utilized a collaborative approach to tailor a solution that fit within the client’s department and organizational goals and objectives:

Rx Strategic Pricing

  • Meet net revenue goals by modifying markups and/or to include within annual increase in budgeted revenue
  • Mitigate lost net revenue during transition to charge on admin
  • Transition to charge on administration
  • Create strategy to modify markups to meet net revenue goals
  • Increase collaboration with Rx, care contract management and rev cycle
  • Simplify charges with increased transparency and defensibility

NDC Cost Update

  • Sustainability and maintenance of drug cost database
  • Streamline technology and database updates to optimize daily, weekly, monthly, quarterly and annual drug update processes
  • Evaluate other opportunities to optimize technology related to the drug database and revenue cycle

Rx Revenue Capture

  • Identify and recoup missed revenue on specific drugs
  • Complete full audit of pharmacy HCPCS code assignment, usage, correlating bills and collections

Key drivers of the significant value stream were concentrated on increasing the gross revenue by $195M, mitigating losses by transitioning to charge on administration, identification of over 165 ERX IDs without HCPCS codes.

Over a 9-month period of working with our client, Pathstone was able to drive $5.56M in recurring revenue enhancements.

Employee Health Plan Prescription Drug Revenue & Net Margin

Health Care Financial Consultant Lower Prescription Dug Cost
Pathstone worked to ensure CMM program met 340B Drug Pricing Program requirements and increased overall 340B capture rate.

A multi-hospital health system on the west coast partnered with Pathstone to evaluate Employee Health Plan pre-rebate prescription drug spend ($40M+ annually). The health system was interested in internalizing services where the quality of care could be improved, and financial value could also be achieved. Pathstone identified an opportunity to develop a Comprehensive Medication Management (CMM) program for health plan patients and achieve maximum system annual benefit of $8.2M by capturing 519 covered lives in the first and second phases of implementation.

CMM is defined as the standard of care that ensures each patient’s medication (i.e., prescription, nonprescription, alternative, traditional, vitamins, or nutritional supplements) are individually assessed to determine that each medication is appropriate for the patient, effective for the medical condition, safe given the comorbidities and other medications being taken, and able to be taken by the patient as intended. CMM includes an individualized care plan that achieves the intended goals of therapy with appropriate follow-up to determine actual patient outcomes. This all occurs because the patient understands, agrees with, and actively participates in the treatment regimen, thus optimizing each patient’s medication experience and clinical outcomes.

Pathstone reviewed claims data for the full scope of Employee Health Plan members (28,000+) to better understand the current prescription drug landscape. Our pharmacy consulting experts synthesized relevant information to identify the following:

  • Dispensing Pharmacy Landscape – prescription drug revenue varies based on dispensing pharmacy’s relation to health system (hospital-owned pharmacy, contracted pharmacy, other pharmacy).
  • 340B Capture Rate – prescription drug net margin varies based on account type (340B, GPO, WAC).

Upon review, Pathstone determined that only 10% of claims spend was being dispensed at a hospital-owned pharmacy and determined significant opportunity ($11M+) to increase 340B capture rate via qualification of the 340B Drug Pricing Program.

The 340B Drug Pricing Program is a federally based drug purchasing program that enables hospitals to save millions of dollars annually. As a requirement for their medications to be covered by Medicaid, manufacturers must agree to provide medications to certain covered entities at significantly reduced prices (i.e., 340B price). To participate in the program, covered entities must meet certain criteria and comply with program requirements (e.g., maintain OPAIS data, recertify eligibility, prevent diversion to ineligible patients, prepare for audits).

Pathstone formed a cross-functional team of C-Suite, Supply Chain, Pharmacy, and Health Plan stakeholders to develop a CMM service for a subset of targeted qualified members. The team worked closely to establish a comprehensive workflow including steps for patient identification and outreach, referral process, and prescription qualification measures for the program to achieve maximum value:

  • Increase Drug Revenue: Pathstone partnered with the pharmacy team to optimize the dispensing pharmacy landscape by routing the maximum number of prescriptions to either a hospital-owned pharmacy or contracted pharmacy
  • Increase Net Margin: Pathstone worked with the health system to ensure CMM program met 340B Drug Pricing Program requirements and increased overall 340B capture rate

Evaluating Outsourced Hospitalist Provider Relationships

Health Care Financial Consultant 02
Over a 6 month period of working with the client, Pathstone was able to drive $1.1M in fixed fee savings.

