January 23, 2012 12:01 ET

VHA Inc. Helps Memorial Hermann Healthcare System Save $48.7 Million in Supply Chain Savings and VHA Door-to-Discharge™ Improvements

Comprehensive Initiative Strengthens Financial Performance and System's Commitment to Provide One of the Nation's Best Care Delivery Systems

IRVING, TX--(Marketwire - Jan 23, 2012) - Anticipating the effects of decreased reimbursements and revenues related to health care reform and the myriad regulatory pressures demanding cost reductions and improved patient outcomes, Memorial Hermann Healthcare System worked closely with VHA Inc., the national health care network, to save nearly $49 million in less than two years and help the system achieve its vision to be among the nation's best health care systems.

As one of Texas' largest not-for-profit health care systems, serving southeast Texas and the greater Houston community, MHHS includes 13 hospitals and a vast network of affiliated physicians and specialty programs and services. Because one-third of Houston's residents are uninsured and 23% of the system's volume is derived from self-pay and Medicaid patients, system leaders determined that at current operating costs, the organization would confront a $400 million gap between its actual patient care costs and reimbursements in the next five to seven years.

"We realized we needed to achieve a new level of operational performance and could foresee significant funding cuts under health care reform," said Michael Shabot, MD, chief medical officer, MHHS. "We needed to reduce our cost of operations while providing a higher quality service. We thought that was possible and that's why we partnered with VHA."

Working with VHA, MHHS implemented a Non-Salary Cost Reduction and VHA Door-to-Discharge Engagement to achieve transformational changes in day-to-day operations, reducing the overall cost of patient care while maintaining or improving quality.

"In light of payment reform and other increasing industry demands, hospitals are under unparalleled pressure to cut costs while maintaining, if not improving, the quality of patient care," said David Markoski, senior vice president, Performance Services consulting at VHA. "We leveraged our unique approach and industry-leading business intelligence to help Memorial Hermann achieve meaningful savings and implement processes to sustain improvements to prepare for the uncertain future of health care."

VHA's supply and clinical consultants worked with MHHS to implement more than 300 savings initiatives and improve all areas of cost from acquisition of supplies, purchased services, and capital, to utilization of supplies and clinical services. Additionally, these efforts promoted physician and clinician behavior changes and identified operational workflow and patient throughput improvements in several system hospitals.

"VHA brought some of the very best talent in the country into our system to tackle these challenges and help fix this problem with us. They were not only very knowledgeable and experienced in their field, but fit in with our organization, our people and our culture," said Dan Wolterman, president and CEO, MHHS. "As a result, our supply cost per net operating revenue dropped from around 15.5% to 13.6%, which is one of the lowest in the country."

With 150 experts averaging 25 years of health care experience, VHA has one of the largest and most experienced health care consulting practices in the industry. Additionally, VHA brings to its engagements the industry's broadest set of tools and best practices derived from the practice's work with more than 5,000 consulting engagements.

About Memorial Hermann Health System
An integrated health system, Memorial Hermann is known for world-class clinical expertise, patient-centered care, leading edge technology, and innovation. The system, with its exceptional medical staff and more than 20,000 employees, serves southeast Texas and the greater Houston community. Memorial Hermann's 13 hospitals include three hospitals in the Texas Medical Center, including a level 1 trauma center, a hospital for children and a rehabilitation hospital; a hospital for women at Memorial Hermann Memorial City Medical Center; a rehabilitation hospital in Katy; and eight suburban hospitals. The system also operates three Heart & Vascular Institute locations, the Mischer Neuroscience Institute, the Ironman Sports Medicine Institute, an air ambulance, cancer, imaging and surgery centers, sports medicine and rehabilitation centers, outpatient laboratories, a chemical dependency treatment center, a home health agency, a retirement community and a nursing home. To learn more, visit

About VHA Inc.
Based in Irving, TX, VHA Inc. 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. Since 1977, VHA has leveraged its expertise in analytics, contracting, consulting and networks to help members achieve their operational, clinical and financial objectives. In 2010, VHA delivered record savings and value of $1.7 billion to members. VHA serves more than 1,350 hospitals and more than 30,000 non-acute care providers nationwide, coordinating delivery of its programs and services through its 15 regional offices. VHA has been ranked as one of the best places to work in healthcare by Modern Healthcare since the publication introduced this list in 2008.

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