Committed contracts: what happens after you take the pledge?

For years, hospitals played under shifting rules at the high-stakes purchasing table. Manufacturers, groups and providers all dealt and bluffed. Each made commitments to one another, but afterward the manufacturers would try to go in the back door if a competitor shut them out at the front, and hospitals would join multiple groups and shift loyalties at will to get the lowest price. Sure, all agreed that solid contract commitments would be better for everyone. But when it was time to ante up, what really mattered to each was getting the best deal. And "best" meant something different to each player.

Strategic resource management

No one in healthcare can challenge the fact that expense reduction is and will continue to be one of the primary concerns of the industry. Everyone also knows that these cost pressures are merely beginning. All indications point to a future environment of intense competition, managed care based on cost-per-covered-life reimbursement, reduced reimbursement from Medicare and Medicaid, and further reconfiguration of the industry to shift patients from in- to out-patient settings. When we focus on the future, the $64,000 question is: "What is the healthcare industry doing to control non-labor expenses, and who is responsible for this ambitious undertaking within each hospital or network?" With nearly 30% of every hospital dollar consumed by non-labor expenses, are current efforts adequate to meet future demands? This article focuses on a strategic plan for reducing non-labor expenses.

Improving health care means spending more time with patients and less time with inventory

In most hospitals and medical establishments, about 35 percent of their budgets are spent on supplies and labor to manage the inventories, material, and information flows; typically, these are managed as multiechelon systems. The importance of reducing inventory costs, among others, has become relevant in today's health care management. This research applies just-in-time concepts to health care inventories.

A partnership to affect real cost reduction: a guaranteed savings of $20 million

In 1994 Brigham and Women's Hospital and Massachusetts General Hospital joined forces to form Partners HealthCare System, Inc. (Boston, MA), an integrated healthcare delivery system. Both teaching affiliates of Harvard Medical School, the two hospitals comprise approximately 1,750 beds with 80,000 inpatient admissions and 1.3 million outpatient visits annually. The two campuses have over 16,000 employees in facilities covering 6.5 million square feet. The key goals of their partnership were to reduce cost and improve quality. Partners HealthCare System (PHS) set a goal to save $240 million in the first three years. These savings were to be achieved through consolidating departments and programs, adopting best practices between institutions, and wise purchasing. This article looks at the supplier partnering process followed by PHS to affect a guaranteed savings of $20 million.