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Highmark supply chain deemed a success

Andrew Russell | Tribune-Review
Bill O’Connor, senior vice president at Provider Supply Chain Partners, a Highmark company, shows off the company's wares on Tuesday, Jan. 8, 2013, in their offices in the North Side.

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A 150,000-square-foot distribution center is in the works. The warehouse near Evans City in Butler County, scheduled to open this summer, will store products before delivery. The building will enable Provider Supply Chain Partners to further cut costs by buying truckloads of products.

By Rossilynne Skena Culgan
Saturday, Feb. 23, 2013, 8:44 p.m.
 

Less than a year since its start, Highmark Inc.'s supply chain partnership is saving member hospitals money by allowing them to pull together and buy in bulk.

“We absolutely are saving money, and it's significant,” said Bill O'Connor, senior vice president at Provider Supply Chain Partners, a Highmark company.

On average, member hospitals will save 4 percent to 31 percent on total nonlabor spending annually, Highmark projects.

Highmark's goal is to provide affordable health care, O'Connor said, and to do that, it needs to make sure expenses are kept in check.

The company leverages its buying power, O'Connor said.

For example, he said, a person buying groceries for one household would pay a certain price, but somebody buying groceries for 20 households can buy a truckload and negotiate prices.

In this case, medical apparatus goes into a collective shopping cart — items such as replacement hips or knees, pacemakers, crutches, bandages and pharmaceutical drugs.

Since its beginning in April, 11 hospitals have joined the buying agreement, including five in the West Penn Allegheny System, five in the West Virginia United System and St. Vincent Health System in Erie.

Highmark is targeting facilities in Pennsylvania, West Virginia and Delaware.

Though other supply chain service organizations exist, O'Connor said, Highmark's took a different approach by working with doctors.

“We are taking it a step further,” he said. “When it comes to medical devices, we're really trying to work with the physicians. We have advisory boards that we use to communicate and educate and get them to help us make good quality decisions.

“It enables us to work with the supplier community and ... make much stronger and aggressive commitments.”

Al Mansfield, chief financial officer at St. Vincent Health System, underscored the doctors' influence in guiding purchases.

“Together with physicians, Provider can evaluate from a clinician's point of view the clinical merits of competing products,” Mansfield said.

Already, he said, the hospital has realized a cost savings, which he said will become more significant over time.

Rossilynne Skena is a staff writer for Trib Total Media. She can be reached at 724-836-6646 or rskena@tribweb.com.

 

 
 


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