Process improvement saves one health region $27,000

October 6, 2016

Better together has a nice ring to it, but it also has a significant impact to the bottom line for Saskatchewan health system.

By combining the buying power of health regions and agencies delivering health care across the province, we are realizing enormous savings – in excess of $90 million in five years, to be precise. Until the province adopted a shared services approach to procurement, individual regions would typically negotiate smaller contracts. Today, the entire system reaps the rewards of working together to purchase products and supplies under provincial, multi-provincial and national purchasing contracts.

Heartland Team
Janelle Franko, Catherine Pelton, and Geralyn Allen
Heartland Health Region

One of the tools helping health regions to take full advantage of provincial contracting is the supply chain management software program known as Global Healthcare Exchange (GHX). GHX helps automate and eliminate manual supply chain processes by making them visible. Orders, prices, invoices, etc. are all available electronically and in real time.

The Heartland Health Region implemented GHX several years ago and has seen tangible results since. Heartland coordinator of materials management Geralyn Allen says adding GHX has allowed them to automate and streamline their supply chain operations.

“Previously the purchase order had to be emailed or faxed. Now, as soon as you hit ‘post’ for the purchase order, it shows you’re communicating with the vendor.”

Allen says having GHX is nice, but the system still has to be managed to realize financial benefits.

Allen takes her role as a steward of public health dollars seriously and makes a point to not just accept an invoice as automatically being right.

“We have it set up so that even with as little as a five per cent difference in pricing, it won’t let them post it in the system. Instead, that invoice is brought to a supervisor and then there is follow up to understand the pricing difference.”

With the GHX system in place to help administer provincial contracts, Allen and her Heartland colleagues have been able to realize significant savings. They are able to correct errors such as overcharges for shipping and extras. In one example, they were being charged $113 in shipping and other extras on an order which was originally only $85.

“This is proof that setting standards for how defects will be dealt with results in actual financial savings,” say Val Klassen, Director of supply chain management.

“In one case, a large laboratory company wasn’t honouring provincial contract pricing. So we just stopped paying them. Every invoice we would snip and copy the contract information from GHX and submit it to them and say we wanted the contract pricing. We had some help from 3sHealth and we were able to get back $27,329.04.

Consider how many medical supplies or services could be paid for with $27,000, she said.

“Healthcare money is my money too. We need to use it wisely.”

We can all learn from the Heartland experience, says Klassen.

“Sharing these learnings will help other regions implement the same standards so we can ensure everyone is realizing the benefits and reducing rework which is so important in a publicly funded system.”

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