This article appears in the January/February 2013 issue of HealthLeaders magazine.
Editor's note: This piece is excerpted from a full case study that is available as part of the upcoming March 19 event, HealthLeaders Media Live from Heartland Health. For more information, visit www. healthleadersmedia.com/live.
When looking at its cost portfolio, the team at Heartland Health realized it had a gap. There was already a team in place that carefully reviewed all capital expense to ensure the health system leveraged its large investments. Similarly, there was a process regarding new hires, ensuring staff was added only where and when needed. And all information technology outlays went through rigorous review. Diane Smith, team leader for contracting, says the team realized there was still a stream of expense that was not being reviewed as carefully.
"One of the gaps that our organization had was basically what we call 'all other,' " Smith says. "If we wanted something that was not capital, was not staff-related or equipment-related, that was a purchased service; we did not have anyone looking at those to make sure that we don't have overlaps. We didn't have the oversight to ensure multiple departments were not all buying the same services with no volume discount or that we were not spending dollars for something that would be more effective to insource."
In the last fiscal year, Smith says Heartland spent about $450 million that would fall into the category of purchased and professional services. So the Con$erv committee—which stands for "contracted services" and was formed to conserve dollars, with the dollar sign for emphasis—was given the goal of saving $2 million in the first fiscal year. So far in the first quarter, the committee has saved $456,000 for the fiscal year, Smith says.