Scoring Success in Supply Chain Management

How a health system can systematically reap savings in purchasing while safeguarding quality

In the current healthcare reimbursement environment, every dollar counts. When a health system aims to reconcile that reality with an uncompromising commitment to quality patient care, it can be hard to avoid tension between the simultaneous imperatives to raise standards and lower costs. It’s enough to test the weakest link in any chain.

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Fortunately, Cleveland Clinic began years ago to think of these two imperatives as working together rather than as opposing forces.

Cleveland Clinic needed to move toward value-based purchasing — dividing outcomes by cost to arrive at the most appropriate supplies for every treatment and procedure. But attention also had to be paid to matching the right device with the needs of the individual patient, not the price tag.

The challenge: Overcoming unquestioned preferences

In any practice area, many of the most expensive supplies are physician-preference items. These can be anything from complex ventricular assist devices to stents, endografts and sutures.

In the past, physicians would frequently order these items with little regard for or even knowledge of what they might cost. This individual preference system did not apply a methodical approach to evaluating new devices on the market or in development, nor did it address concerns about devices that had proved in practice to be problematic.

Ten years in the making

Over a decade, these tandem ideas of quality and savings merged to become the foundation for a new way of evaluating and procuring supplies and devices at Cleveland Clinic. Across the enterprise, teams were formed by Supply Chain Management, with physician champions and cross-functional committees, to evaluate and debate the purchasing decisions for every item used in the clinical setting.

In all areas, guidelines for a particular supply were implemented across Cleveland Clinic’s system of eight community hospitals and 16 family health centers, as well as its main campus.

The process: Evaluating and scoring every device

In Thoracic and Cardiovascular Surgery, Cardiology and Cardiac Electrophysiology, the team, working with Carrie Steele, Director of Clinical Sourcing for the Miller Family Heart & Vascular Institute, vetted vendors by carefully evaluating every device, categorizing and scoring its features, and noting prices. The team looked at clinical outcomes and indicators, distinguishing differences among vendors and products, reviewed proposals, and decided what would be the best value proposition for Cleveland Clinic and what would provide the best outcome for patients.

Despite some initial resistance, all the suppliers came around to Cleveland Clinic’s new purchasing arrangement.

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A tiered approach to electrophysiology products

Electrophysiology presented a particular challenge because of the multiplicity of devices available. So the team went to the peer-reviewed literature and compared research on each device, ranked the devices in tiers, and established purchasing guidelines based on cost and patient benefit.

Bruce Lindsay, MD, Section Head of Cardiac Electrophysiology and Pacing, has participated in the supply chain work since he joined Cleveland Clinic in 2008. “Our ranking system throughout the enterprise consists of three tiers, in which we attach values to certain features in the products we’re evaluating,” he says.

He explains that the tier system relies on physicians assigning value to device features and then ranking the devices within the tier system. Criteria include subjective measures, such as what is game-changing about a particular device, as well as information physicians have gleaned from the literature in the field.

“Many times a device company thinks a feature is valuable because they invested a lot of time and money into developing that feature,” Dr. Lindsay says. “We as doctors don’t see a device’s value through that same lens.”

The most expensive products are in tier 3, he notes. Tier 2 products have the greatest utility in the enterprise, while products in tier 1 are used the least. Contracts with the appropriate vendors are then put in place and are awarded for varying lengths. This system allows for flexibility.

“We can move products among the tiers,” Dr. Lindsay explains. “Sometimes patients have researched the devices that are appropriate for their procedure and will come in with an idea of what they want. We are mindful of that consideration, but in no instance would we compromise patient safety.”

He notes that the partnership with Supply Chain Management started several years before he arrived at Cleveland Clinic, under the direction of Bruce Wilkoff, MD, Director of Cardiac Pacing and Tachyarrhythmia Devices.

A never-ending process

Discussion, communication and physician involvement are critical to every stage of this process. Physician preference is often driven by strong feelings, so participants need to know their concerns are being heard and addressed by the team.

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Value-based purchasing also entails an enduring change in mindset. “Cost awareness needs to be an ongoing thing,” says Sean Lyden, MD, medical director of Supply Chain Management and a vascular surgeon. “Technology is always maturing, and new technology is constantly being introduced. We don’t want to keep innovative products out. But there is often very little data on value for new technology. Is the new product an improvement on what came before, or is it simply competition for something we already have?”

He adds that a balance must be struck between too much and too little variety. “We don’t need everybody on the shelf,” he says.

Dr. Lindsay agrees. “We’re not putting all our eggs in one basket,” he says. “It’s a balance between quality of care and cost-effectiveness, while always mitigating risk to the patient.”

The payoff: $150M saved in two years

In only two years, more than $150 million was trimmed from Cleveland Clinic’s operational costs. Fully one-third of those savings came from reducing costs in heart and vascular specialties.

“Cleveland Clinic has many advantages that helped this endeavor succeed,” Dr. Lyden observes. “We are a group practice and share the same incentives. Without physician partnership, it would never work.”

For more information, contact Carrie Steele, Director of Clinical Sourcing, Supply Chain Management, at 216.448.8112 or