Health Care

UVM Health Network about to book $50M in savings

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.

Central Vermont Medical Center in Berlin is part of the UVM network. File photo by Erin Mansfield/VTDigger

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.

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Erin Mansfield

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  • Steve McKenzie

    If increased volume generally equates to lower cost/price (which it should), then why do patient costs go up 2-3x whenever UVM takes over a private practice?

    • Nachman Avruch

      Maybe you’re confusing cost and price. What patients and insurance companies pay is the price. What the provider spends to provide a service to a patient is the cost. UVM negotiates prices in the same way that any practice or provider does, it just has a better negotiating position than most in Vermont.

      • Steve McKenzie

        Mr. Avruch: Fair comment but not in this case (and, besides, it was more of rhetorical than an actual question).

        The article points to the success of UVMHN procurement in leveraging increased volume for lowered purchasing costs. The chief procurement officer goes on to state: “That’s our goal. We’re trying to be the low-cost, high-quality provider.”
        I also realize the increased volume can go both ways: UVMHN then uses it to leverage better reimbursement rates from insurance companies, which translates to higher patient costs for similar services after they take over a practice.

        My point is this is contrary to the stated goal of UVMHN, and I’ve never quite understood why the GMCB allows this to occur as it’s contrary to its core goals as well.

        The overall cost of running a given private practice should go down (worst case stay flat) after being taken over by UVMHN. The big talking points in VT have been controlling health care cost/price increases by establishing ACO’s, improving access to primary and preventative health care, etc. So when the largest health network in VT takes over a primary care practice, reduces costs and then is able to raise prices 2-3x to consumers, making the same care more expensive, I have to ask the question why are they allowed to do this as it’s directly contradictory to the supposed goals.

        And, unfortunately for us as UVMHN continues to grow, the answer to my rhetorical question is “because they can”.

  • Edward Letourneau

    The concept that you can book savings on money that has not been spent, indicates the people running this are not the best and brightest.