How a Regional Hospital Saved $263k In 30 Days
A regional, 300+ bed academic medical center located in the U.S. has been recognized frequently for its excellence in joint replacement surgery as well as the overall quality of care and attention to patient safety. The hospital’s services have grown and methods of medical care have become increasingly sophisticated over the last two decades. While these changes are positive, they led to an opportunity for improved cost efficiencies.
Challenge: Over-Spending Across Many Categories
Hospital supply chain management is notoriously fragmented and complex, requiring interactions with numerous stakeholders including manufacturers, distributors, insurers and group purchasing organizations. Similar to many other health systems, this hospital’s supply chain costs often represent the second largest expense category after payroll.
The Director of Materials Management at the hospital focused on the categories where he and his supply chain team could realize the biggest cost savings. However, there were still significant opportunities in smaller categories such as breast reconstruction, vagus nerve stimulators, AAA grafts, drug-eluting stents, as well as countless others.
- Because contracts were constantly expiring, it was impossible for the supply chain team to respond quickly enough to market trends that could benefit pricing. The expiring contracts typically won in priority.
- It was difficult to identify how his pricing compared to the market, especially in areas where local agreements could be preferable because they only had insight into GPO benchmarks. Supply chain needed unbiased benchmark insight in PPI to complement the GPO benchmarks.
- Running a manual savings project in a PPI category could take months to complete. That means he didn’t have the resources to focus on smaller spend categories simply because there wasn’t time to work them. But they knew those small categories could add up to big savings if he could automate some of the steps.
As the hospital’s supply chain team experienced firsthand, cost savings opportunities can typically only be identified through manual processes and resource-intensive checks and balances. This makes it exceedingly challenging for regional hospitals to identify – and take action on – savings opportunities.
Solution: Curvo’s Clinical Spend Management Software Allowed the Hospital to Send 25 Re-Pricing Events in Less Than 6 Hours
The Director of Materials Management began exploring innovative solutions to help the hospital take action on the competitive pricing he knew they could achieve. He reached out to Curvo as he heard the company was excellent at helping manage expenses. Curvo’s clinical spend management software helps health systems like theirs automate and maximize the supply chain.
After selecting Curvo as its clinical spend management solution, the regional hospital’s supply chain team immediately began taking advantage of many of the software’s features. With Curvo, the team is now able to:
- View unbiased benchmark insights across PPI categories, and see savings opportunities updated monthly at his fingertips compared to hospitals with similar volume and market share.
- Automate the manual steps in the sourcing process to shave weeks and months of time from the vendor bid process.
- Monitor for price creep in an automated way that ensures the hospital realizes the forecasted savings after a savings project is complete.
In the category of breast reconstruction, Curvo compared one vendor’s pricing against hospitals of similar size in similar markets and found that they were paying significantly more. Supply chain was able to send a re-pricing event and save $49,000 in just that single category.
The sourcing process became so efficient that in less than 6 hours of the supply chain team’s time, the hospital was able to send 25 individual re-pricing events to vendors where savings opportunities ranging from $9k to $49k were identified.
Results: 3:1 ROI in First 30 Days
Not only has Curvo helped the hospital supply chain save $263k in just 30 days, but also the team dedicated less than 6 hours to those re-pricing events, thanks to Curvo’s analytics and automation. Cutting costs while receiving the same quality items from their vendors has allowed them to operate more efficiently while passing along cost savings to their patients.
Just 30 days into the partnership with Curvo, the regional hospital has seen incredible results – and they’re just getting started:
- 25 Repricing events sent in a single day
- 12 vendors offered improved pricing
- Only 4-6 hours of dedicated time by the hospital’s supply chain team
- Completed in 30 days
- Total basket spend $2.8M
- Savings of $263k
- 3:1 ROI in first 30 days
Since the hospital’s launch with Curvo, the supply chain team has saved nearly $500k and can now easily track for any price creep or utilization changes that impact their ability to realize savings from the work they’ve already completed. Curvo has allowed them to take true ownership of their supply chain costs and has already secured a 4X ROI on the investment.
Vision: We’re Just Getting Started!
Out of the 25 repricing events sent by Curvo in a single day, 12 vendors lowered their prices. Just imagine the opportunity this hospital would unlock by dedicating a small amount of time each month, each quarter, and each year to identifying cost savings through Curvo. The compounding savings upside is incredibly high. This client is thrilled with the Curvo partnership both in the positive impact to the bottom line as well as the improved patient experiences with the hospital.
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