Reining in the supply chain spending of a 15-facility healthcare delivery system isn’t easy. Ask James McManus, vice president of finance and supply chain strategies for St. Joseph Health (SJH) serving northern and southern California, west Texas, and eastern New Mexico. “Without a good, accurate price benchmarking guide, we were concerned about whether our product pricing was within an acceptable range,” says McManus. “Some of the hospitals in our system were paying more than others for the exact same supply items. It was the appropriate time to establish pricing consistency across the enterprise and take advantage of the savings opportunities.”
SJH turned to ECRI Institute’s PriceGuide™ advisory service and started immediately cutting costs across the enterprise. “With PriceGuide,” says McManus, “we can quickly pinpoint the major SKUs within our existing contracts that hold the most spend and assess whether our prices are reasonable or not.”
“PriceGuide helps us determine if we have a good ‘ask’ of a supplier for a price,” continues McManus, “because it shows us how many providers in the database have reported on a specific product category and what the spend is with that supplier. We know immediately if it makes sense for us to request a lower price.”
In a site visit to one of SJH’s hospitals, McManus logged on to the PriceGuide database and sorted the facility’s pricing on 22 specific product categories, including cardiac rhythm management. Within two hours, he uncovered $265,000 in potential savings. As a result, he and his team were able to contact suppliers for immediate savings, and had some crucial conversations with others to negotiate a more reasonable price.
“What I like about PriceGuide,” states McManus, “is that it provides actual, not estimated, data from hospitals. Additionally, it gives us benchmarks all the way down to the SKU level, while other services go just to the category level or make assumptions based on estimated spend.”
According to McManus, not only are PriceGuide data accurate, they are presented in a more actionable format than other services.
“Recently, a supplier told us we couldn’t get a better price for a certain product category because our volume was too low. PriceGuide revealed that seven IDNs had a better price than SJH with lower spend. So, we were able to make the case with the vendor for what needed to be done, and back it up with real data,” says McManus.
St. Joseph’s supply chain leadership makes smart, strategic use of PriceGuide’s data in reports to senior management.
“We advise management as to what percentage of the time our price is the best in the database, and how often we are paying above the national low or average price. Sharing of this data builds support for pricing changes and product conversions as management knows what opportunities exist from a percentage standpoint as well as in dollars,” explains McManus.
SJH saved nearly $2 million on supplies in one year on medical devices as well as low-priced, high-volume medical-surgical supplies. “We’ve made PriceGuide the standard for how we do business,” states McManus. “It is our means for stabilizing pricing across the entire St. Joseph Health
network, and has helped us achieve remarkable savings on our supply items.”
Learn more about PriceGuide membership.