Pathstone partnered with a large 11 hospital health system in the southern region to evaluate the existing $11M relationship with their outsourced hospitalist provider. Two out of the eleven hospitals have an outsourced model, whereas the remainder of the health system relies on internal hospitalist resources. Given the recent leadership turnover, Pathstone worked collaboratively with the client by defining the current state, understanding previous system efforts, and future goals.

The incumbent hospitalist group dominates the rural local market and has been a long-term partner with the client for 10+ years. Given that many of the physicians have relocated and settled in the local area, additional consideration and sensitivity was needed given their livelihoods.

Given the variation in staffing models, Pathstone aligned on two simultaneous approaches to determine the best future state for the two hospitals:

  • Request for Proposal: Send out bids to national competitors to evaluate the current outsourced market
  • Insourcing: Hold internal discussions around feasibility of hiring internal resources given current labor market and health system priorities

Pathstone’s clinical purchased service consultants formed a comprehensive team of stakeholders throughout the organization consisting of key leaders and operational owners within: Operations, Supply Chain, Finance, and Revenue Cycle. Recurring touchpoints with this team and other subcommittees generated the necessary momentum and buy-in to achieve maximum value and sustainable success.

Pathstone’s original business case provided insight into the financial business relationship and the historical performance of the incumbent, including recurring missed SLA metric targets and lack of expectations.

Within each of the identified 2 approaches the Pathstone team utilized a collaborative approach to tailor a solution that fit within the client’s department and organizational goals and objectives:

Request for Proposal

  • Bids from national suppliers helped provided visibility that the fees associated with the current local incumbent was not market competitive
  • This provided leverage in incumbent negotiations and allowed the client to request realistic financial targets

Insourcing

  • A make / buy analysis provided insight into pros and cons of insourcing

Considerations included: labor market, geographic location, training resources, management resources, billing and collections, operational workflow.

Over a 6 month period of working with the client, Pathstone was able to drive $1.1M in fixed fee savings by staying with the incumbent. In addition, to help enhance service levels and meet the client’s expectations, the client and supplier agreed to a $800K incentive payment tied to meeting key service level metrics, paid quarterly. This incentivized the medical directors of the physician group to entice their providers to provide better quality services in exchange for a higher salary and bonus.

Leveraging Healthcare Coding Supplier Relationships

Health Care Financial Consultant Medical Coding
All suppliers reduced their rates for all service lines of coding that more closely aligned with expectations.

A large academic medical center in the Midwest utilizes 4 different outsourced coding suppliers across the health system that did not have co-terminus contract renewal dates. Fees also differ across these suppliers for the same services at the same hospital locations. Though select suppliers proactively decreased rates upon contract renewal, rates still did not reflect the market. It is understandable that rates increase when a new International Classification of Diseases (ICD) is released given the learning curve and increased complexity, but it is expected that rates decrease over the years as coders learn and become more acquainted to the new ICD version.

Upon partnering with our healthcare technology consultants, the health system’s goals included improving standardization of current services, lowering the cost of coding services across the full system, and improving quality of service. Incumbent negotiations were conducted with all 4 suppliers to allow them to address the system’s goals.

All suppliers recognized that there were other discussions being held with incumbents, so if they did not address the hospital’s goals, there was potential to lose the partnership. Multiple rounds of negotiations were conducted prior to selecting finalist(s) for the health system.

Conducting incumbent negotiations allowed for the health system to continue leveraging their historical relationship with each supplier. There are instances where coders have been with the health system for multiple years and developed a relationship with the providers.

All suppliers reduced their rates for all service lines of coding that more closely aligned with expectations, especially given that ICD-10 had been implemented for multiple years.

During COVID-19, there has been an extraordinary labor shortage for qualified coders. However, there was also less inpatient and outpatient volumes given the decreased non-necessary visits. Hospitals did see steady emergency department patient volumes, as many OP and IP coders shifted to ED coding.

