Savings Top $1.5M in Year One With Premier

January 17, 2017

CHALLENGE

When Jimmy Robertson joined Bothwell Regional Health Center in April 2013 as chief financial officer, the 145-bed Sedalia, MO, hospital had experienced four straight years of operating losses. The stand-alone, city-chartered facility was struggling. It needed significant cost savings.

“We were losing millions,” Robertson said. “We made money one year but only because of meaningful use dollars. If you can’t make it from operations, you’re not going to be in the game long.”

Robertson’s charge: Find out what needed to be done to ensure the hospital remained financially viable. A task force helped lead the effort.

Robertson realized early on that Bothwell was spending a lot for supplies. There was an established relationship with Amerinet, the primary GPO. “But I felt we really should open it up to bids,” he said. Premier, Inc. (NASDAQ: PINC), Novation, MedAssets and Amerinet were invited to do market baskets. “We found we were paying way too much for a lot of the things we were purchasing,” the CFO said.

SOLUTION

Bothwell chose to join Premier as an affiliate of SSM Health in St. Louis, which also is a part of CCG, a purchasing collaborative within Premier with more than $3 billion in Premier contract purchasing volume.

What impressed me the most,” Robertson said, “is that Premier wanted to partner with us, not just for us to join the GPO under the wing of SSM. I felt Premier wanted to come in here, be our partner and help us improve. That sold me. It means a lot to me as a stand-alone organization.

“I didn’t have a system to rely on,” Robertson continued. “With Premier, I now have a region director, all the other folks at Premier as well as all the folks at SSM. They’re our partners. They want us to be successful.”

RESULT

At the time of the conversion to Premier, first-year savings projections were about $875,000. “We’re well over that. It’s getting close to $1.5 million in savings,” Robertson said. “Through Premier and SSM Health coming in
and scouring through what we buy and working with us on how to

make changes, we’ve saved more than $600,000 above that. I have a valuable partner and they’re doing great work. It’s amazing. I couldn’t be happier with what Premier and SSM have been able to do for us.

When Bothwell closed its books in 2014, the net operating loss was $4.6 million on net revenue of $90 million, a negative operating margin of 5.16 percent. Through 11 months of 2015, net positive operating revenue is $4.5 million or a 5.06 percent operating margin on net revenue of $89 million.

“April to April, we’re $9.2 million ahead, about a 10 percent turn. There are lots of reasons behind that,” he said. “It’s not all due to Premier/SSM Health. But $1.6 million of that $9.2 million (more than 17 percent) is because of the work Premier and SSM Health have done.”

Robertson expects savings to continue to grow. The organization will continue to drive savings by using Premier/SSM agreements. Bothwell expects about $400,000 in savings already identified on capital purchases next year.

He expects additional savings by enhancing resource utilization efforts using benchmarking data from PremierConnect® Quality (QualityAdvisor™). Bothwell is reviewing other Premier solutions and services as well.

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