Hawai’i Pacific Health is a leading healthcare provider for citizens of Hawai’i; one that advocates a willingness to create its own change. Its forward-thinking attitude is evident by being among the national leaders in conversion to an entirely electronic-based medical records system, expanding its presence on the islands with new facilities and programs, and leading outreach efforts to educate the community on its efforts to change how healthcare is delivered in Hawai’i. And its penchant for thinking ahead fuels an ongoing commitment to sustained improvement in all areas of operations.

In 2006, when Hawai’i Pacific Health Vice President Paula Dias joined the supply chain department, the system already was a customer of MedAssets. It was taking advantage of the national portfolio of contracts for products and services, but largely going on its own in other aspects of supplies. As Hawai’i Pacific Health proactively began to emphasize a search for additional system-wide cost savings, Dias and her team explored ways they could further leverage their relationship with MedAssets to increase operational efficiencies and better manage supply expense.

From those initial inquiries began a new era in Hawai’i Pacific Health’s supply chain operations – one marked by multimillion-dollar savings in costs through improved business processes, access to actionable data and a commitment to standardization. At the center of the new approach was employing data analytics from Aspen Healthcare Metrics, a MedAssets company, to guide improvements in overall supply chain performance, then implementing MedAssets Strategic Information (SI) solution to identify and drive standardization and savings opportunities.

The Hawai’i Pacific Health supply management team is a lean organization, serving the supply needs of its 500-bed multi-hospital system and structured to gain the most from limited resources. Throughout the process, Hawai’i Pacific Health was able to use its existing team, with support from MedAssets personnel, who were available on-site as required. This easily accessible assistance was invaluable, Dias says, in having early and complete information on contract details and status before work began on new initiatives.

As the team began the work of strengthening the supply management process, it had its share of challenges. Varying types of technology, introduced on a trial basis by personnel in different facilities, had become permanent; physician preference items were adopted outside of standard purchasing procedures; some who had a hand in product selection did not fully understand the contracting process or the benefits of standardization.

Hawai’i Pacific Health employed a collaborative approach to gain consensus on implementing change. SI and related data metrics were applied to supplies for various service lines across the system. Dias and her team kept a log of all contract analysis and supply utilization results, identifying standardization opportunities, documenting potential cost savings and directing clinicians to appropriate value-analysis teams in each facility for review and decisions.

Value-analysis teams (VAT) are comprised of both clinical and supply personnel. Their review of SI data helped drive both the clinical decisions on product standardization and the selection of contracts and suppliers for purchasing products. Supply personnel led each VAT effort to ensure continuity in process and approach.

According to Dias, Hawai’i Pacific Health was able to start the process with a couple of quick, significant wins in finding cost savings in initial areas such as orthopedic and cardiac services, which would especially benefit from new approaches to supply purchasing and utilization. For example, contracts for heart valves were renegotiated based on data analysis and highly variable orthopedics product usage was brought into line.

This momentum has been sustained in other areas. To aid in Hawai’i Pacific Health’s negotiations with suppliers, MedAssets has developed a formulary guideline that indicates how much the system should pay for given products, which is then used to help frame contract discussions. Dias says when suppliers are informed that pricing outside of formulary guidelines will prevent a contract award, it often guides final pricing in a favorable direction for the provider.

Not surprisingly, the Hawai’i Pacific Health team has found standardization to be among the most difficult elements of the overall cost-reduction efforts. Physicians still have their preferred products and there’s an understandable tendency to want to meet those preferences.

However, Dias reports that sharing data analytics directly with physicians has proven to be effective in getting them to see the value of standardizing on certain products, if the quality is maintained. When data are available that show direct comparisons of utilization among physicians and hospitals and the savings that standardization brings to the entire system, physician cooperation in making those decisions has been very good.

To sustain over time the savings opportunities that have been identified, Hawai’i Pacific Health has developed a rigorous purchasing process that is applied across the system. All affected parties now understand the process for capital budgeting and each major purchasing decision is carefully reviewed by the supply chain team and must be approved by senior-level management.

Suppliers must acknowledge and sign off on Hawai’i Pacific Health purchasing policies before gaining access to the system’s facilities and those who wish to introduce trial equipment or other items requested by clinicians must complete a purchase request.

Dias reports that several years of work by her team, supported by implementation of the MedAssets business tools, has changed the mindset for supply management across the organization. Cost savings are not only an objective, but also a way of doing business. Actionable data and quantified savings are the bonds that tie together the efforts of the supply team, executive leadership, clinicians and value-analysis teams.

Shared success in achieving supply cost savings also complements Hawai’i Pacific Health’s emphasis on employee engagement – and its belief in the importance of group investment in meeting goals toward overall job satisfaction.

According to Dias, bottom-line results are the best advertisement for potential rewards. Supply cost savings totaled nearly $2 million for the latest fiscal year and slightly more than $2 million in the previous year. Dias credits the decision to expand the MedAssets relationship as one of the key catalysts for change. By using new services and tools, the team now better controls the supply process and should sustain the savings for
years to come.

“We’re a service department and MedAssets helps us do the best possible job for Hawai’i Pacific Health. By working with other departments to continuously improve the supply process and drive more savings, we are making a long-term positive contribution to the system,” Dias says. “It’s a contribution that helps maintain Hawai’i Pacific Health’s record of providing quality, efficient healthcare to the people of Hawai’i.”