SUCCESS STORY | Business Intelligence Solutions 

The Harsh Reality of State Budget Cuts: Intalere Diagnostix Business Intelligence Tools Help El Rio Community Health Center Weather the Storm

The Challenge

In 1964, President Lyndon B. Johnson declared a “War on Poverty” that included an initiative providing grants for the formation of neighborhood health centers. Community activists in the Tucson area, collaborating with the University of Arizona College of Medicine, came together and secured financing for the first El Rio Community Health Center. Started in a government building donated by Pima County, former jail cells were transformed into exam rooms, and this special healthcare facility began its ongoing mission to provide affordable and accessible care for the tens of thousands of local residents near or below the federal poverty level. Dedicated to serving the underrepresented and uninsured with respect and dignity, El Rio has grown to become the 14th largest healthcare system in the nation, serving over 900 residents a day from all walks of life requiring “top notch” life-saving healthcare.

The economic downturn of recent years hit the state of Arizona particularly hard. “First, the housing market crashed — then the unemployment benefits started running out,” explained Scherri O’Connor, senior purchasing agent for El Rio. “We had already experienced an increase in the number of patients without insurance who were unable to afford care—more than 100,000 were cut. On top of that, we were informed by the state they were going to make significant budget cuts that would greatly impact our revenue and in turn, our budget.”

With the beginning of the fiscal year looming and much less capital than expected available to support normal operations, El Rio, a valued member since 1990, turned to Intalere for help. “We had to find money somewhere — fast,” O’Connor said. She contacted her local Intalere representative to see if there was a solution that could cut costs and increase revenues without making changes that would interfere with the continuity or quality of care.

The Solution

El Rio’s Intalere representative suggested a strategy utilizing cost-free supply chain data analytics from Intalere Diagnostix® to identify over-spending with distributors and under-utilization of their contract portfolio. Intalere Diagnostix offers a variety of business intelligence tools that utilize supply chain data and transform it into actionable information such as the Supplier Contract Match Report and the Opportunity Report. The process is simple and free of charge for all Intalere members. “The first thing we did to generate the Intalere Diagnostix reports was ask our accounts payable department for a complete list of vendors on our most-used medical/surgical supplies,” said O’Connor.

The Diagnostix Spend Analysis team prepared a Supplier Contract Match Report from the 12 months of historical spend provided. When the report uncovered a number of new Intalere supplier options for increased compliance and standardization, El Rio’s Intalere representative then arranged for the appropriate portfolio suppliers and specialists to supply direct cross-references, technical background information and, where appropriate, product samples for clinicians to evaluate.

An Intalere Opportunity Report was also prepared for El Rio. The fastest, easiest method to analyze supply chain data to identify areas for significant savings, the Opportunity Report generates an immediate action plan for reducing costs by enabling on-the-spot signatory capability for “quick win” exact-match Letters of Commitment (LOCs). The Opportunity Report also verifies supplier reporting and tier-level commitments, ensuring all discounts have been appropriately applied. Custom-built to each individual organization’s specifications, Opportunity Reports can also be used to highlight particular departments, vendors or product segments showing unfavorable trends.

“If we found unsigned LOCs that were beneficial in helping to lower our costs — we signed them,” said O’Connor. In addition, the tier-level data provided indicated that El Rio’s participation with the Arizona Regional Council division of the Intalere Western Regional Alliance (IWRA) was not being maximized. Intalere and its affiliates join members together in strategic regional alliances to drive savings through purchasing volume aggregation, and to help participants jointly benefit from networking and sharing of best practices. IWRA — formed in 2002 in conjunction with Intalere affiliate Health Resource Services to serve members throughout Arizona, California and Nevada — has been particularly successful in proactively securing specific preferred regional terms from distributors that eliminate the need to wait for winning proposals. “Intalere and I worked very closely with the distributor reps to determine which LOCs would be the most advantageous for best tier pricing as well as increased shareback,” said O’Connor.

The Outcome

“In one case, we discovered that our dental clinic and laboratory departments were purchasing the exact same nitrile glove used by the Health Center — at twice the cost,” said O’Connor. “The Supplier Contract Match and Opportunity Reports identified an immediate win that saved us over 50 percent on a common consumable. Not only did we decrease costs by obtaining a higher tier with the increased volume, we earned significant rebates and improved quality through standardization.”

We started to realize there was light at the end of the tunnel. Our budgetary issues still existed, but the savings Intalere found for El Rio went a long way to mitigate the problem. We improved the bottom line by about $100,000 and are examining several other areas for potential savings identified with Intalere’s business intelligence reports. Compliance has also greatly improved. When presented with an easy-to-visualize report showing the huge impact that could be realized with small purchasing-habit modifications, everyone pulled together to help institute the needed changes.”

Continued O’Connor, “If it wasn’t for Intalere’s valuable help and the way the business intelligence reports pinpointed immediate savings, we may not have been able to weather the storm. Now I utilize business intelligence reports all the time, as well as the other tools Intalere offers free-of-charge online. They have become my weapon-of-choice in the fight to save money.”