Facing the ongoing challenge of expense increases outpacing revenue increases, Lahey Health (now a part of Beth Israel Lahey Health) in Boston, Massachusetts, engaged with Premier® to optimize financial performance across their academic medical center and five community hospitals.
“We felt that we could make a much bigger impact with an organization like Premier, because they have significant experience at this, closer working relationships with the vendors and good analytic capabilities that they could bring to the table to identify where opportunities existed,” said Tim O’Connor who served as EVP, CFO and Treasurer of Lahey Health prior to the formation of Beth Israel Lahey Health.
The health system embarked on a non-labor expense reduction engagement, optimizing supply and purchased services spend. Leveraging robust analytic capabilities, Premier identified savings opportunities related to pharmacy, lab and physician preference items (PPI) like high-value implants used in surgeries and cardiac procedures.
The data used was vital. While optimizing pricing on high-value implants, for example, Premier harnessed its unique four-level categorization to classify purchased implants based on functional equivalence. This enabled credible cross-reference benchmarking and productive conversations between Lahey Health’s leadership and physicians, leading to savings of $2.5 million in this high-spend area.
“Physicians are very scientific in nature,” O’Connor said, “and the facts help everyone get to the right conclusion, so you can take action.”
During the engagement, Premier’s experts collaborated with a variety of stakeholders to develop buy-in. “The Premier team and management worked very closely with clinicians and clinical teams,” O’Connor said. They delivered concrete data, enabled new product trials and shared best practices used at other health systems to maintain or improve outcomes while reducing costs.
Premier explored a variety of solutions, such as pricing, utilization, standardization and new ways of working, and through their efforts, helped Lahey Health achieve more than $22 million in savings over the course of the approximately two-and-a-half-year engagement.