Yale-New Haven Health System & Bristol Hospital: A Value Analysis and Supply Chain Partnership That’s Working


Tue Mar 29 13:00:26 CDT 2016

How to improve your hospital's efficiency and cost savings.


"Sixty percent of our hospital costs are labor costs. Because it makes no sense to cut costs at the patient's bedside, we must create savings with the supplies and products we use. To generate higher supply savings, it is essential to have the right people and the right support network in place." - George Eighmy, CFO, Bristol Hospital


In this ever-changing and challenging climate, hospitals must operate as efficiently as possible. From a supply chain perspective, that means using the most clinically appropriate supplies at the lowest available price.


Increasingly, large hospital systems are sharing their supply chain expertise by establishing collaborative agreements with smaller hospitals within their states and regions.


These partnerships work two ways. First, they expand access to the analytical tools and purchasing power of the smaller hospitals while helping them operate within limited budgets. Second, they offer the larger system's supply chain organization new clinical insights and expanded volume opportunities. These factors strengthen the collaborative's overall value analysis and strategic sourcing decisions.


We recently spoke with George Eighmy, Vice President and CFO, Bristol Hospital (a $165 million system with 150 beds) and Keith Murphy, System Director, Strategic Sourcing and Clinical Value Analysis, Yale-New Haven Health System (a $3.3 billion system with 2,130 beds) about how their hospitals' partnership benefits the value analysis, strategic sourcing and purchasing activities for these Connecticut-based healthcare providers.


When and how did the idea for the Yale-New Haven Health System and Bristol Hospital collaboration develop?


George Eighmy, Bristol Hospital: Three years ago, we withdrew from a Connecticut hospital purchasing system, which left us with no strategic sourcing relationship. We were at the whim of our vendors and our costs began to skyrocket. Our CEO, Kurt Barwis, was familiar with the Yale-New Haven Health System and its supply chain expertise. We reached out to them for support in rebuilding Bristol Hospital's entire purchasing, value analysis and supply chain organization. After our first year working with the Yale-New Haven Health team, we formalized an agreement to become clinically integrated, which allowed for a much higher level of cooperation.


Keith Murphy, Yale-New Haven Health System: Our team provides purchasing, supply chain and value analysis support to Bridgeport Hospital, Greenwich Hospital, Yale-New Haven Hospital and the Northeast Medical Group; Bristol Hospital is now a part of that collaboration. Our value analysis team draws from the input of nine clinical committees. Physicians, nurses and supply chain experts from our hospital partners participate on these committees. Their insights, gained from experiences within their organizations, offer an essential breadth and depth of perspective that drives our supply chain process.

Our value analysis team and the clinical committees who advise them understand that saving money is important. But they also know if we don't get the right products to our patients, money savings don't matter.


GE: Through our partnership with Yale-New Haven Health, we are realizing significant price savings. But what's really valuable is our ability to determine which clinically effective suppliers offer the lowest price; we were not able to do that before. We benchmark our supply needs. We participate on Yale-New Haven Health's committees, and then bring back those insights to Bristol Hospital's surgical and medical/nursing committees.


We tell our physicians "This is what Yale-New Haven Health recommends and this is the approach we need to take." Our doctors understand that when we recommend certain medical and surgical supplies, that through the partnership we have done our due diligence. Ultimately we may not single source a product, as different products may have different niches. But we always remember that efficiency must always be second to clinical value.


What are the goals of your value analysis program?


GE: Through our partnership with Yale-New Haven Health, our goal is to purchase the most clinically valuable products at the lowest prices. We evaluate hundreds of products; some are high cost, low volume while others are low cost but low volume. Our hospital is leveraging the expertise of Keith's team to make sure we are as efficient and effective as possible.


KM: While we know that our hospitals' savings won't all come from the supply chain, we understand that supply chain is a big piece of cost savings. Each member of our team does a technological analysis of each process. Our RNs take the time to understand if the products we are reviewing are clinically acceptable. As a member of the New England Purchasing Coalition, encompassing 70 hospitals and 22 health systems across six states, we use many tools to drive value, including an e-bids process.