Select suppliers also implemented tiered structures based on actual volumes. The higher the volume in the month reviewed, the lower the rate for services.

Minimizing Stakeholder Disruption in Office Supply Negotiations

Health Care Financial Consultant Office Supplies
The total financial impact in this category was $500K while maintaining variety for end users to be able to select items that meet their needs.

Pathstone partnered with a large healthcare system on the west coast to evaluate the full scope of Office Supplies & Related Product spend.  This process began with developing an understanding of the current state including vendor landscape, previous system efforts, and future goals.

This client had success selecting one primary vendor for most purchases and beginning to assess the types of purchases permitted through that vendor; however, we identified opportunity to revisit the items purchased to further negotiate pricing and refine the permitted purchase list.

Pathstone’s non-clinical purchased service consultants began identifying incremental opportunities by breaking spend into categories that may be purchased through an office supplies vendor: Ink & Toner, Paper, Office Supplies, and Other Related Products.

  • Ink & Toner: Ink & Toner may be covered under a relationship with a Managed Print Services provider, through a technology value added reseller, or a traditional office supplies vendor.  For Ink & Toner purchased through an office supplies vendor, we considered pursuing cost reduction on original equipment manufacturer (OEM) products, shifting volumes to remanufactured products, and shifting to high-capacity cartridges with higher page yields.
  • Paper: Paper also typically represents a large portion of spend in this category.  Pricing is typically influenced by external factors, such as the global supply chain.  Contracts may feature favorable fixed pricing on certain paper items, which presented standardization opportunities.
  • Office Supplies: The core of this category, health systems have a wide variety of office supply needs such as writing utensils, staplers, and binders. We evaluated average costs within each item type and set cost thresholds to eliminating the purchase of higher cost items while maintaining variety and choice for different end users.
  • Other Related Products: Other related products often available with office supplies vendors include furniture and breakroom supplies.  These categories were reviewed to determine if purchases are necessary or if other channels existed for more effective purchasing.

The total financial impact in this category was $500K. Qualitative benefits included enabling better control and visibility of purchases while maintaining variety for end users to be able to select items that meet their needs.

  • Ink & Toner: Achieved $200K value by shifting remanufactured ink to OEM to maintain increased discounts and moving eligible toners to high-capacity cartridges.
  • Paper: Achieved $30K value by shifting volumes to paper that was contracted at a flat, competitive rate.
  • Office Supplies: Developed a price capping methodology to drive $270K, or 13% value across all office supply purchases.
  • Other Related Products: Identified targeted categories to restrict purchasing within the client portal; further evaluation of alternative products available to quantify value.

Optimizing Clinical Equivalencies for Bone and Biologics

Health Care Financial Consultant Clinical Supplies
Through collaboration with physicians and the supply chain team, Pathstone achieved an estimated ~$630K in annual savings.

A ~700 bed hospital in the Southern U.S. was facing financial challenges and tasked Pathstone’s clinical purchased supplies consultants with examining areas of spend that had opportunity to drive benefit. Clinical supplies is typically one of the largest and broadest areas of spend, with items ranging from pennies to thousands of dollars.

For higher cost supplies, there is often opportunity to achieve high savings (e.g., .25% – 50%) through converting to a lower-cost product at another supplier. Bone and biologic items (e.g., allografts, tendons) typically cost in the $1,000s and were identified as having high potential for savings. However, the more complex the supply, the more challenging it may be to convince physicians of clinical equivalency.

To begin, Pathstone wanted to isolate spend on bone and biologic items. The team limited scope to tissues, surgical meshes, and allografts and issued pricing proposals to several suppliers asking them to provide matching products with pricing when applicable. In many cases, suppliers were proposing 50%+ in savings.

The next, and more complex, step was to perform research on product specifications and outcomes to determine clinical equivalency. Pathstone leveraged a clinical research tool that provides a bevy of information with the intent of supporting product and supplier selection.

