Physician preference items are a known cost driver in the supply chain, yet eliminating them can cause consternation and conflict between a hospital and physicians. It doesn't have to be that way. UC Health in Cincinnati found a way to save more than $35 million over two years, while actually strengthening the physician-hospital bond.
In 2009, the University of Cincinnati, University of Cincinnati Physicians, and University Hospital came together to form UC Health. Shortly after the partnership was launched, Rick Hinds, executive vice president and CFO, and Dennis Robb, senior vice president of business operations and chief supply chain officer for the 1,700-bed organization, launched a targeted cost-cutting effort to reduce physician preference items (PPI).
When entities join together, as financial leaders know well, a signed agreement doesn't necessarily lead to seamless alignment. What's more, a PPI reduction effort isn't likely to be met with enthusiasm. But both goals are attainable, Hinds says, through a transparent and collaborative approach with physicians.
"We have really good alignment and transparency between the hospital and the physicians. And you have to have that if you're going to succeed, because the physicians are going to drive the ongoing sustainability of preference items," he says.