HealthTrust Helps Hospitals Meet Savings Goals

Cookeville Regional Medical Center and HealthTrust forge long-term relationship to meet savings goals

In 2013, Healthgrades named Cookeville Regional Medical Center (CRMC) among America’s 100 Best Hospitals in four different specialties and ranked the hospital No. 1 in Tennessee in five different specialties.

CRMC also received the Distinguished Hospital Award for Clinical Excellence, which places it among the top 5 percent of more than 4,500 hospitals nationwide. These recent awards are a testament to the patient-first approach that CRMC has taken since Cookeville built its first hospital in 1950.

While becoming a state-of-the-art regional medical center that now employs a staff of 2,000 and has more than 150 physicians on the active medical staff, CRMC has maintained an independent, community-focused approach to serving Tennessee’s 14-county Upper Cumberland region. But that doesn’t mean the hospital isn’t on the cutting edge.

While CRMC may have a traditional approach to serving patients and their families, it takes a modern, bottom-line-focused approach to managing costs. And partnering with ServiceTrust, HealthTrust’s purchased services program, has helped CRMC achieve the savings to aggressively manage current healthcare challenges. On purchased services alone, it has achieved savings of 23 percent, or $237,936, over the past two years.

“Most hospitals today operate on a very thin margin with trends going the wrong way,” said Dave Riddell, vice president of support services at CRMC. “Our challenges are not unique.

“We face the question of what value-based purchasing payments will do to us or do for us. We are hustling to achieve meaningful use objectives. We need to keep our infrastructure in good repair. We must replace medical equipment as it wears out. We see decreasing reimbursements and rising expenses. It is easy to understand why non-salary cost reductions are of strategic importance.

“Fortunately, HealthTrust brings expertise and experience to the table to help us address all of this.”

Achieving Savings

In December 2011, HealthTrust worked with Riddell and his team at CRMC to identify $5.2 million in savings opportunities that could be prioritized, approved and implemented, said Kathy Spears, the HealthTrust account director who worked with CRMC.

Over the span of two years, ServiceTrust methodically reviewed and finalized savings across seven purchased services categories, with additional categories slated for analysis to determine additional savings opportunities, Spears said.

Savings to date (at the time the article was published) have spanned the areas of pest prevention, vending services, reprocessing, phone book advertising, linen processing and medical cylinder gas.

“Most hospitals today operate on a very thin margin … Fortunately, HealthTrust brings expertise and experience to the table to help us address our challenges.” — Dave Riddell, vice president of support services, CRMC

Beyond ServiceTrust, HealthTrust and CRMC have worked together to optimize the pharmacy contract portfolio and maximize pharmacy clinical initiatives, Spears says. And CRMC realized an additional 7 percent savings by converting its physician clinics to AdvantageTrust, the HealthTrust division extending industry-best pricing to non-acute care groups.

By converting to one of HealthTrust’s contracted suppliers for drug screening and background checks, the hospital realized another 25 percent savings.

Spears also worked with CRMC to ensure that the facility takes full advantage of savings through HealthTrust’s Standardization Incentive Programs. Through their ongoing partnership, Spears makes sure CRMC is maximizing the value of HealthTrust contracts with tiered pricing.

CRMC’s partnership with HealthTrust has resulted in a changing culture that is focused on cost savings. For instance, CRMC wanted to reduce supply expense per adjusted admission, and Riddell and his team were intrigued by the ability of SolutionsTrust—HealthTrust’s supply chain optimization program—to help identify best practices and drive product standardization, product utilization and cost-savings initiatives, Spears said.

Spears recommended SolutionsTrust’s Supply Expense Management program, which included staffing the hospital with a clinical resource director, and Riddell was interested.

The hospital implemented SolutionsTrust’s recommendations in October 2013. Duties of the new, full-time position are completely dedicated to reducing supply expense per adjusted admission, and CRMC expects to see significant savings as a result. Riddell’s goal is to save at least another $1 million.

Cookeville Regional Medical Center supply chain leaders — Some key CRMC supply chain leaders: standing: Casey White, PharmD; Kevin Strong, clinical resource director; Mitchell Stonecipher, RN, director of cath lab; seated: Dave Riddell, vice president for support services; Leah Ingram, PharmD, director of pharmacy; Darla Cline, RN, OR manager; Frank Dlabal, materials manager

Building a Powerful Relationship

Cutting costs has its own rewards, but the relationships that develop through that process ensure that the rewards are ongoing.

“The most valuable result of partnering with HealthTrust has been an enduring relationship that continues to deliver value to our hospital,” Riddell said. “I learned a long time ago that business relationships need three ingredients for success: quality, service and price. HealthTrust is a very successful organization that provides all three of these aspects and with core competencies beyond our own.”

Also of chief importance is the expertise of “our experienced account director, Kathy Spears, who helps in any aspect of supply chain and contracting,” he said. “And price savings continue to accumulate through a multitude of HealthTrust contracts that cover a broad spectrum of our needs, from supplies to purchased services.”

“Dave has a truly vested interest in ensuring he communicates the valuable programs HealthTrust has to offer,” Spears said. “He keeps me informed of the progress, or lack thereof, and we work together to ensure we are doing all the right things for the hospital while driving value for both CRMC and HealthTrust.”

Relationships with internal hospital staff have been as vital as those with HealthTrust for achieving savings at CRMC. In many cases, savings have been reached because Riddell “has been a leader in ensuring that the HealthTrust stories are delivered to the appropriate department directors within CRMC to create excitement to help implement several of our programs,” Spears said.

Building positive relationships throughout the hospital has helped Riddell achieve buy-in for HealthTrust programs all the way up to the top of the organization.

“We have enjoyed a mutually beneficial relationship with HealthTrust for several years,” said Paul Korth, CEO of CRMC. “HealthTrust routinely delivers cost savings that have significantly improved our bottom line. I am glad to see HealthTrust has broadened its contract portfolio and service offerings to include areas outside of the traditional supply chain agreements.”

For other HealthTrust members who want to make the most of their membership, Riddell advises meeting regularly with HealthTrust representatives to review successes and possible opportunities.

“Facilitate non-traditional supply chain opportunities in areas like human resources, marketing and staffing,” he said. “HealthTrust can help there, too. Take advantage of HealthTrust University and other HealthTrust-provided educational and networking opportunities.”