The University of Vermont Health Network says it is about to book $50 million in savings on equipment and services in large part because of its growing number of member hospitals.
Charlie Miceli, the network’s chief supply chain officer, said Monday that the network has been saving an average of $8.5 million a year since it started nearly six years ago, and he said the savings has gone up in years when new hospitals join the system.
Miceli said the network has not quite reached $50 million in savings but expects to hit that mark by the end of the fiscal year Sept. 30.
The network does bulk purchasing and strategic contracting to help bring down prices for items like software, imaging machines, cardiology implants and orthopedic implants. Maceli’s team also works with analytic tools and a clinical team to find products that are both low-price and high-quality.
“Ultimately, we lower the cost of the care so that the cost to the health care ecosystem goes down and the quality goes up,” Miceli said. “That’s our goal. We’re trying to be the low-cost, high-quality provider.”
The network started in 2011 as an umbrella organization to bridge operations at UVM Medical Center in Burlington and Central Vermont Medical Center in Berlin. The network has since added three hospitals in upstate New York and Porter Medical Center in Middlebury.
Miceli said the network is big by Vermont standards, but not in comparison to health networks like the Mayo Clinic, which has 40 members across the world. Additionally, he said the network is trying to negotiate product costs down against medical device companies with $30 billion in annual revenue.
“You deal with these big companies like Microsoft Oracle and we have specialists in our group that we work with and we work with our IT leadership and folks and we negotiate together with the suppliers there, but we negotiate as a network,” Miceli said.
“If Central Vermont Medical Center, if they were negotiating on their own, say with Microsoft, they would get one price,” Miceli said. “When the UVM Health Network negotiates for (all of its member hospitals), we negotiate as a network and we all get the same cost, and we tie that into our savings.”
Vizient Inc., a national health care company that absorbed the University Healthsystem Consortium, awarded the UVM Medical Center second place in the nation in 2017 for supply chain management.
The hospital has won first or second place since the network was first eligible for awards in 2012.