Purchased-service agreements present an area of potential savings for operational budgets if hospitals have the right data, research and tools to control and reprioritize their purchased-services spending. Join us as we learn how SSM Health, a four-state non-profit health care system, implemented a best-practices approach to purchased services to secure large-dollar savings across its entire purchased-services spend. During this webinar Cris O'Neal-Gavin, System Contract manager for Purchased Services at SSM Health, will share how they drove savings in large national purchased-services categories, and achieved even larger savings in more strategic regional services. Also get exclusive access to MD Buyline's most recent research showcasing how the nation's most innovative hospitals are implementing common strategies to reduce the cost and complexity of purchased-services contracts.

1. SSM Health and MD Buyline
Achieving Sustainable Savings in Purchased Services through Best
Practices

2. Presenters
David Rodriguez
SVP Marketing
• 15 years of experience in healthcare product marketing for revenue cycle,
supply chain and payer solutions
• Previous positions held at Trizetto, Interpoint, Concuity and The Advisory
Board
Cris O’Neal
System Contract Manager – Purchased Services
SSM Health Care Corporation
• Manager of SSM System-wide Purchased Services
• Appointed member -Premier National Purchased Services Strategic Planning
Committee
• Active Member of CCG Purchased Services Committee
• Active Member of AHRMM Education Committee

3. Agenda
• Introductions to MD Buyline and SSM Health Systems
• Overview of Purchased Services
• SSM –Transcription and Laundry Services
• Purchased Services Best Practices
• SSM –Transcription and Laundry Services Results
• Q&A

4. SSM Health - The Facts
Mission-Through our exceptional health care services, we
reveal the healing presence of God.
• 1st Health-care
Organization to receive
Malcolm Baldridge Quality
Award
• 19 Hospitals in 4 States
• 30,000 Employees
• 3,900 Licensed Beds
Annual Spend
on Purchased Services
• $300 million
• 20% of system’s annual
expenditures

5. MD Buyline – The Facts
Industry-Leading and
Proprietary Data
• 500,000+ unique products
and services tracked
• 100+ clinical specialty
areas covered
• 60,000+ quotes, contract
reviews, and analyses
annually
• 30+ years of historical
data
Clinical and Financial
Research
• 600 years of collective
experience, averaging over
20 years of experience each
• Broad collective expertise
across a range of
specialties
• Over 3,700 research reports
and surveys published
annually
Technology Solutions
• Capital: Proprietary
product configurator
analyzes thousands of
possible configurations
• Consumables: Item-level
benchmarking and
sophisticated analysis
capabilities
• Purchased Services:
Sophisticated data and
service contract analysis

6. Our Research: How to Outperform the
Market
• Challenge: Growing non-labor costs, increased risk, compliance
mandates
The CAGR for all healthcare expenditures is projected to grow at 6% annually from
2013 to 2022, according to a 2014 HSCA report.
• Process: Identifying opportunities: 3 keys – cost, risk, process
Understand your spend (AP review). Evaluate the ROI. Align stakeholders to ensure
utilization.
Manage the contract. Reduce your exposure.
• Savings: Equipping hospitals with actionable data and research
Vendors on GPO contracts are offered at a discount, but healthcare providers
achieve
greater savings when applying industry-leading benchmarks and
research.
medical devices15% healthcare IT14% purchased services30% medical/surgical11%
%SAVINGS
GPO
10% Medical Capital
15%PPI/Consumables
30% Purchased
Services
Status Quo Savings

7. Our Research: How to Outperform the
Market
• Execution: Managing contracts, risk and performance
Centralize contracts and establish a formalized contracting process with
transparency and
accountability. Leverage healthcare subject-matter experts.
• Alignment: Bridging the clinical, savings and contracting gap between
stakeholders
Coming together like never before, clinicians, physicians, department heads, supply
chain, vendors, finance, compliance, audit and legal teams will be able to collaborate
and use data to improve decision making and reduce risk for their health system and
patients.
financial
accountability
contract
repository
manage
risk
financial
accountability

8. 25%
20%
15%
10%
5%
0%
Save more every month
5% sustainable improvement to operating margins
10% to 30%
average savings in a
purchased services
category
savings
before after
experience the direct impact
purchased services savings fall
straight to the bottom line.
before after
20%
15%
4%
9%
PURCHASED SERVICES OPERATING MARGIN
Hospitals implementing Purchased
Services’ best practices
spend 25% less on purchased services.
Hospitals with a defined Purchased
Services Program quickly realize a
5% sustainable improvement
in their operating margins.

9. Poll Question #1
Q. Do you have clinical outsourced services that
have not been re-evaluated or re-contracted in 3
or more years?
A. Yes
B. No
C. Unsure

10. SSM Purchased Services
Transcription and Laundry Services – Strategic Services that needed a facelift
HOWTO FINDTHE RIGHT FOCUS
Immediate, high-impact
savings
• Look at top 10
• Then top 50
Best Practice
1. Set our goals
2. Formulate the plan
3. Implement
Price is only one factor
• Strategic Services
• Regional Providers
• OptimizeTechnology
• Regulatory Compliance
Implications
• Risk

11. Transcription – Current State
MModal
• Is the incumbent the best choice?
• How is the current pricing?
• What do the clinicians think of the vendor?
• How do we build a solid contract?

