Faced with the challenge of balancing finances as expense inflation continued to outpace revenue inflation, Lahey Health (now a part of Beth Israel Lahey Health) in Boston, Massachusetts, sought out new avenues to improve their financial performance. Their academic medical center and five community hospitals engaged with Premier® to tackle non-labor expenses and achieved millions of dollars in savings in the complex and challenging area of purchased services.
Leveraging robust analytics, Premier began by assessing Lahey Health’s purchased services spend. By performing a two-level categorization of their accounts payable data, Premier identified the number of vendors in each purchased services category and provided cost transparency across departments and facilities. Seasoned purchased services experts analyzed the results and collaborated with various stakeholder groups to validate savings opportunities, determine prioritization and develop customized plans.
“They were very professional,” said Tim O’Connor who served as EVP, CFO and Treasurer of Lahey Health prior to the formation of Beth Israel Lahey Health. “You could tell they had a lot of experience. They were well-versed in the marketplace and very collaborative.”
As a provider of advisory services and GPO contracts, Premier was able to bring an array of solutions to the table — from “quick win” contracting opportunities to new ways of working. In addition to optimizing pricing, specialists explored utilization improvement, vendor substitution, refinement of contract terms and conditions, and more. Standardization across facilities proved to be instrumental to the project. One initiative alone — standardizing multiple reference lab vendors to one — achieved nearly $1 million in savings for the organization.
“We do outsource things like environmental services and dietary services, and they helped us work through the existing arrangements that we had to determine whether or not that was the path we should continue,” O’Connor said. “Ultimately, they helped us sort through the pros and cons of each of those relationships.”
By analyzing Lahey Health’s data and implementing numerous initiatives across hospitals, Premier drove purchased services savings of more than $5.5 million for the organization.
“They did an outstanding job coming to the table with prepared analytics defining areas of opportunity, putting processes and a project plan together to get to results, and getting the right people involved,” O’Connor said. “It’s very much a partnership in terms of our relationship with Premier.”