Strategic Sourcing and Procurement

The client.

A large Midwest academic medical center.

The business issue.

This medical center was experiencing significant growth in supply costs while, at the same time, dealing with significant declines in net revenue. The hospital targeted medical/surgical supplies managed by the surgical services department for a significant cost reduction effort.

The solution.

Members of The Claro Group assisted the hospital with an initial assessment and then rapid implementation of steps to capitalize on cost-saving opportunities.

First, the project team reviewed current medical/surgical supply costs to establish a baseline and to prioritize opportunities. This assessment included a spend review, contract review, and invoice review.

The team then determined conducted project planning for a customized implementation approach based on supplier relationships, internal considerations and market environment. It assisted the medical center by initiating negotiations and analyzing responses. The complexity of the responses required substantial analysis and a rigorous decision-making process.

Achieving the cost-saving opportunities required significant change management. The project team supported most initiatives with communication efforts and other tools to facilitate user adoption.

Finally, the team established tools to sustain savings efforts by measuring supplier performance, pricing, and other important measures.

The results.

This approach enabled the medical center to achieve more than $2.2 million in annual cost savings, including a retroactive rebate of $300,000. In addition, it identified other cost savings opportunities related to inventory management, demand management and supplier performance management.