SUCCESS STORY | Price Accuracy
Collaboration and Intalere’s AccuPrice Bring 10 Percent Reduction in Laboratory Costs for Strategic Resource Partners Alliance
The issue for Columbia Memorial Hospital, a small critical access hospital in Astoria, Ore., and other member hospitals in the Intalere Strategic Resource Partners (SRP) alliance, was an ongoing disparity with laboratory pricing, particularly with non-contract items. They were also troubled by disparities in shipping and handling fees. “We were looking at our invoices and could not understand how line item pricing and shipping for similar products through the same primary distributor had so many variations in cost,” said Rhonda Raney, laboratory manager at Columbia Memorial. “We wanted to collaborate as an alliance to standardize our products that were on contract in order to achieve reduced costs by qualifying for the best pricing tiers.”
The alliance members decided to commit time during their quarterly meetings, as well as do the necessary homework in their laboratory departments, to determine exactly what products they were using in order to start their standardization process.
In order to create transparency in pricing, they also decided to open a dialogue with their primary distributor, asking them to share pricing and volumes on all items utilized by the entire alliance.
The overall scope involved using the quarterly meetings of the SRP alliance in order to identify utilization of the various products, both contracted as well as non-contracted, to look for the best pricing opportunities. The laboratory group trialed different products in order to find the best quality product with the best pricing opportunities for the group. This tactic allowed the alliance to standardize products for best pricing opportunities.
They then sought to strategically collaborate with their primary distributor. “We wanted to see pricing on all products utilized by the entire alliance across the board, so that we could address pricing disparity and ask them to commit to a single standardized price file for our alliance,” said Raney. The supplier was immediately responsive and stepped forward to collaborate with alliance members in education, transparency and standardization.
A third piece of the puzzle was the implementation of AccuPrice® Laboratory, a software solution that quickly identifies and resolves unfavorable pricing variances. The concept is simple – create and manage an optimized product price file and match each invoice to that file.
AccuPrice Laboratory benefits members by providing:
- Master File Maintenance – an accurate customized master file listing the price for each product your facility purchases from the Intalere portfolio.
- Resolution Management – an Intalere program manager dedicated to reviewing and resolving your facility’s unfavorable price errors.
- Report Distribution and Analysis – the unfavorable resolution reports are sent either weekly, monthly or quarterly with detailed analysis of specific issues.
- Value Report – an executive level report summarizing your facility’s most current invoice information for the current year to date and the prior two years.
“AccuPrice Laboratory provides the necessary checks and balances needed to achieve accurate pricing,” said Pat Martin, the Intalere laboratory specialist who worked with the SRP alliance on the project. “Once a variance is identified, we investigate and resolve the pricing issue. AccuPrice Laboratory was vital to the alliance in identifying unfavorable pricing variances, as well as analyzing the shipping and handling spend and reviewing price drift.”
The SRP alliance was successful in standardizing their contracted and noncontracted products, with the further aggregation of volume allowing them to take advantage of the best pricing tiers available. They were also able to provide visibility of pricing discrepancies, as well as create transparency in all special handling and shipping charges from their primary distributor. This resulted in an overall reduction of 10 percent in special charges for the SRP alliance in 2012 in addition to the tier optimization savings.
“Through AccuPrice, we were also able to provide transparency to any pricing drift on our non-contracted items in real time, thus leading to actionable data for future cost avoidance. This resulted in nearly $10,000 worth of credits and exponential future cost avoidance,” said Todd Bengtson, Intalere director of member solutions.
“We were also able to identify purchases that were not aligned with the Intalere contract and get letters of commitment (LOCs) signed for those, leading to further savings.” The success of the entire project highlighted the value of participating in group activities and collaborating with Intalere for all members of the alliance.
“The innovation was the power of our alliance coming together and making the commitment to standardize our products with the clear goal of reducing expenses. AccuPrice Laboratory then created an even greater opportunity to improve billing efficiency and identify potential savings opportunities,” concluded Raney. “This took dedicated collaboration by the alliance, as well as our primary distributor.
Their willingness to share pricing and data with the alliance created the necessary transparency to accomplish our combined goal of cost savings. The unintended consequence of this collaboration was a strengthened relationship with our primary distribution partner.”