While the team wanted to supply physicians with all relevant data points, it was important to develop a concise comparative analysis given their busy schedules. The team had the opportunity to present the opportunities to the Chief Medical Officer and the Head of Orthopedics. Pathstone developed a relatively standardized summary view for each of fifteen conversion opportunities, with more supporting data in an appendix to pull from when necessary.

The two physicians were supportive of the potential conversions but needed to hold conversations with end users that have more product specific expertise. At times, physicians can have strong preferences towards specific products for non-clinical reasons (e.g., supplier relationship). Thankfully, there was little concern with Pathstone’s proposed conversions, and any hesitations were addressed with further research.

While physician conversations occurred, the team worked with the supply chain and contracts team to ensure that current contractual arrangements would allow for conversions. Hospitals typically have a web of local contracts and GPO arrangements with high variability of terms, spend requirements, rebates, etc. For GPO contracts, hospitals often have a tiered rebate schedule in which the more the client purchases, the higher effective discount they receive. For suppliers in which the client transitioned away from, Pathstone needed to confirm that potential price increases did not outweigh savings opportunities from converting to a new supplier.

Through collaboration with physicians and the supply chain team, Pathstone achieved an estimated ~$630K in annual savings on ~$1.8M in annual spend. For suppliers in which Pathstone moved significant spend away from, there were negligible rebate implications. Moreover, the team helped the client establish a clear process for future high-cost clinical product conversions, such as orthopedic products. Some conversion opportunities were filed away for a Phase 2 that will be reevaluated after a year.

Optimizing Outpatient Physical Therapy

Health Care Financial Consultant Outpatient Physical Therapy
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.

How Supply Chain Management Can Reduce Hospital Costs

Health Care Financial Consultant Supply Chain

SCM & Hospitals

Supply chain leaders within healthcare are under immense pressure to reduce cost across their systems. In the US alone, hospitals are estimated to lose $54 billion in net income in 2021.

Robust utilization data is one way that healthcare supply chain leaders can increase their bottom line and improve the revenue management cycle. Dynamic access to “centralized, consumable, and real-time data allow health systems to determine what’s needed, what’s in stock, and the scope of future demand.” Hospital supply chain systems employ data across their system to capture demand, eliminate waste, and avoid redundancy.

Eliminating waste and redundancy across the medical supply chain is just one example. Supply chain knowledge and data can be employed across a health system to achieve price reductions, utilization optimization, and standardization that drive value to the health system.

Does the Healthcare Supply Chain Affect Patient Outcomes?

In today’s value-based care model, health system leaders are required to improve patient outcomes despite the necessity to reduce cost. In particular, supply chain management in the healthcare industry plays a critical role in improving patient outcomes to achieve reimbursement through incentive alignment.

For example, decisions surrounding supply selection solicit feedback from the hospital supply chain teams and clinicians to optimize patient outcomes and source cost-effective supplies. These teams can be aligned through detailed data. Utilization and clinical outcomes data provide the opportunity for medical supply chain teams and clinicians to make decisions that achieve the goals of the health system. Linking supply chain related items such as product standardization to patient outcomes enable these teams to align on the most cost-effective and clinically optimal choice.

What is the Future of the Healthcare Supply Chain?

Supply chain management is a critical function in the healthcare industry. The elimination of unnecessary costs, patient outcome improvement, and increased reimbursement are only a few of the significant benefits optimal supply chain management provides. Emphasis on data collection and employment, incentive alignment, and vendor management are a few avenues that healthcare organizations can utilize to achieve these goals in the future.

At Pathstone Partners, we specialize in helping healthcare systems across several different markets navigate the complexities of their supply chain. With our years of experience in clinical purchased service and supplies, we can assist with everything from supplier contract review to price negotiations.

Contact us online to learn more about our healthcare consulting solutions and how we can help create efficiency in your supply chain.

Reducing Bulk Oxygen Spend Through Consolidation

Health Care Financial Consultant Bulk Oxygen
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.

Reducing Total Courier Spend for Health Systems

Health Care Financial Consultant Courier Service
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. 

Service Models to Improve Lithotripsy Contracts

Health Care Financial Consultant Lithotripsy
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.

Standardizing Language Services Across a Large Health System

female asian translator working working with smiling businesswoman
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.