Improving lab operations while enhancing patient care & saving millions
When Trinity Health identified a visibility gap in its supply chain for laboratory expenses in 2021, the leadership team saw it as an opportunity for improvement. HealthTrust, already a trusted partner, was the natural choice for clinical, operational and financial improvements in lab operations—including a savings of $1.7 million in lab testing spend. Here’s how they did it.
Starting as partners
Michigan-based Trinity Health includes 88 hospitals, 131 continuing care locations, the nation’s second-largest PACE program, 125 urgent care locations, and many other health and well-being services. The health system also operates a reference lab and hospital labs. As one of the largest non-profit Catholic healthcare systems in the country, Trinity Health had already engaged HealthTrust for custom contracting resources. It leveraged that relationship to tap into HealthTrust’s expertise in laboratory solutions.
“We had a clear recognition of the gap between supply chain and lab, and HealthTrust was engaged to help us fill that gap,” says Dameka Miller, VP, Strategic Sourcing & Value Analysis, Trinity Health. “HealthTrust has the perspective and comparative expertise to help us figure out where we need to prioritize our opportunities. The long-standing partnership is what led to our engagement.”
Drew Preslar, AVP, Advisory Services, HealthTrust, says drawing on that relationship is part of the foundation for success. “The added value is that we’ll be here long after that engagement ends. We’re part of a long-term relationship.”
The process was revealing. “We got to an assessment of our lab spend, and it’s the best we’ve had to date,” says Miller. “We now understand where we have opportunities to pursue. It’s very clear to us how to reduce our costs in products and services.”
Taking it beyond the basics
HealthTrust went beyond its traditional GPO role and brought in Advisory Services to problem-solve. The first step was to fully understand supplies on hand and how to anticipate obstacles, identify waste and pivot as needed. The team established a lab operations steering committee that included Trinity Health and HealthTrust stakeholders to focus on operations improvement, supply cost savings and expense management.
Rick Phillips, VP, Advisory Services, HealthTrust, explains how HealthTrust dug deeper to find solutions. “We’ve seen an increased number of members needing support around their laboratory operations. When Trinity Health engaged us, it was not to create an infrastructure—because they already have one,” he says. “They have lab leadership at the operations level. They have dedicated resources on the contracting side. We looked at their lab operations more comprehensively so decisions could be made from a system-governance perspective.”
The work included setting up a governance model/structure, analyzing lab operations (including reference lab utilization) and incorporating value analysis. The team relied on the existing relationship to identify opportunities and implement process improvements affecting clinical, operational and financial performance. It centered around testing processes, inventory and even staffing. “When we talk about staff modeling, it may be that they have enough people, but they just don’t have enough people working at the right times,” explains Preslar. “For example, we looked at data around test volume throughout the day and by the hour. Staff volumes and testing volumes should shift with each other.”
Ed Hisscock, SVP, Supply Chain, Trinity Health, agrees. “We’re tackling over 120 categories of products in short supply. And HealthTrust is giving us visibility into problems that have yet to show up and build strategies to address them,” he says. “They have helped revolutionize how we manage lab inventory.”
Identifying significant opportunities
One key opportunity was Trinity Health’s utilization of its low-cost reference lab, Warde Labs (co-owned by Trinity Health). HealthTrust worked to identify “leakage”—situations in which Trinity Health locations were under-utilizing their lab. This focus was critical as reference testing accounts for $50 million of Trinity’s spend.
HealthTrust established utilization reporting, leveraging Trinity’s size and scope, and heightened data collection and analysis. It was an approach Trinity Health hadn’t been able to take on its own. “In the past, we haven’t had the granularity that we needed to push the initiative,” says John Hilton, VP, Laboratory Services, Trinity Health. “We could always get to overall purchased services spend and knew we were paying millions of dollars, but we needed to get more granular in spend to the facility level. HealthTrust helped us get to that granularity by focusing on utilization. Now, we can sit down with each site and talk about the leakage.”
Visibility into the data yields evidence to support unified best practices and standardization. “We’ve helped Trinity look at opportunities to drive more of their own business through their lab,” explains Preslar. “So rather than sending it out somewhere and paying cost plus 20%, they can keep it internal and save all of that markup.”
The ultimate objective is to help streamline the process for lab leaders, so the workflow optimizes efficiency while allowing them to focus on their jobs—serving providers and patients. “How is it that we can continue to push these things, yet enable them to spend the majority of their time as clinicians?” asks Hilton. “That is the goal.”
As a result of implementing the reference lab initiative with three of its locations, Trinity Health realized $1.7 million in savings. “And that’s just the low-hanging fruit,” adds Hilton. “Now we need to reproduce these efficiencies across all of our sites.”
The engagement with Trinity Health will be ongoing, with more positive results expected. “The initial phase was the assessment of opportunity to reduce spend on our products and services, and that has been very successful,” says Miller. “Next, we’ll be moving into the linkage between supply chain and lab at the hospital level and how things are happening from a lab operations standpoint.”
“We expect to have visibility to laboratory inventory and better managing that inventory,” says Hisscock. “It sounds very 101. But it’s not how healthcare has ever done things in this space. So, it is revolutionary to manage the lab like we’ve managed other supplies across the health system.”
Another focus area Trinity Health and HealthTrust will target is enhancing supplier diversity. Via HealthTrust’s Valify platform—a technology that captures and categorizes spend—Trinity Health will be able to identify opportunities to contract with diverse suppliers for purchased services. “We have a strong commitment to diverse suppliers,” Miller explains. “Valify identified our courier service as an opportunity. We had a national agreement with the supplier that was not in the HealthTrust portfolio but was veteran-owned. We used that information to negotiate with that supplier. We got our rates down, and that supplier was then added to the HealthTrust portfolio.”
Indeed, the partnership is poised to grow. “HealthTrust is an extension of who we are,” adds Miller. “Its consulting team doesn’t let us go off the rails. It drives us forward.”
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