Switch to generic drugs, other steps save New­ton Med­i­cal $2.1 mil­lion

The Covington News - - Front page - GABRIEL KHOULI gkhouli@cov­news.com

New­ton Med­i­cal Cen­ter was able to trim costs by $2.1 mil­lion over the past four months by switch­ing to generic drugs, shop­ping more com­pet­i­tively for prod­ucts and stream­lin­ing in­ter­nal pro­cesses.

The hospi­tal con­tracted with con­sult­ing firm Lynne Sisak and As­so­ci­ates, which im­ple­mented a Lean Waste Re­cov­ery pro­gram, a de­riv­a­tive of the Six Sigma process pop­u­lar­ized in man­u­fac­tur­ing that seeks to save money and stream­line op­er­a­tions by elim­i­nat­ing waste and stan­dard­iz­ing pro­ce­dures.

At the hospi­tal board’s Septem­ber meet­ing, Chief Fi­nan­cial Of­fi­cer Troy Brooks said the hospi­tal’s 35 depart­ment heads all looked for sav­ings, but there were a cou­ple of ex­em­plary sav­ings ef­forts.

Phar­macy Di­rec­tor Robert Hal­l­i­day saved $490,000 in drugs costs by switch­ing to gener­ics or dis­counted name brands; his depart­ment had the great­est sav­ings in the hospi­tal. He cred­ited the hospi­tal physi­cians for buy­ing into the pro­gram.

The sav­ings came on top of the hospi­tal’s pre­vi­ous ef­forts to save money on drugs by par­tic­i­pated in a group sav­ings plan through MedAs­sets that trimmed $550,000 in costs.

Sur­gi­cal Di­rec­tor Karen McAfee sug­gested 29 dif­fer­ent sav­ings ideas, which earned her the nick­name the “Queen of Lean” in the hospi­tal. Brooks said she fe­ro­ciously ap­proached sav­ings and hag­gled with ev­ery ven­dor she had, in ad­di­tion to cre­at­ing a spread­sheet for ev­ery item in her bud­get.

“Much of the sav­ings gained in sur­gi­cal ser­vices were a re­sult of prod­uct con­ver­sions. We have an ex­cel­lent sur­geon

community who sup­ported us in each ini­tia­tive by par­tic­i­pat­ing in prod­uct eval­u­a­tions to en­sure that there would be no com­pro­mise in qual­ity as a re­sult of the pro­posed con­ver­sions,” McAfee said in an email. “The sur­geons also sup­ported our ef­forts in work­ing with our prod­uct ven­dors to rene­go­ti­ate pric­ing on costly or­tho­pe­dic and pain re­lated im­plants.

“The depart­ment em­ploy­ees were also very en­gaged in this ini­tia­tive, and we could not have re­al­ized the suc­cess with­out their sup­port. Ev­ery­one sub­mit­ted ideas which ranged from elim­i­na­tion of un­der-uti­lized sup­plies, stan­dard­iza­tion of prod­ucts, re­duced linen us­age, and con­sol­i­da­tion of in­stru­ment ster­il­iza­tion method­olo­gies. I am very proud of ev­ery­one’s com­mit­ment to the chal­lenge we were given and the man­ner in which they sup­ported the ini­tia­tives while main­tain­ing fo­cus on qual­ity pa­tient care.”

CEO Jim Wead­ick said the hospi­tal more than dou­bled its ini­tial goal of $1 mil­lion in sav­ings, and ad­di­tional sav­ings could still be found. He said at the board meet­ing that the hospi­tal could hire Lynne Si­sack’s firm for an­other round of cost-cut­ting search­ing next year. Wead­ick noted that an ex­ec­u­tive from St. Mary’s Hospi­tal in At­lanta was “flab­ber­gasted” when told about the sav­ings.

“We are proud that our staff has turned this pro­gram into such a suc­cess. Through their ded­i­ca­tion, we were able to greatly sur­pass our ex­pec­ta­tions; and are all ded­i­cated to continue search­ing for ways to be­come more ef­fi­cient,” Wead­ick said in a fol­low-up email.

“And it hap­pens at a time in our life when it’s im­por­tant that ev­ery­thing we do in this hospi­tal is looked at two, some­times three, times be­fore we com­mit,” Wead­ick said in the email.

Wead­ick said New­ton Med­i­cal em­barked on the lean sav­ings pro­gram be­cause op­er­a­tional ac­tiv­i­ties need to pe­ri­od­i­cally re­view to elim­i­nate costs that “may have grad­u­ally crept into the busi­ness.” He cred­ited Hu­man Re­sources Di­rec­tor Greg Richard­son for propos­ing the idea.

Brooks said of­fi­cials will pe­ri­od­i­cally check-in on ex­ist­ing sav­ings pro­ce­dures and con­sis­tently look for new sav­ings ideas.

Dr. Mark Han­son passed along a note that there could be an op­por­tu­nity for sav­ings in pacemaker prod­ucts from BioTron­ics. Han­son said com­peti­tor Medtronic has largely cor­nered the pacemaker mar­ket in At­lanta.

The sav­ings come at an im­por­tant time for a hospi­tal that’s tech­ni­cally los­ing money ev­ery month, when you take into ac­count de­pre­ci­a­tion, and is just be­gin­ning its bud­get process for next year.

Ac­cord­ing to the Au­gust fi­nan­cial re­port, the hospi­tal pro­vided $23.59 mil­lion in ser­vices, but only col­lected $6.18 mil­lion for those ser­vices, in ad­di­tion to an­other $404,878 in other rev­enue (cafe­te­ria and gift shop sales, etc.).

To­tal oper­at­ing ex­penses to­taled $6.77 mil­lion, caus­ing the hospi­tal to end up with a neg­a­tive bal­ance of $190,899. To date, the hospi­tal has had $1.45 mil­lion more in ex­penses that it’s col­lected in rev­enues, though the hospi­tal has had $4.14 mil­lion in de­pre­ci­a­tion for build­ings and equip­ment dur­ing that time.

The hospi­tal con­tin­ued its fa­mil­iar trend of ac­tu­ally los­ing money on Medi­care, Med­i­caid and self-pay pa­tients. The only cat­e­gory of pa­tients the hospi­tal makes money on are those with pri­vate in­sur­ance.

In Au­gust, New­ton Med­i­cal saw 225 Medi­care pa­tients along with 70 Med­i­caid, 41 self pay and 89 pri­vate in­sur­ance pa­tients. As of Au­gust, the hospi­tal has had 3,340 ad­mis­sions, nearly iden­ti­cal to last year’s to­tal of 3,339.

Hospi­tal pro­mo­tions

In other hospi­tal news, Lisa McWil­liams was pro­moted to Di­rec­tor of Di­ag­nos­tic Imag­ing Ser­vices, the new name of the hospi­tal’s ra­di­ol­ogy depart­ment.

“Lisa has been a good, ex­pe­ri­enced, re­spon­sive man­ager,” Wead­ick said at the board meet­ing.

Tak­ing over McWil­liams for­mer po­si­tion of di­rec­tor of the Women’s Di­ag­nos­tic Cen­ter will be Shauna Fincher.

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