What do Community Coffee, Microsoft and Stryker have in common? All three strategic business partners – and several others – helped us save about $25 million in operational costs.
Delivering on the Vision (DOTV) Non-Labor Initiative was more than just a cost-savings expedition. It prompted us to think like a system and ask ourselves, “What can we do differently to maximize efficiency across the organization?”
In July 2012, Texas Children’s launched DOTV and partnered with Huron Healthcare consultants to identify cost savings opportunities across the organization. They examined several non-labor areas including billing and collection processes, vendor contracting, physician services and clinical care coordination. Fifty-eight initiatives were identified, which yielded $18 million in potential savings and revenue opportunities.
During the second phase – which began in September 2013 – Texas Children’s implemented Huron’s cost-saving strategies systemwide. But, our efforts didn’t stop there. Three non-labor solution teams – administrative support, clinical coordination, and hospital-based services – were tasked with identifying more opportunities to grow our hospital’s savings strategically year-over-year.
“We engaged our employees at every level of the organization to pitch their cost-savings ideas,” said Texas Children’s Revenue Cycle Director Carrie Rys, who was the co-leader of the Administrative Support Solutions Team. “Our three teams generated $5 million in potential savings.”
The DOTV Initiative uncovered 91 cost-savings ideas amounting to potentially $25 million.
“We negotiated and leveraged our vendor relationships to maximize the full value of every contract,” said Texas Children’s Vice President Diane Scardino, who co-led the DOTV Non-Labor Solutions Team. “When we asked the right questions, we discovered bigger savings and revenue opportunities.”
“One of our pathology frontline managers picked up on a workflow that had left out the billing on a pathology test that had existed for years,” said Texas Children’s Pathology Director Ann O’Connell. “After updating the workflow, more than $1 million in annual gross patient revenue is now generated.”
Other impressive ways we Delivered on the Vision include:
- Microsoft License Optimization: We assigned shared clinical workstations a device license instead of a per user license (as we have more clinical users – physicians, nurses, clinicians – than devices), which saved the hospital $857,000. Also, we were able to negotiate lower costs for our annual support benefits equal to $100,000 in savings.
- 340B Drug Purchasing: When we purchased medications at the 340B discounted price for our Medicaid patients, we saved $10.3 million for Texas Children’s Main and West Campus in FY14.
- Surgery: We restructured our Stryker contract so that anytime a new product/service line was added, all previous lines received a savings percentage to ensure we were duly compensated each time their business increased. Additionally, implants around spine surgeries were negotiated with three vendors to meet the physician preference needs of spine surgeons across two service lines – Orthopedics and Neuroscience. We used a benchmark tool and leveraged the support of our surgeons to negotiate more than $1 million in annualized savings.
- X-ray services: When we purchased five digital X-ray machines in bulk this year, we saved more than $200,000. We leveraged the buying power of a system by aggregating our purchases to drive price concessions from two vendor partners.
- Community Coffee: Being alert of contract errors helped us trim our expenses. When an administrative employee asked why it was more expensive to buy Sweet N’ Low at the contracted price versus buying it in bulk at the store, our Supply Chain team found Community Coffee had not adjusted its rates appropriately, which resulted in a $58,000 rebate check.
- Pest Control: We saved $6,727 by streamlining the hospital’s pest control services to one vendor at a reduced cost, which made the process of ordering and tracking supplies easier and more efficient.
“We have a lot of negotiation power that we don’t always use,” said Chanda Cashen Chacón, vice president of Women’s Services at Texas Children’s Pavilion for Women. “When we think like a system, we achieve better and bigger results.”