Cutting links out of the healthcare supply chain

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When Baylor Scott & White realized that it was paying more than its peers for certain equipment and supplies, the numbers just didn’t add up.

The Dallas-based system relied on data benchmarking tools to see how much it paid for products used in various service lines, such as artificial hips and knees. The organization found that it sometimes paid more than average, and as a large system—the largest not-for-profit in Texas—that should not be the case, said Tony Johnson, senior vice president and chief supply chain officer.

THE TAKEAWAY
Tired of paying intermediaries’ price markups, some providers are getting better deals elsewhere.
“The way I would describe us two years ago is a loose confederation of states when it comes to the supply chain—every hospital basically made its own decisions,” Johnson said, adding that the same supplier was charging different prices at different hospitals. “If you are a large health system, why not bring everyone to the table?”

Guided by the benchmarking data, Baylor Scott & White started systematically picking off different service lines and negotiating directly with manufacturers to standardize its purchases, which…

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