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Improving the Cardiovascular Supply Chain

Health Solutions

April 20, 2016

Situation: Southcoast Health, a three-hospital community based healthcare delivery system servicing southeastern Massachusetts and Rhode Island, found themselves facing a difficult situation in the fall of 2012. A new Transcatheter Aortic Valve Replacement (TAVR) program was in its start-up phase; three vascular surgeons were lost to the competition; a high-volume interventional cardiologist retired; and open-heart (CABG) cases were declining.

FTI Consulting’s Role: FTI Consulting Health Solutions experts were engaged on the heels of a less-than-successful consulting engagement from another large nationally-recognized consulting company. Prior to FTI involvement, Southcoast had successfully reduced cardiac rhythm management product cost by $1M, but it still found itself in a high cost per-procedure situation compared to its market peers.

The FTI approach included: mapping a more efficient supply chain for cardiovascular services; creating a more robust value-analysis cardiovascular team; standardizing cath lab & interventional radiology products; engaging physician leaders; and developing quality-improvement metrics to ensure sustainability. Additionally, FTI:

  • Created a comprehensive system-wide value-based strategic purchasing plan for the cath labs, interventional radiology, vascular and cardiovascular operating suite service areas.
  • Completed a comprehensive 24-month Purchase Order (PO) and Accounts Payable (AP) deep-dive into the system’s clinical and operational cardiovascular data, including review of all cardiovascular products purchased and utilized by physicians. FTI completed procedural cost by DRG and measured results against desired national benchmarks for top-performing cardiovascular programs throughout the country.
  • To keep the system abreast of changing technologies without adding additional cost, FTI reviewed every cardiovascular supply chain contract, met with the system’s contracted business cardiovascular services business partners and determined where applicable longer-term, more strategic business relationships made sense.
  • Strategic Sourcing / Contract Management. Once all contracts were reviewed, FTI helped Southcoast move to system-wide best practice pricing matrices for cardiac rhythm management, diagnostic & interventional cardiology, radiology, endovascular and structural heart products.

“ Southcoast Health is a community hospital system that provides academic level services without academic level reimbursement. As the Director of Operations for the Interventional Cardiology Service Line, I am continually looking for opportunities to maximize profitability and streamline operational efficiencies. Through their network of consultants, FTI was able to provide competitive benchmarking tools and analytical data to help us achieve over $1 million dollars in savings. The team of consultants was professional, engaging and very accessible.”

David Teixeira, M.A., B.S.N., R.N., Director of Operations, Interventional Cardiology, Southcoast Health System

  • Physician Engagement. In each step of the process, physicians played key roles in Southcoast’s cardiovascular program. In each initiative, physicians and clinical leaders drove product selection, actively engaged in supplier negotiations, and helped create quality metrics and dashboards to ensure sustainability of the improvements.
  • The Nexus of Cost & Clinical Quality. With the help of physician champions, FTI developed best-in-class pricing matrices and product standardization formularies for Heart valves, Drug-eluting and Bare-metal stents, cardiac rhythm management, endovascular and vascular and diagnostic and interventional products. The physicians’ role was to review clinically and functionally equivalent implants and products and bracket them into clinical product categories and sub-categories, and then work with the supply chain team to assign a single system-wide price point for that product. The FTI approach resulted in two key benefits: 1) Standardized product SKUs within a category across the system – eliminating product waste in the labs and operating room; and 2) Empowerment of the physicians to objectively and openly discuss the use of one product over another.
  • Value-Based Purchasing. Value-Based Purchasing (VBP) adjusts hospitals’ Medicare reimbursement payments based on their performance in four specified domains: 1) Clinical Process of Care domain; 2) Patient Experience of Care domain; 3) Outcome domain; and 4) Efficiency domain. The Clinical Process of Care domain features a number of cardiology and cardiovascular operating suite-related inpatient services. While Southcoast is not fully vested in VBP yet, they are much further down the VBP path than they were prior to engaging FTI.

Outcome: FTI was successful in achieving these key improvements:

  • Greater transparency, higher efficiency, and lower cost
  • An additional $1.2M in cardiovascular supply chain savings after the FTI engagement
  • A transparent, robust and structured cardiovascular Value-Analysis Committee
  • Dynamic dashboards & metrics used to monitor and sustain the gains made

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