Strategic Supplier Campaign

Pathstone Partners Chicago Health Care Consulting (19)
The client achieved over $3.5M+ in annual benefit in several key strategic categories.

Pathstone partnered with a large academic medical center, which included six additional hospitals throughout the system. After a three-year effort dedicated towards driving benefit across large, complex categories, leadership charged supply chain and Pathstone to drive remaining benefit opportunity quickly and ensure no stone was left unturned. “Speed-to-Value” became a frequent talking point in all client conversations and out of these conversations a Strategic Supplier Campaign was strategized, mobilized, and executed.

Throughout the first three years of the client engagement, Pathstone had successfully interacted with many suppliers through competitive bid processes and stakeholders through utilization and standardization initiatives. Though significant benefit was achieved through these efforts, it was clear that there were many additional suppliers that had opportunity to achieve price improvements.  

Pathstone reviewed accounts payable data, contract expiration reports, pipeline activities, group purchasing organization (GPO) involvement and benchmark data to identify key suppliers to include in the Strategic Supplier Letter Campaign. Out of this review process, 105 suppliers representing $100M in total spend were selected for the campaign.  

Having created a strategically focused list, Pathstone created a timeline to reach out to all 105 suppliers within one month of go-live. Prior to go live, a workplan with roles and responsibilities was developed with and agreed upon by client stakeholders. 

The Strategic Supplier Letter Campaign had three primary goals that were communicated with the selected suppliers:
  1. Review of Current Supplier Relationships: We provided a data request template within each communication to the suppliers. These templates allowed Pathstone and the client to evaluate the current utilization and spend, including comparing expected rates and spend against actual rates and spend.
  2. Reduce Overall Costs: Included in the data request template was a suggested reduction in current rates. Pathstone utilized available internal and client-based benchmarking to determine this request. Suppliers had the opportunity to provide enhanced pricing within the data request template, which allowed for a real-time view of expected spend and benefit delivered to the client.
  3. Solidify and Enhance Long-Term Partnership: Knowing that the list of 105 selected suppliers were strategic suppliers, many of which had been key partners of the client for multiple years, Pathstone’s client was offering to extend any active agreement for a select number of years if the supplier could meet the request.

As a result of Pathstone’s Strategic Supplier Campaign, the client was able to achieve the following results:

  • Achieved $3.5M+ in recurring non-labor expense reduction: The client achieved over $3.5M+ in annual benefit in several key strategic categories including Surgery, Cardiovascular, IV, Neurology, Spine, Respiratory, Patient Supplies, Wound Care, Laboratory, and Dietary.
  • Received accepted proposals from over 50% of suppliers within 4 months: Speed-to-value was a prominent theme for this strategy. Pathstone made concerted efforts to keep communication channels open with suppliers and review proposals as promptly as possible. Each week a list of proposals was brought to the client’s supply chain team for acceptance and then moved through the contracting process.
  • Identified $51K in overpayments: Pathstone carefully reviewed current contract rates versus rates provided in the data request template and identified over $51K in overpayments. Through conversations with 5 different vendors, the client received refunds for these overpayments.
  • Strengthen partnership with 63 suppliers: By the conclusion of the Strategic Supplier Campaign, Pathstone’s client received reduced rates and extended their relationship with 63 key suppliers across the system.
  • Confirmed Benefit: Pathstone worked directly with the supply chain, finance, and legal teams to confirm the benefit of each supplier’s proposal. A thorough review of these proposals was necessary to ensure the benefit being proposed fell within the client’s future operational plans. Pathstone actively communicated with impacted stakeholders to confirm the benefit before marking complete.

Supply Chain’s Role in Compliance with IONM Services

Health Care Financial Consultant Neuromonitoring
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.

Quality and Cost in Dialysis Services

Health Care Financial Consultant 02
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.