Case study: Einstein Health Network saves time and money through automating processes and product standardization
Adopting electronic processes and standardization to a product formulary help position a growing health system for success.Contact Us
When Steve Piraino, Director of Corporate Purchasing and Supply Chain, began working at Einstein Healthcare Network over six years ago, he expected system growth, since the network planned to build a new hospital and acquire a primary care physician group. However, this new growth, combined with a reduction in staff head-count, had the unintended impact of a 280% increase in workload per full-time employee.
Because almost 84% of Einstein’s payer mix is public, controlling costs is critically important. Like many other health systems, Einstein faced declining reimbursement rates as the case mix moved from admitted to observed patients. Costs and complexity increased further when Einstein’s non-acute facilities began buying a wider range of SKUs than previously.
In order to maintain healthy operating margins, Einstein Healthcare Network needed to transition from manual to automated business processes, address their repetitive supply chain functions and reduce their supply costs.
“Prior to McKesson, problems with credit holds, operational inefficiencies and lack of EDI made our processes almost entirely manual. We now have 110 EDI connections with all of our major manufacturers. Because of all the work we’ve done, acquistions no longer cause us pain.”
— Steve Piraino, Director of Corporate Purchasing and Supply Chain, Einstein Health Network
Einstein implemented a number of McKesson’s tools and analytics to drive standardization, automate manual processes and reduce cost. With McKesson’s help, Einstein:
- Standardized non-acute practices to one medical-surgical distributor
Created formularies and customized ordering templates to simplify product purchases among non-acute facilities, reducing SKUs from 3,000 to 1,500
- Implemented a variety of electronic systems to create paperless processes, such as electronic data interchange (EDI) for 850, 855, 856 and 810 transactions and automated clearinghouse (ACH) payments
- Automated the receiving process through the EDI 856 advanced shipment notice transaction, eliminating faxing and data entry of receiving documents and avoiding invoice payment delays
Einstein has already seen notable savings and efficiencies as a result of their collaboration with McKesson.
To date, Einstein has:
- Fully automated almost all ordering and payment transactions for their non-acute business, allowing 12,000 purchase orders per year to be processed with no staff involvement, and over 85% via EDI
- Saved approximately $60,000 per year on non-acute supplies, contributing to a total of $17 million in non-labor savings driven by
- the corporate purchasing department over the past 6 years
- Optimized their payment discount opportunities through DSO efficiency, enabling better cash flow and shorter turnaround times
- Noticeably reduced the time spent on invoice discrepancies, especially pricing and unit of measure differences
- Dramatically increased productivity of their purchasing staff
- These operational efficiencies have positioned the purchasing department for optimum performance as the health system continues to grow.
*The results as stated may vary and may not reflect the typical user’s results.