Changing the supply system paradigm.

Abstract

Since revenues are fixed for a growing majority of patients, healthcare providers need to develop creative mechanisms for fixing and reducing costs in all aspects of their operations. Froedtert Memorial Lutheran Hospital in Milwaukee, WI, wanted to find a supply distributor, or distributors, interested in becoming our partner to accomplish five main objectives: 1) stabilize current supply costs at or below current line item pricing, 2) reduce supply costs per unit of patient service, 3) consolidate a broad range of supply sources to achieve economies of scale and more cost-efficient systems, 4) reduce supplier line item profit margins in exchange for broader market share within the hospital, and 5) establish a mutual commitment to supply cost measurement and control that evolves from the current focus on line item pricing to a system of procedure or unit of service pricing and cost control. Froedtert selected one prime vendor after an RFP process. Material Management will manage and monitor the program, with primary supply recommendations to come from the medical staff, nursing services and the Product/Service Analysis Committee.