Enhanced Purchasing Services (EPS) - USMD Arlington
The Case: USMD Hospital - Arlington, TX
The Challenge
34-bed USMD Arlington was looking for ways to reduce non-salary expenses, so that it could improve its operating margin. The hospital’s leadership knew they needed more from their group purchasing. Th ey also needed access to enhanced tools and services that would reduce supply costs and drive supply chain performance. USMD Arlington called on QHR’s Material Resource Group for help.
Q Solutions
QHR began with a market basket analysis of the USMD product mix and spend. This analysis determined that there were many areas of opportunity for savings; 60 percent of those savings were areas that were easily achievable. Based on the analysis, QHR developed a game plan to help the hospital transition to HealthTrust group purchasing organization (GPO).
“Whether it was moving to a new product line and vendor, or just migrating from our previous GPO agreement with the same vendor, QHR walked us through every step of the process,” said Karen Fiducia, President of USMD’s Hospital Division. “And as soon as spend data under our new contract was available, QHR began providing us with off contract Med Surg, Pharmacy and Lab reports to help us identify additional savings and conversion opportunities.”
Next, QHR took steps to help USMD further maximize its “spend” by comparing purchases within a product category by vendor.
“QHR helped us understand that, for example, if we moved $5,000 worth of spend from one vendor to another, we might be able to move to a higher tier and pick up an additional percent savings,” she added. “We used this to move from Tier 2 to Tier 1 pricing with one vendor – and picked up an additional 3 percent cost reduction!”
Specifi cally, QHR provided USMD with:
- A Management Action Plan that quantified supply cost reduction opportunities;
- A QHR Implementation Team to help the hospital transition to HealthTrust GPO agreements;
- Assistance in developing annual GPO supply chain action plans, designed to help the hospital achieve its goals and objectives;
- QSpot – QHR’s proprietary, online Supply Purchasing Opportunity Tracker, which helped the hospital identify additional opportunities to reduce supply costs; and
- Access to QHR’s Strategic Service Partner (SSP) program – QHR’s contract portfolio offering a broad range of agreements not offered by traditional GPOs.
The Results
“QHR brought USMD competitive muscle,” Fiducia said. “Through QHR, we received preferred pricing on products that we would not have been able to qualify for based on our own volumes.”
The HealthTrust contract move alone was worth close to $500,000 in savings for USMD in its fi rst year.
“From the start, we had a strong site coordinator and eager contract coordinator at our disposal,” Fiducia added. “Our QHR contract coordinator personally walked some of our paperwork through the red tape to get us off to a fast start. To this day, the same coordinator funnels valuable product information, contract updates and quality information to us on a regular basis.
“From implementation to operation, we have had an excellent startup with QHR’s assistance.”
