How supply chain efficiencies improve patient care

As the client’s operations grew, its procurement organization knew there were opportunities for greater efficiencies and a more clarified organizational structure. The EY team assessed procurement operations through cross-functional workshops, interviews and data analysis, identifying areas for improvement and providing targeted recommendations across a 10-year growth roadmap. EY US created end-to-end process maps and RACIs to increase clarity, as well as KPIs and metrics to measure system health and a productivity matrix to help right-size the procurement team.

The health system recognized that technology had to underpin and enable the procurement process. The EY team facilitated four procurement technology expert panels and developed a technology enablement roadmap. The increased focus on procurement technology will help empower caregivers, facilitate data-driven decision-making and increase teaming across the organization.

The newly redesigned procurement operating model now supports strategic objectives including a community focus, cost savings that will help deliver affordable health care, and transaction efficiency so that hospitals are getting what they need when they need it.

The client believes that to achieve lasting value from this transformation, it should continue to invest in its people. EY professionals led training sessions for over 50 caregivers in procurement on negotiation effectiveness. This effort helped the health system continue to be a leader in procurement and empower caregivers through education in support of the organization’s mission.

The client washes millions of pounds of laundry a year in one centralized facility, and it wanted to analyze whether its linen and laundry services should be maintained in-house or outsourced.

Historically, materials management departments at each hospital were emailing orders to laundry facilities, which tracked them using clipboards. The EY team supported the implementation of a centralized linen-management software platform to be used by each hospital’s linen distribution team, along with a reporting and governance structure to improve linen utilization. The new automated materials management process lets each hospital track laundry output in an integrated system where overall volume is visible to leadership, while reducing manual labor.

The EY team also analyzed market prices on linen sources, identifying over $250,000 in sourcing savings, which resulted in the client being offered a lower price from its current linen vendor.

Ultimately, the new linen management system, sourcing efficiencies, and other laundry and facility improvement efforts saved the health system more than $5 million.

The EY team examined the client’s courier system before one of its mergers, determining that money could be saved by optimizing transportation routes. First, EY US built a routing model based on real scan data from the materials in transit, then evaluated unproductive stops and validated lack of activity. The effort identified opportunities to reduce cumulative hours driven by over 100 hours per day. EY US established routing parameters and requirements needed for realistic and actionable courier optimization and developed a transition plan to new courier routing so that current transportation services were not disrupted. This redesign saved roughly $4 million through insourcing and optimization in courier services across multiple states.

The client owned its distribution center and logistics hubs, while another major health system that it merged with outsourced the distribution. The EY team developed a regional micro-hub model to support the combined health system’s expanded footprint where it could consolidate inventory across hubs, align courier and transportation functions for each market, and consolidate laundry operations. Two laundry centers were strategically chosen to be in centralized locations to further optimize the transportation network. This effort overall would yield them an estimated net present value (NPV) of more than $50 million over a three- to five-year period.