Maryland IDN realizes $9M+ in implemented savings Last Updated: July 23, 2014
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Challenge

Western Maryland Health System (WMHS) in Cumberland, MD, engaged Premier Performance Partner consultants for a transformation project to identify and implement cost saving initiatives that would reduce expenses by at least $7 million. A fully engaged Premier owner, WMHS uses most alliance data applications and actively participates in the ASCEND® purchasing and QUEST® quality and safety collaboratives.

Solution

The Premier team of consultants and subject matter experts partnered with WMHS executives and department heads in an eight-month initiative. A combination of Premier apps – primarily SpendAdvisor® MySpend, OperationsAdvisor®, QualityAdvisor™, and SafetySurveillor® – helped identify significant savings opportunities and sustainable changes in labor, supply chain, pharmacy and purchased services.

Labor expense reduction efforts centered on redesigning processes, staffing models, staffing mix and position controls because FTE reductions based on benchmarking alone would not produce desired results. An aggressive physician preference initiative targeted orthopedic total joint replacement. Non-labor initiatives focused on supplies and pharmacy. Purchased service opportunities were identified, particularly in food services and laundry.

Result

Implemented savings amounted to nearly $9 million (including $1.9 million in labor savings that were implemented through the efforts of WMHS).

  • Labor savings exceeded $3.3 million for 15 departments only. A rigorous labor management program built around OperationsAdvisor was put in place to hold gains. The largest savings came from
    • Consolidating Cardiac Catheterization and Interventional Radiology labs into Interventional Imaging that resulted in increased utilization and eliminated 11.4 FTEs.
    • Realigning roles and responsibilities as well as adjusting skill mix of therapists and assistants in the Rehabilitation Department that eliminated 4.8 FTEs.
  • The total joint replacement initiative (about 500 procedures annually) saved $1.3 million.
  • On recommendation of Premier Foodservice Operational Strategies, WMHS returned to purchasing food through US Foods instead of with its contracted food services management company saving $450,000.
  • Pharmacy savings of more than $725,000 were implemented.
  • The contract for a competitive MySpend application was cancelled saving $275,000-plus.
  • The supply warehouse was reorganized to maximize efficiency. Accounts payable processes were revised to maximize early pay discounts and use of purchase orders versus check requests.
  • Staff was trained and coached in the most effective use of Premier apps to facilitate holding the engagement’s gains as well as identifying additional savings opportunities in the future.