Cape Fear Valley Health System Achieves $5.34 Million Supply Chain Savings with Premier Healthcare Alliance.

Value Analysis Identifies Supply Spend Inefficiencies; Implementation Achieved without Sacrifice to Quality

CHARLOTTE, N.C. -- Cape Fear Valley Health System (CFVHS) in Fayetteville, N.C., a member of the Premier healthcare alliance, has announced $5.34 million in supply chain cost reductions in just 14 months through focused work with Premier Consulting Solutions (PCS). These savings will be reinvested into providing for the health of the Fayetteville community.

Through the efforts of a value analysis team, which included PCS representatives, and its steering committee, CFVHS began to recognize savings on 60 percent of project-identified savings even before the engagement was completed. The team identified the primary areas of supply spend savings, including orthopedics, pharmacy, cardiology and surgical services, and implemented the savings without any sacrifice to quality.

According to Kevin Jackson, vice president of Support Services at CFVHS, "We set out to identify $5 million in savings and were able to implement $5.34 million. You have to have a strong value analysis process in place, including internal and external personnel, to make changes like this work."

CFVHS started using value analysis teams in 2003, and they've helped the organization execute millions of dollars in savings while maintaining quality. Jeannie Vaughn, value analysis director for CFVHS since 2004, leads the teams through quality care, patient safety and cost savings initiatives.

Value analysis team members come from different disciplines and levels throughout CFVHS's organizational structure and serve to generate initiative buy-in, foster communication enterprise-wide, and reduce unnecessary expenses. Physicians are included on teams as projects demand. "Doctors will act on what they consider relevant data," said Jackson. Using robust benchmarking data, they "were able to more accurately show pricing at neighboring hospitals."

"Value analysis teams are playing a greater role in healthcare facilities, looking for optimization and providing momentum for change," said Premier Purchasing Partners President Mike Alkire. "A best-practice hospital in this arena, Cape Fear has proven once again that when organized appropriately, value analysis teams can expeditiously implement efficiencies across traditional boundaries without sacrificing quality."

Premier and CFVHS uncovered savings through additional contract opportunities and discrepancies between existing supply contract prices and higher invoice prices. Significant savings were achieved by shifting percentage distribution of clinically alternative medications, giving greater weight to lower cost options while keeping flexibility to meet patient requirements and prescriber preferences.

PCS introduced CFVHS to orthopedic construct pricing, which breaks down the components required for a specific therapeutic model. A construct on cemented hips, for example, listed and described all the components necessary to make up the hip. The team determined what really goes into a given therapeutic model, with input garnered from orthopedic surgeons, senior leadership and Premier consultants.

Desired pricing for each construct was based on current reimbursement structures. Premier compared CFVHS's data on 13 implant constructs with blinded data from hospitals within the region as found in its pricing database These actual supply expense benchmarks gave CFVHS an objective truth that could be used to leverage vendor discussions. Negotiations based on this data yielded significant savings without orthopedic vendor change.

About Cape Fear Valley Health System

Cape Fear Valley Health System (CFVHS) in Fayetteville, N.C., is a 619-bed regional health system of four hospitals and primary care physician offices serving Cumberland County and surrounding areas in Southeastern North Carolina. The flagship, Cape Fear Valley Medical Center, offers open-heart surgery in affiliation with the Cleveland Clinic. Other services include home health, hospice, cancer treatment, maternity services, emergency medicine, and pediatric intensive care. Highsmith-Rainey Specialty Hospital provides long-term acute care and urgent care. Cape Fear Valley Rehabilitation Center offers physical rehabilitation, and Behavioral Health Care is a psychiatric hospital. HealthPlex is an award-winning fitness and wellness facility. CFVHS is a member of the WNC Health Network, an independent regional network affiliated with Premier for group purchasing.

About the WNC Health Network (WNCHN)

Based in Asheville, N.C., the WNC Health Network is an independent regional network affiliated with Premier for group purchasing. WNCHN leverages the purchasing volume of 52 Premier members for increased supply chain savings. Since the program began in 2001, it has saved participants more than $31 million in addition to Premier contract savings.

About Premier Inc., 2006 Malcolm Baldrige National Quality Award recipient

Serving more than 2,000 U.S. hospitals and 53,000 other healthcare sites, the Premier healthcare alliance and its members are transforming healthcare together. Owned by not-for-profit hospitals, Premier operates one of the leading healthcare purchasing networks and the nation's most comprehensive repository of hospital clinical and financial information. A subsidiary operates one of the nation's largest policy-holder owned, hospital professional liability risk-retention groups. A world leader in helping healthcare providers deliver dramatic improvements in care, Premier is working with the United Kingdom's National Health Service North West and the Centers for Medicare & Medicaid Services to improve hospital performance. Headquartered in San Diego, Premier has offices in Charlotte, N.C., Philadelphia and Washington. For more information, visit www.premierinc.com.