With the ongoing challenge of expenses rising faster than revenue, Lahey Health (now a part of Beth Israel Lahey Health) in Boston, Massachusetts, sought to improve their financial performance by reducing supply chain costs. Wanting to leverage robust analytic capabilities, supplier knowledge and deep supply chain expertise, Lahey Health turned to Premier®.
Premier analyzed opportunities throughout Lahey Health’s academic medical center and five community hospitals including the high-cost area of high-value implants, also known as physician preference items (PPI) used in surgeries and cardiac procedures.
Using their specialized, four-level categorization, Premier’s High-Value Implant Advisory Services team classified Lahey Health’s purchased implants based on functional equivalence. Unlike traditional line-item benchmarking that compares the pricing of exact vendor items and can potentially leave savings on the table, this process enabled credible cross-reference benchmarking within and across vendors. With legitimate data in hand, productive conversations with stakeholders and a successful vendor strategy ensued.
“The physicians and other clinicians are an integral part of the organization and leadership, and are very involved in everything we do,” said Tim O’Connor who served as EVP, CFO and Treasurer of Lahey Health prior to the formation of Beth Israel Lahey Health. “And analytics are important. Physicians are very scientific in nature, and the facts help everyone get to the right conclusion, so you can take action.”
With pricing opportunities in Joints, Spine, Cardiac Rhythm Management and Fracture Management, Premier developed an all-play strategy to identify savings without limiting physician choice, and supported Lahey through the supplier pricing negotiation process to implement $2.5 million in savings.
“Premier really helped us improve our savings,” O’Connor said. “The professionalism of the group, their experience, their understanding of the vendor market and their ability to bring best practices to the table were vital to our success.”