How is your value analysis process structured?


KM: The Yale-New Haven Health System's value analysis process includes nine committees that are managed by a clinical leader. To evaluate products by service line, we engage with five to six clinical and five to six non-clinical committees. These committees spend a lot of time researching and finding the right products for our patients.


Bristol Hospital's clinicians actively participate on all the Yale-New Haven Health's value analysis committees. These conversations are essential to our collective price negotiations.


GE: Because Bristol Hospital's value analysis structure is smaller, it's wonderful to be able to leverage the knowledge and experience that Yale-New Haven Health's committees bring. Through our surgical and medical evaluation teams' involvement, Bristol Hospital's clinicians better understand and buy into product recommendations.


Are the decisions you make in the partnership driven by clinical considerations? Material manager/supply chain considerations?  Or a combination of the two?


KM: We are not dealing with widgets; we are working to improve people's health. These are not financial decisions alone; they must be approached first from a clinical perspective.


GE: While purchasing managers run the process, they don't make the decisions. The Yale-New Haven template helps us make better decisions. Comparative effectiveness is what we look for. Is the product clinically safe? Does it provide the best outcomes?


Our hospital recently considered purchasing a new kind of lead cable for our telemetry monitors. Our nursing staff initially thought the product's quality and $100,000 projected savings made sense. However, during the roll-out phase, we found the lead was not designed correctly. We immediately pulled it from the hospital because it wasn't working from a clinical perspective.


What are your thoughts on product standardization?


KM: We want to achieve one quality standard of care. If one category's supplier drives that, great, but if multiple products or suppliers get us there, that's OK too. Our chief medical officers standardize the practice pathways to care; product standardization follows those pathways. In wound care, our system was able to reduce the number of suppliers from six or seven to two.


GE: Our clinicians are very passionate about having the right products. Standardization is a four letter word to most. However, working with Yale-New Haven Health, we're able to look at products from the standpoint of clinical outcomes, which helps them view things differently.


What is the level of executive support at Yale-New Haven and Bristol for this supply chain collaboration?


GE: I am the executive sponsor for Bristol Hospital's involvement. Our president, chief surgical officer and chief nursing officer are all committed to the partnership.


KM: Yale-New Haven Health's value analysis and strategic sourcing process has the complete support of our C-suite and our oversight committee. While physician involvement is a big part of our committees' work, our CFO and COO also serve as change agents with doctors and nurses who may be accustomed to using certain products.


GE: Change is hard. Doctors historically have wanted to select the products a hospital uses and where they're purchased. The good news is that our process now has clinical support at all levels, which makes it easier to develop consensus on change.


How is the value analysis partnership positively affecting other parts of your respective health systems?


KM: Our analytics team looks at our financial data in the aggregate and by committee. In past, materials management did not look at outcomes. Now they look at patient length of stay and quality measures. Along with the cost per procedure, what are the quality variances? We look at the big picture--savings data is one component, but clinical data is what drives our decisions.


GE: I can tell you that what I report out is very beneficial to staff morale. When we can cut $1 million in supplies from a $160 million budget that means we do not have to cut staff. Every time we find savings on the non-labor side, we are saving another job.


KM: We tell our committees, "It's really about 'staff or stuff'.'' Good decisions on the products we purchase allow us to keep staff in place.


Is it possible to be both efficient and thorough in your validation process?


KM: To create change, you must have an efficient process and understand the steps that process requires. In the past we would look at the same products and simply negotiate a better price. Now, we also know that the best decisions happen through research. Our physicians are trying to do right thing for their patients and research helps us with that conversation.


However, research takes time. We select products and negotiate pricing after our committees use a number of research tools and spend time figuring out which products are the most clinically acceptable. In specialties, such as orthopedics, we also use trials to determine products' efficacy and discuss their benefits or drawbacks.


