Collaborative Effort with Premier Alliance Yields $700,000-Plus in Savings at Evangelical Community Hospital in Lewisburg, Pa.

Streamlined Purchasing Process Brings Dramatic Results in Just Nine Months

CHARLOTTE, N.C. -- Through a multi-faceted effort with the Premier healthcare alliance, Evangelical Community Hospital (ECH), Lewisburg, Pa., in just nine months streamlined its purchasing process, engaged with physicians and saved more than $700,000 in supply expenses. And that's just the beginning. Future savings are expected to top $1 million annually.

For a small community hospital, that's more than significant - it's huge, especially for the residents of Union, Snyder and Northumberland counties and the surrounding areas in the greater Susquehanna Valley of central Pennsylvania who depend on the hospital for healthcare services.

Evangelical, a 135-bed not-for-profit community hospital, offers a full continuum of care. In 2006, ECH was experiencing increased volumes, but was struggling with how to increase capacity while streamlining operations. Senior management, including newly appointed Chief Financial Officer Christine Martin, decided to focus efforts on lowering the organization's supply chain costs. Without additional expertise and support, however, the management team was skeptical about how quickly improvements could be made.

"We turned to Premier to help us rein in costs, but more importantly, to evaluate our supply chain process and find ways to quickly integrate best practices," said Martin. "We needed to turn over every rock so that we could make significant progress very quickly."

ECH embarked on a year-long evaluation with Premier, which included a supply chain walk-through that compared ECH's performance to national benchmarks using Premier's SupplyFocus[TM] database. The evaluation helped highlight and prioritize areas to be targeted for accelerated improvement.

In August 2006, ECH implemented a materials management contract with Premier and officially became a purchasing affiliate in September 2006 through Premier owner Geisinger Health System in nearby Danville. Premier's John Efthemis was assigned as the project director and has been serving as Evangelical's interim director of purchasing since.

The initial engagement focused first on re-implementing the hospital's materials management information system including staff education in its use. Garnering support and understanding about the importance of the system was a critical first step. Without it, capturing contract savings was impossible. Efthemis hired buyers and trained them to handle the increasing volume of requisitions, and spent time with staff from every department to build understanding and support for the process changes.

Now, with implementation of an electronic MMIS and full cooperation of management, ECH is capturing the appropriate data and understands opportunities available to the organization. The electronic system has also helped streamline and improve inventory processes, as well as audit functions.

Once the process improvements began to take hold, ECH could begin to focus on capturing the savings offered through Premier's contract portfolio. In just nine months, more than $700,000 in contract savings was realized, encompassing all areas of the hospital.

A year ago, supply cost as a percent of net patient revenue was more than 19 percent, as it had been for the past several years. Today, ECH's steadily declining supply costs are below 18 percent. Even more important, leadership is projecting supply cost reductions of more than $1 million annually.

"Where we were and where we are now - it's been a remarkable transformation over the last year. A year ago, our purchasing system was decentralized, manual and the numbers had run amok," said Martin. "We still have much to do, but we've made such great progress in integrating the people, processes and technology to set the stage for future improvements."

ECH identified an opportunity for significant savings in orthopedics - specifically hips and knees. By initiating a dialogue with physicians, the team was able to use Premier's SupplyFocus[TM] reports to educate physicians about alternatives, and in turn, physicians have been very willing to consider those changes. To date, implant costs have been reduced by $350,000.

"Premier brought a depth and breadth of expertise - and not just in the supply chain areas - that we just would not have had access to otherwise," said Martin. "It includes access to experts in the consulting area, as well as relationships with key vendors. These relationships have been critical and have allowed us to accelerate our success and achieve remarkable results in a very short period of time. We couldn't be more pleased."

About Premier, 2006 Malcolm Baldrige National Quality Award recipient

Serving 1,700 hospitals and more than 46,500 other healthcare sites, Premier Inc. is the largest healthcare alliance in the United States dedicated to improving patient outcomes while safely reducing the cost of care. Owned by not-for-profit hospitals, Premier operates the nation's largest healthcare purchasing network, the most comprehensive repository of hospital clinical and financial information and one of the largest policy-holder owned, hospital professional liability risk-retention groups in healthcare. Headquartered in San Diego, Premier has offices in Charlotte, N.C., Philadelphia and Washington. For more information, visit www.premierinc.com.

About Evangelical Community Hospital

Evangelical Community Hospital is a 135-bed acute care hospital with a 12-bed acute rehabilitation unit patients and an 18-bed nursery located in Lewisburg, Pa. A not-for-profit community hospital, it offers a full continuum of care with services ranging from comprehensive diagnostic tests to delicate microsurgery and from specific treatment programs to numerous outpatient services. For more information, visit www.evanhospital.com.