Issue link: https://beckershealthcare.uberflip.com/i/831159
59 Executive Briefing waste throughout the health system. After conducting a Six Sigma project, ROi dis- covered Mercy was losing about $30.71 per pack — an average of six items per pack were thrown away without ever being used. A year later, ROi built a 6,000-square-foot custom procedure tray production facili- ty inside its existing consolidated service center in Springfield, Mo. The supply chain organization's strategic contracting and sourcing team had to contract with 150 vendors to access 900 unique items used in the packs. ROi standardized exist- ing packs and created new packs tailored to end users' preferences to eliminate un- necessary waste. These improvements led to a 10 percent reduction in custom pro- cedure tray costs for Mercy. Prior to implementing its own custom procedure tray operations, Mercy used 93 unique custom packs about 90,000 times annually. Now, ROi offers more than 600 unique custom packs used more than 500,000 times a year by Mercy and other health systems across the country. "Most, if not all, of our commercial cus- tomers purchase packs from us, so they're experiencing the same benefit as Mercy," says Mr. Firestone. The secret to a successful GPO In addition to greater customer savings on procedure trays, Mr. Firestone be- lieves ROi's GPO members receive nu- merous benefits from the organization's uniquely integrated structure and role in the healthcare industry. He highlighted five ways ROi ensures sustainable cost savings and satisfaction for its GPO members. 1. Provider-owned perspective Truven Health Analytics named Mercy among the top five large health systems in the country in 2016. After handling the day-to-day supply chain operations of such a large-scale, prominent health system for more than a decade, Mr. Fires- tone says ROi is well positioned to share its breadth of supply chain knowledge. "We bring a real-life, practicable applica- tion of running a supply chain," he says. "We can take the lessons we've learned from running Mercy's supply chain and transfer it over to our members." Mr. Firestone says ROi leverages best practices in sourcing, contracting, stan- dardization, utilization and supply chain management developed at Mercy so its member organizations can achieve the same level of success. 2. Vertically integrated service offering Unlike many other GPOs, ROi manufac- tures its own custom procedure trays, IV compounding solutions and other prod- ucts, including its own private label. By leveraging its self-manufacturing capa- bilities, along with strategically sourced branded products, ROi offers member hospitals additional savings on lower cost products that still promote clinical value and efficacy. "We're always looking for other opportu- nities to further vertically integrate," Mr. Firestone says. "We're always searching for processes that generate a substantial amount of spend for an organization so we can attack those cost areas and start to reduce dollars." 3. Clinically integrated supply chain ROi offers 11 service line committees that physicians, other clinicians or sup- ply chain stakeholders from member hospitals can join to weigh in on the de- cision-making process when looking at supply and device contracts. The com- mittees have monthly phone meetings to discuss not just the "price at the pump," but utilization and standardization op- portunities for everything from med/surg supplies to pharmaceuticals to capital equipment, according to Mr. Firestone. They also place a strong emphasis on managing physician preference items and purchased services categories. "We think clinical integration is critical throughout the decision-making process," he says. "We've found if we involve physi- cians' considerations from the very begin- ning, we get much better commitment on the purchases and better overall compli- ance, which in turn drives lower pricing and cost from a manufacturer's perspective." 4. Guaranteed sustainable cost savings ROi's unique contracting and self-distri- bution strategy allows it to offer guaran- teed cost savings to its members, accord- ing to Mr. Firestone. Mr. Firestone is so confident in ROi's ability to transform a healthcare organi- zation's operational supply chain struc- ture and inventory management, he feels comfortable telling new ROi members upfront not only what they'll save in the first year, but each and every year for the duration of their partnership. "We believe an organization should be held accountable for what they say they can deliver," he says. "We are very com- fortable putting ourselves at risk to offer guaranteed savings." 5. No fees for service ROi wants to be very transparent with its GPO costing model so members know the exact benefits they'll receive from day one and understand that's not going to change, says Mr. Firestone, who likens fee-for-ser- vice GPO models to extra airline fees. "You buy your ticket, get on the flight and they charge you for an in-flight meal," he says. "Nobody likes to be on the receiv- ing end of that." ROi uses the simplest costing model pos- sible, in which new members know exactly what they're going to get out of the part- nership and are aware of the potential revenue generation and cost savings. The GPO also shares back a portion of collect- ed administrative fees with its partners and avoids any service or membership fees. Conclusion The innovation behind ROi's integrated supply chain and group purchasing ser- vices is homegrown by a health system. That said, it offers substantial opportuni- ties for health systems to achieve supply chain efficiencies, eliminate waste and lower costs, all while providing quality patient care. ROi hopes to keep up this level of innova- tion with new service offerings and projects in its pipeline. Mr. Firestone says the com- pany is looking into offering clinical ana- lytics capabilities to aid hospitals in supply chain decision-making. ROi is also building a 110,000-square-foot custom pack facility to increase manufacturing capacity and ex- pand the service across the U.S. "We look at ourselves as a continuous im- provement engine," says Mr. Firestone. "We constantly ask ourselves: 'How can we do the same things today, better tomorrow?" n ROi believes in the power of provider collaboration to transform health care. A recognized leader in healthcare supply chain management through a vertically integrated supply chain model, ROi was founded more than a decade ago by Mercy, one of the nation's largest nonprofit healthcare systems. We now serve fellow providers across the U.S. that share a passion for supply chain excellence. As a provider-owned accountable supply-chain organization™, our insights and goals are uniquely aligned with today's healthcare organizations that must find new ways to provide better care at lower cost. ROi works alongside fellow providers of all sizes to deliver a range of cost management and end-to-end supply chain solutions with significant results. We are the only provider to be ranked by Gartner as a top 10 healthcare supply chain for eight straight years.