Reduction of Costs Related to Blood Products and Services - University of Pittsburgh Medical Center
AHRMM is offering a repository for leading and proven supply chain practices, case studies, and toolkits that are developed from a Cost, Quality, and Outcomes (CQO) perspective. The following CQO leading practice describes methods used to reduce costs, enhance patient care quality, and drive greater financial outcomes through blood product and service optimization, and was submitted by:
University of Pittsburgh Medical Center (UPMC), Pittsburgh, PA
Problem Statement: Up until the mid-2000s, the United States was nearly in crisis mode with regards to supply and demand of human blood products. Blood donations were going down while utilization was going up. Furthermore, the U.S. Food and Drug Administration (FDA) put into place new testing requirements and guidelines to enhance the safety of the nation’s blood supply, which further restricted access. As a result, the cost of blood products and blood bank services increased steadily year after year for about a decade.
In 2010, UPMC experienced a change in leadership, which coincided with cultural and business changes required to address new healthcare reform initiatives. To address economic challenges and comply with new regulations, the administration and physicians of UPMC agreed that they must come together to drive down costs while maintaining high quality patient care. With supplies being the second largest category of expense for healthcare organizations, it was evident that supply chain needed to take a central role in this effort.
Around the same time, the pressure on the nation’s blood supply receded, as healthcare facilities put into place practices that decreased the amount of blood required per procedure and began using manufactured products in place of blood and plasma when possible. This drove down blood product utilization, yet UPMC, like other facilities, found it was still paying inflated prices for blood bank services and products.
Method: In 2010, UPMC formed the Patient Blood Management Committee, a cross-functional team comprised of clinicians, administrators, and leaders from the quality and supply chain departments. Their goal was to maintain or even enhance quality of care while driving down costs related to blood products and services.
The team first had to align the clinical and business sides of the organization to convince physicians why change was necessary. The Patient Blood Management Committee conducted data analysis to demonstrate how variances in practice drove up blood utilization – and costs - with no correlated patient benefit. This made the case for standardization in practice to reduce blood product utilization, and related services.
Understanding the importance of UPMC’s relationship with its blood bank partner, the Patient Blood Management Committee also aligned with the blood bank’s operational and medical leadership to determine how they could work together to achieve mutually beneficial outcomes. Rather than “beating up” the blood bank and demanding the lowest prices, the supply chain team sought to find a balance of pricing that was both affordable to UPMC and enabled its partner to make a profit so that it could remain viable and healthy to serve UPMC and other healthcare providers. It also partnered with the blood bank on processes and practices that would improve efficiency while reducing waste.
Means: The Patient Blood Management Committee took a multifaceted approach to achieve its goals of reducing costs, enhancing patient outcomes, and driving greater revenues.
Updating Protocols/Best Practices: The Patient Blood Management Committee determined that many of UPMC’s protocols related to blood utilization were outdated, resulting in excessive blood product usage and waste. The Committee analyzed patient level details from UPMC’s clinical systems and blood product purchasing data from its supply chain systems and found some facilities were using three times the amount of blood for the same procedure compared with other facilities. In other cases, blood was dispatched too early relative to a procedure and staff had to discard it. The Patient Blood Management Committee worked with both UPMC physicians and the organization’s blood bank partner to establish best practices that would optimize blood product usage, ensuring clinicians had what they needed when they needed it without wasting this precious resource.
Standardization: From its analysis efforts, the Patient Blood Management Committee found physicians had three different blood product utilization practices:
- One group introduced blood products at the beginning of procedures
- One group introduced blood products at the end of procedures
- One group introduced blood products only if the patient needed them
The Committee engaged in a dialogue with physicians, presenting evidence from its analysis that patients in the third group had equal or better outcomes than those in the first and second groups. The decision was made to standardize on this third practice – rational use of blood products – as a way to reduce costs without negatively impacting patient outcomes.
Contracting: One way that the UPMC supply chain team played a pivotal role in this effort was by negotiating a new way of contracting with the organization’s blood bank partner. Both parties agreed to implement a margin based contract for blood products and services, under which the blood bank cannot inflate prices over a certain margin. The margin was set so that the blood bank can make a reasonable profit, while UPMC secures a great price. Furthermore, both parties worked together on business process improvements to drive efficiency and reduce costs related to services. For example, UPMC agreed to minimize services that did not add value, such as unnecessary overnight delivery of blood products. Through these improvements, both UPMC and the blood bank can deliver high quality, cost effective services that ultimately benefit the patient.
Date Implemented: 2010 - present
Outcomes: Through its Patient Blood Management Committee initiatives, UPMC achieved the following outcomes:
- Significantly reduced blood product and services spend from 2013 to 2014
- Using fewer blood products per procedure and wasting fewer blood products
- Standardized blood product utilization practices to improve efficiency, lower costs and maintain or enhance quality of patient care
- Securing blood products and services from blood bank partner at a reasonable cost
- Engaging in mutually beneficial partnership with blood bank that enables both parties to best serve the ultimate customer – the patient
- Excel spreadsheets
- Patient level detail from clinical systems
- Purchasing data from supply chain systems
- Financial information from cost accounting system
How Does Your Example Address the Issue from a CQO Perspective?
Through its Patient Blood Management Committee initiatives, UPMC has successfully reduced costs related to blood products and services while driving high quality patient care and improved financial outcomes for the organization.