Strategic Sourcing Initiative for $2B Integrated Delivery Network
Client
The client is a large, $2B Chicago-based Integrated Delivery Network (IDN) with a mission to serve the health needs of individuals, families and communities through a holistic philosophy, embracing compassion, equality, excellence, partnership and stewardship.
The client was ranked one of the nation’s leading health care delivery networks for the past four years. They manage more than 200 sites offering acute care, outpatient services, home health care, counseling, day care, physician services, skilled nursing care, and health care education. The client is the third largest private sector employer in metropolitan Chicago with over 24,000 associates. It also ranks as the inpatient market share leader in Chicagoland with more than 3,000 licensed beds, eight acute care and two children’s hospitals. Two of the eight hospitals in the system have been rated among the top 100 hospitals by HCIA-Sachs and in the top 15 major teaching hospitals in the nation.
Executive Summary
The Revere Group in conjunction with a Group Purchasing Organization (GPO), who is also a previous client, was engaged to perform a three-week Clarity Workshop for the client. The workshop focused on expense reduction and strategic sourcing efforts. The three-week engagement developed into a full-scale strategic sourcing project, which is expected to save the client between $9-15M.
Business Challenge
The client’s annual expense reimbursement exceeded budget by over $30M due to rapid acquisitions and mergers over the past three to five years. The client established several goals, including:
- Save $30M by end of fiscal year
- Realize $10M immediately
- Realize $20M balance during next fiscal year
- Reduce non-salary annual expense run rate by $20M
- Service by supply chain management staff throughout the Enterprise will meet or exceed expectations
- Adopt a “One System, One Way” practice wherever possible
Solution
The Revere Group, working with the client and the GPO, analyzed historical spend patterns by Account, Facility, Cost Center and Vendor, reported to a Corporate Steering Committee and Strategic Council Team and developed implementation plans for over 40 expense reduction initiatives, specifically around Purchased Services.
Results
The Revere Group is currently working with the client, managing Purchased Services expenses. Projected savings range between $9M-$15M. Initiatives in Purchased Services include Transcriptions, Linen Management, Delivery/Freight, Fleet Management, Books & Subscriptions, Recruiting/Hiring, Advertising, Print Services, Leases/Rentals, Records Management, Property Services, Third Party patient Billing, IT Services and Perfusion Services.