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Finding True Value in the Supply Chain

Finding True Value in the Supply Chain

Collaboration between spinal surgeons and Johns Hopkins purchasing department leads to annual savings of $3.3 million for Johns Hopkins Medicine.

Neurosurgeon Jean-Paul Wolinsky examines surgical implants—a synthetic knee, a tiny screw to hold vertebrae in place, an artificial skin patch—with the same scrutiny one might use to shop for a new car.

He asks, “Can I get the best price from its seller? Does it provide the most value for what it costs?” And, with the cautious concern of a surgeon—or a car shopper who’s also a new parent—“Is this the safest product possible?”

Wolinsky, who repairs spines and removes spinal tumors, also guides decisions about which surgical items The Johns Hopkins Hospital should use. As chair of the operating room’s value analysis committee, he oversees items ranging from bone graft substitutes to needles and thread. If he and his team think a product is too expensive, they’ll see if another functions as well, and as safely, at a lower price.

Last winter, Wolinsky applied his powers of discernment to a similar task that affects purchasing for the entire health system. As a member of Johns Hopkins’ Spine Clinical Community, he helped lead a group of about a dozen surgeons, nurses, anesthesiologists and other clinicians to determine what Johns Hopkins should pay as the true value—instead of the list price—for products used in spinal surgery at all Johns Hopkins member hospitals.

Their effort produced a new pricing schedule, effective since April, which is expected to save $3.3 million annually and end the practice of health system hospitals being charged different prices for the same item. When contracting manager Tom Frasca informed vendors that, going forward, all Johns Hopkins affiliates would pay the same price for each spinal implant product, the Spine Clinical Community’s value analyses powered his arguments, providing expert rationale for lower prices.

Clinician-Driven Savings

This kind of cross-departmental collaboration is just one example of how the health system’s supply chain initiative (see sidebar) has saved more than $30 million in the past two years. The goal is to produce a total of $80 million to $100 million in nonlabor savings by 2019.

“For our savings initiative to be a success, it’s absolutely critical that we involve our clinicians,” says Ron Werthman, senior vice president and chief financial officer of Johns Hopkins Medicine.

The Spine Clinical Community was formed in 2014 to bring together spine surgeons based in orthopaedics and neurosurgery from Johns Hopkins’ Baltimore and Washington area hospitals. Its goal, like that of the other 18 official clinical communities, is to improve patient outcomes while reducing costs. Since 2011, the Armstrong Institute for Patient Safety and Quality has chartered the communities and provided them with project management, analytics and administrative support.

“Cost savings cannot be driven from a purely financial perspective—decisions must be clinician-driven to ensure patient safety and best practices,” Werthman says.

He points to another physician-led effort by the Blood Management Clinical Community that has reduced the number of red blood cell units transfused unnecessarily at Johns Hopkins member hospitals. Although standard protocol has been to infuse two units at a time, one at a time is more appropriate in most cases, says Steven Frank, medical director of the health system’s Blood Management Program.

Once all hospitals have fully implemented the Why Give Two When One Will Do? campaign and evidence-based criteria for transfusions, the health system hopes to reduce blood use by 10 percent—for an annual savings of $2.8 million.

One System, No Silos

This collaborative, cross-system approach to supply sourcing and use is a cultural change, says Zishan Mustafa, the supply chain’s director of finance.

“We’ve been operating in silos for a long time,” with each hospital and department making its own decisions about supply purchasing and use, he explains. “Working together as an integrated team across all health system affiliates and departments with the support of our clinicians, we can realize signifycant savings while maintaining or even improving patient outcomes.”

The key is drawing upon the expertise that Johns Hopkins clinicians collectively hold. A product analysis prepared by a dozen or more surgeons from across Johns Hopkins Medicine holds significant sway during supply contract negotiations. “Without it, vendors can more easily charge a premium for a product that isn’t unique,” says Sibley Memorial Hospital neurosurgeon Joshua Ammerman, a clinical lead for the Spine Clinical Community.

Because such savings initiatives are clinician-driven, patient safety and care remain at the core of every financial decision. And the work pays off again, when clinicians are working in the operating room.

Wolinksy says that spinal surgeons across Johns Hopkins Medicine carry a “sense of reassurance” from their product analysis. “Now we know we’re using only the best for our patients.”

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