Technology-Enabled Spend Management Services Targeted to achieve Significant Supply Savings
ATLANTA--(BUSINESS WIRE)-- MedAssets (NASDAQ: MDAS) today announced that Revenue Cycle customer Kettering Health Network (Kettering), has selected key components of its Spend and Clinical Resource Management solutions to help optimize overall financial performance. Under terms of the multi-year agreement, Kettering will use a combination of MedAssets strategic sourcing services, clinical cost management capabilities and tools to analyze the utilization and purchase of medical and non-medical supplies across its seven-hospital system to drive cost reductions and operating efficiencies without compromise to high-quality patient care. MedAssets and Kettering have targeted significant, multi-million dollar savings as result of the initiative.
Improved Purchasing Practices and More Favorable Supplier Terms
“To survive what I consider a looming financial crisis in healthcare, we plan to place a higher concentration on analyzing the resources used in delivering patient care and eliminate waste to reduce the total cost,” said Steve Huckabaa, vice president of procurement and supply, Kettering Health Network. “MedAssets offers the capabilities and expertise to transform supply chain management and create the bridge to engage service line physician leaders. We plan to leverage their experts and advanced spend analytics to improve organizational purchasing practices and gain more favorable terms with outside suppliers. This new agreement presents a tremendous opportunity to lower costs and improve utilization in a yet untapped area and enabling us to reallocate those savings toward investments that directly support patient care.”
The new analysis of purchasing decisions builds upon Kettering’s track record of lowering costs. The health system holds currently a very favorable cost of supply to net revenue at 17 percent, down from more than 20 percent five years ago. Kettering is determined with MedAssets services it can move to even greater cost performance, according to Huckabaa.
Medical Devices – Typically 40 percent of the Supply Budget
Because supply costs are among the highest expenses of a hospital, Kettering expects to realize significant bottom-line savings. Supplies and drugs represent 25 percent of a typical hospital’s operating budget, and about 40 percent of the supply budget is spent on physician preference items (PPI), such as orthopedic implants—a particular area of focus for Kettering’s cost-reduction initiative.
MedAssets clinical cost management experts will utilize the company’s Service Line Analytics tool to capture the total cost of Kettering’s care delivery involving medical devices and other physician preference items. The comparative analysis variables include reimbursement, supply cost, utilization and clinical resource data. The on-site team will then engage physicians in a distinct analytical review process to present insight on cost drivers and assess savings opportunities. The goal is to maintain high quality patient outcomes while gaining consensus on opportunities to standardize and improve clinical resource utilization. This PPI process typically results in savings of 5-20 percent of implant expense.
Kettering, which utilizes centralized purchasing, also will use MedAssets Purchased Services to look for ways to lower costs and improve operating margins outside of medical-surgical supply spend. MedAssets offers national market intelligence to look at total hospital expense of items such as insurance rates, energy, food, laundry and linen to create an improved sourcing strategy for these indirect patient care delivery services.
Complements a Proven Track Record of Improved Revenue Capture and Integrity
The supply savings initiative also builds upon Kettering’s successful use of MedAssets revenue cycle solution suite to improve financial performance. Its long-term use of the MedAssets Claims Auditor, CarePricer® and Contract Manager has enabled the health system to optimize revenue capture, improve operating margin and accelerate cash flow. The use of the Contract Manager solution alone has helped the health system achieve more than $5 million in documented financial improvement through recouped payor underpayments.
“We are very pleased to pursue this logical extension of our relationship with Kettering Health Network and that our Spend Management solutions continue to have great appeal among similar renowned healthcare systems,” said Rand Ballard, chief operating officer and chief customer officer, MedAssets. “Insufficient reimbursements, capital constraints and increased regulatory requirements are challenging hospitals to find ways to sustain financial viability. Supplies are essentially the last frontier to find hidden costs. It’s a big area of expense that traditionally hasn’t been analyzed and pursued. What our technology and business process expertise brings to bear is a proven solution that gives hospitals confidence they can reduce costs while preserving the delicate balance between saving money and delivering high-quality patient care.”
About Kettering Health Network
Kettering Health Network includes six acute care hospitals along with the area’s only behavioral health hospital and more than 60 outpatient facilities. Kettering Health Network has more than 9,500 employees and 1,500 physicians who work to provide their patients with the best in care and the latest in medical technology. Thompson Reuters recently ranked Kettering Health Network as a Top Ten Health System in the United States for the second year in a row. Please visit www.khnetwork.org
MedAssets (NASDAQ: MDAS) partners with healthcare providers to improve financial strength by implementing spend management and revenue cycle management solutions that help control cost, improve margins and cash flow, increase regulatory compliance and optimize operational efficiency. MedAssets serves more than 180 health systems, 4,000 hospitals and 90,000 non-acute healthcare providers. For more information, go to www.medassets.com.
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