GE: Suppliers typically use their own research when they meet with doctors. It is up to us to dig into and vet that research to determine if it is correct. As a larger and more heavily resourced healthcare system, Yale-New Haven Health offers Bristol hospital independent research that helps us validate or refute suppliers' data. This gives us the authority to ask additional questions and determine if the product is right for our needs. The value analysis that is conducted within our partnership enables us to say to our physicians, "We've tried this product and it's lived up to (or failed) expectations across several hospitals."


In today's dynamic environment, what are some of the more significant changes that have come about as a result of the Yale-New Haven-Bristol partnership? 


GE: In the past, we tended to make one-off decisions on products without having a significant meeting of the minds. After severing our prior purchasing agreement, Bristol Hospital did not have the luxury of trying and failing many times. So it was extremely valuable to take Yale-New Haven Health's process and layer it with ours.


Now, with the Yale-New Haven value analysis template, our structure is efficient and more inclusive. The hour-long meetings of the past, where each person lobbied for their own self-interest, are gone. Now, a broad range of clinicians come together in a one-hour meeting, align their needs and make collective decisions.


KM: Management provided the support for us to get even more clinicians involved. Our re-designed process has allowed us to make decisions on 250 projects throughout our health system last year. That would have been very tough if we did not have an efficient system.


We also take advantage of the clinical documentation and referencing that our group purchasing organization (GPO), VHA Inc., provides to the committees we have in place. The Yale-New Haven Health system has 500 contracts expiring every year; without VHA's support I would need to double my staff. VHA can also help us do comparative analyses based on national trends. Both the New England Purchasing Coalition and VHA help guide the conversations that help us choose the right products.


GE:  There are leading practices in whatever we do, and we also know that bigger is not always better. Clinicians within the partnership's affiliates may have tried things that Yale-New Haven Health has not yet tried. If one product is more expensive but the outcomes are better, the price may be worth the benefit. We are in constant conversation around our practices, products and options. Above all, our clinicians and physicians won't let us make mistakes; their input is invaluable.


What is the role of your suppliers as you bring in new products and new technologies?


KM: Products mean nothing without customer service. We work with our suppliers to make sure they can provide training and education to our staff over time. Our suppliers must stay engaged and continue partnering with us to ensure appropriate use of products, and to look for value opportunities such as standardization.


GE: Our suppliers must be on-board and on-site to support product rollouts and to offer education and training. They must keep an eye on product utilization and recommend changes that support our efficiency and quality goals. Their support—or lack of it—could spur a decision to keep or replace them.


What tips do you have for other smaller hospitals that may be looking to partner with a regional medical system?


GE: Historically, doctors at Bristol Hospital were the key drivers of all care. Then along came the Affordable Care Act and its drive to efficiency. Physicians no longer have the same control over the products they want and how they obtain them. Through our partnership with Yale-New Haven Health, our value analysis committees now ask doctors, "What do you need and how can we help get it for you?" When five doctors agree and one disagrees on a product or service, this changes the group dynamic and spurs buy-in; the process becomes more inclusive and objective.


Mergers and acquisitions are dramatically changing the healthcare landscape. Every small hospital system knows this; we do not want to be left out in the cold. As a small hospital, what you do not want is to be dictated to culturally by your larger partner. I would advise smaller hospitals contemplating this kind of partnership to not jump into the marriage immediately. Rather, look under the rock awhile and ask if it is a good cultural fit. Will you have a voice? Will there be collaboration?


Our collaboration works because Yale-New Haven Health brings doctors and clinicians together who help us make efficient sourcing decisions as well as ensure quality and great outcomes at Bristol Hospital.


KM: When clinicians and subject-matter experts join our system from other hospitals, the bigger knowledge pool enables us to make better decisions. Because Bridgeport and Greenwich hospitals are already part of the Yale-New Haven Health system, their clinicians' input adds the important perspective of community physicians in those regions. That existing dynamic—of diverse opinion and representation—is one of the reasons Bristol began to explore what is now a successful partnership.