SOURCE: VHA

May 03, 2010 12:00 ET

New Jersey Hospital Saves $3.4 Million in Only Seven Months Using VHA's Supply Chain Solutions

IRVING, TX--(Marketwire - May 3, 2010) - In the face of an ever-tightening reimbursement landscape and the need to fund an ambitious hospital Renewal project, The Valley Hospital, of Ridgewood, NJ, partnered with and challenged VHA Inc., the national health care network, to help it achieve an additional $2 million in savings in 2009, beyond Valley's pre-existing 2009 non-salary expense reduction goal. By leveraging VHA's supply chain solutions, the hospital not only met but exceeded its goal and was able to achieve $3.4 million in additional savings in only seven months.

At the beginning of the project, the hospital's administrative team recognized that the goal could only be met by fully engaging the nursing staff, the medical staff and clinical and nonclinical departments. In other words, success would not be realized if this undertaking was viewed solely as a project owned and implemented by the purchasing department. The administrative team was uncertain how the clinical staff would react to a cost savings campaign, since it would require changes to the products the clinicians had become accustomed to using. "We're a hospital that's steeped in choice and preference, so we were concerned the program would be a bitter pill to swallow," says Len Guglielmo, assistant vice president of materials management.

Guglielmo and his team worked with VHA to launch a supply chain initiative that highlighted and respected the importance of choice and physician/clinical preference while balancing theses issues with cost in product selection. It was in this spirit that Valley launched the initiative.

"Through VHA's Spend Analysis, we identified and implemented nearly $740,000 in savings opportunities almost immediately, which helped build momentum for and confidence in the initiative," says Margie Deevy, manager of purchasing at Valley Hospital. 

For example, Valley was eligible for a lower pricing tier for purchasing endotracheal tubes. "We discovered that we were buying the same item not only from our main distributor, but also a second distributor and directly from the supplier," says Deevy. "When we moved the purchases over to our primary distributor, we were clearly eligible for a lower pricing tier, and it went into effect immediately. VHA created an artful balance between saving money and ensuring that it respected Valley Hospital's top priorities, maintaining clinical quality." 

VHA also discovered that Valley was using six different housekeeping suppliers for three of its buildings, including several local suppliers that it wanted to continue to support. "We kept small, local suppliers for some products and moved some of the larger suppliers over to our VHA / Novation national contracts," says Guglielmo. "It was a win/win for both the community and the hospital."

"Part of the challenge for any hospital is to get its arms around all the hidden purchasing activities that go on," he said. "VHA's supply chain analytics tools gave us insights we needed to rein in any unnecessary spending." 

About VHA

VHA Inc., based in Irving, Texas, is a national network of not-for-profit health care organizations that work together to drive maximum savings in the supply chain arena, set new levels of clinical performance and identify and implement best practices to improve operational efficiency and clinical outcomes. Formed in 1977, through its 16 regional offices, VHA serves more than 1,400 hospitals and more than 28,000+ non-acute care providers nationwide. VHA was ranked by Modern Healthcare as the 7th best place to work in health care in 2009.

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