July 06, 2005 14:52 ET

VHA Survey Shows Physicians Engaging in Cost-Saving Initiatives

Opportunity Still Exists for Improved Physician-Hospital Cooperation

IRVING, TX -- (MARKET WIRE) -- July 6, 2005 -- Forging alliances with physicians and clinical staff is key to helping hospitals reduce expenses so they can improve their bottom line -- especially since cardiology, surgery and pharmacy represent 60 percent of a hospital's total supply costs. However, a recent VHA Inc. survey of materials managers shows that while physicians are beginning to participate in hospital-initiated cost-saving projects, there's still room for improved cooperation between physicians and hospitals.

VHA, a national health care alliance, recently surveyed 112 hospital materials managers. According to the survey, 84 percent of respondents reported that hospital attempts to partner with medical staff have been somewhat successful to very successful. In addition, 50 percent of those surveyed said their hospitals have identified opinion leaders among the medical staff to help with supply chain management efforts. Most respondents ranked materials management's relationship with physicians a seven or higher on a scale of one to 10, with 10 being the highest rank.

"Hospitals have done a good job using supply chain management activities to cut costs on commodity items. The most significant opportunity is on physician preference items, such as high-cost pharmaceuticals, pacemakers and cardiac stents and orthopedic devices," said Scott Downing, senior vice president of supply chain services for VHA. "To realize these savings, hospitals need to work with physicians to improve standardization and utilization, as well as participate in negotiation efforts."

More than half of those surveyed, 54 percent, said that physicians involved in supply chain efforts often have to sacrifice some of their personal preferences, yet 89 percent said their hospitals did not offer incentive programs to reward physicians for their efforts to reduce supply costs. By the same token, 73 percent said their hospitals do not offer incentives to physicians or surgeons who comply with the hospital's supply chain management objectives.

Of those hospitals that offer incentives for physicians, the most popular incentive, 12 percent, was investing in departmental equipment. Other hospitals offer scheduling preferences or preferred tools and devices, five and four percent, respectively.

In addition, hospitals are taking steps to bridge the gap between clinicians and materials managers. Seventy-five percent of those surveyed reported their hospital had specialized materials managers for their clinical departments. In addition, hospitals were likely to have specialized materials managers in high cost areas. For example, 51 percent of those surveyed said their hospitals have materials managers for their surgery departments. Approximately 19 percent of the hospitals had materials management personnel devoted to interventional cardiology, 18 percent for cardiovascular surgery and 13 percent had staff focused on orthopedics.

One health system that has successfully forged an alliance with its medical staff is Springfield, Ill.-based Memorial Health System. By partnering with physicians and frontline administrators, the health system has saved $5.4 million on physician preference items, including such high-ticket items as orthopedic hip and knee implants and cardiac rhythm devices.

"One of the things that has made our program successful was having our health system's chief medical officer serve as the program's physician champion and work directly with the medical staff," said Cindy Christofanelli, R.N., MSN, CNRP, director of value analysis at Memorial Health System and president elect for the Association of Healthcare Value Analysis Professionals. "In fact, our value analysis team reports not only to the vice president of operations support, but also has dotted-line reporting structure to the chief medical officer."

About VHA

VHA Inc. is a national alliance of leading not-for-profit health care providers that work together to improve the health of the communities they serve. VHA delivers industry leading supply chain management services and enables regional and national member networks to improve clinical and operational performance and drive sustainable results. Organized as a cooperative and based in Irving, Texas, VHA has 18 local offices serving members across the United States.

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