Consolidating physician distribution helps reduce costs, improve tiers Last Updated: July 11, 2014
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Einstein Healthcare Network is an integrated delivery network with more than 8,500 employees serving Philadelphia and Montgomery County, PA. Flagship Einstein Medical Center is one of the largest independent academic medical centers in the Delaware Valley, providing training and education for more than 400 residents and fellows each year.

The network provides a comprehensive range of healthcare services and employs more than 500 primary care physicians and specialists.The healthcare industry is experiencing unprecedented pressure to reduce expenses. Supply costs are second only to labor. Standardization is an area where even small improvements can decrease supply chain costs significantly.

Challenge

About a year ago, the supply chain executive at Einstein Healthcare Network, a large integrated system serving the Philadelphia area, decided that aggregating physician office and acute care supply volume and standardizing both physician office products and distribution would drive short- and long-term savings. At the time, Einstein’s 50 physician offices were buying a wide variety of products, most not using Premier contracts, and they were using a plethora of distributors.

Solution

That’s when Steve Piraino, Einstein’s corporate director of purchasing, asked Premier to help him rationalize the fragmented physician office purchasing system. Premier acute and continuum of care region directors worked with the Einstein team and McKesson, the contracted distributor, to identify all of the physician practices then revamp purchasing practices.

One challenge was to make sure that all of the office locations were on the roster. Another was to ensure that manufacturers recorded price activations at the same price for each practice location.

Result

  • Einstein realized immediate savings of more than $50,000 when physician offices began purchasing medical supplies using the hospitals’ acute care contract tiers. Savings will be ongoing and continue to grow as more and more purchases are made through Einstein’s contract tiers.
  • Product distribution to all offices was standardized using one distributor – McKesson.
  • Because of the significant reduction in paper work because of fewer transactions and fewer suppliers, the accounts payable and purchasing departments gained productivity efficiencies equal to one FTE.