12. Laundry Services – Current State
SevenVendors
• What are existing obligations (e.g. Expire dates,Termination clauses)?
• What is the current linen/laundry model?
– On-Premise Laundry
– Customer Owned Goods
– Rental Service
– Cooperative
– Other –Vocational Services
• What is price Unit Of Measure (UOM)
– Clean or Dirty
– Poundage or piece rates
• What does regional stakeholders think of incumbent vendor?
• Do we source for system agreement or leverage locally?

13. Purchased Services Categories Addressed
Transcription
• Identified asTop Spend
• Negotiated on System level
• Challenges beyond price
• NewTechnology
• Clinical Improvements
Annual Spend
$3.8M
Laundry Services
• Identified asTop Spend
• Identified as Strategic Importance
• Negotiated on local level
• Challenges beyond price
• Regulatory Compliance
• Existing Relationships
Annual Spend
$7.2M
Leveraged
Existing
Relationships

14. Best Practice Approach
• Analyze spend
• Rank the opportunities
• Analyze T&C
• Service performance
• Utilization
• Identify stakeholders
• Perform interviews
• Gather requirements
• Many points of data
• Scenario driven pricing
• Service-based pricing
• Engage incumbents
• Bid the service
• Pick the vendor
• Define the contract terms
• Monitor the spend
• Monitor the service
• Monitor the users
• Monitor the quality
Opportunity
Identification
Analyze the
data
Research Category
Pricing
Benchmarks
Bid the
Service
Implement and Manage
the Contract

15. The Opportunity Assessment
Built a database with our contracts, AP and PCard
data, centralizing our purchased services.
Categorized the data, then prioritize projects based
on our initiatives and our identified opportunities.

16. Gathering Requirements
Understanding the Needs
1. Meet with key stakeholders
2. Utilize MD Buyline’s resources to
identify action items for service
category
3. Review payment history
4. Agree upon goals and
expectations
Transcription
• Physicians
• Health Information
Management (HIM)
• CIO/IHT
• Supply chain
• Quality
• Legal
Laundry
• Environmental Services
• Operations
• Supply chain
• Accounts Payable
• Quality
• Legal

17. Dialysis
C-SUITE
CONSULTANT DIALYSIS PROVIDER
• Relationship with the dialysis
provider since 2001
• Contracted: hemodialysis,
CAPD,CRRT and apheresis
• Parallon initially involved to
negotiate contract
• Could not achieve maximum
savings
SUPPLY CHAIN
$$
MEMBER FACILITY
• Benchmarked the contract
• Identified $132K annual savings
• Empowered the
supply chain to
achieve greater
savings with MD
Buyline’s
recommendation
• Believed in MD
Buyline’s
recommendation
• Contracting
achieved $142K
savings annually
• $10k over MDB
• Achieved
$71Ksavings over
the contract term

18. Contracting Matters
Dialysis
• Service
• Legal
• Risk
• Liability
The best performing hospitals achieve
30% additional savings through better
data research and contracting$$$$
$$$ • Better terms
• Better price
• Better service
Ambulance Services
• Legal requirements
• Service requirements
• Regulations
• Risk
• Liability

19. Poll Question #2
Q. Do you have local or regional outsourced
services that have not been re-evaluated or re-
contracted in 3 or more years due to local or
regional regulatory issues?
A. Yes
B. No
C. Unsure

20. Duration of Projects
5
months
5 -12
months
Opportunity
Identification
Analyze the
data
Research Category
Pricing
Benchmarks
Bid the
Service
Implement and
Manage the Contract
Opportunity
Identification
Analyze the
data
Research Category
Pricing
Benchmarks
Bid the
Service
Implement and
Manage the Contract

21. Transcription – Results
Contracting and Pricing Improvements for
added contract value
SSM now saves $1.3M annually
Course of Action
• Negotiated new rates: too high for hospital
volume
• Terms and conditions were not industry best
practice. Evergreen Clause and annualCPI
• StandardizedTurnaround times to improve
efficiency.
• Explore Regional flexibility - Outsource
Transcription
Resolution
• Achieved 35% cost reduction
• Improved contract language for turnaround times
• Waived Charges (Hardware and Maintenance)
• Tiered pricing new Fluency Direct technology
• EliminatedAnnual CPI for years 1-3 of 5 year
agreement ($123K cost avoidance)
• Achieved additional $1.2M – Separate Outsource
Initiatives.
RESULTS
35% reduction in
previous contract
rates
Improved escalation
clauses
Option to renegotiate
deal at years 4 and 5
of the contract.
Added Fluency Direct
Technology to
improve efficiencies
and drive further
savings
$1,356,264/YEAR
COST REDUCTION

22. Laundry Services – Results
Contracting and Pricing Improvements for added contract value
SSM now saves $1.1M annually
Course of Action
• Negotiated benchmarked rates. (STL/JC)
• Renegotiated billing method : soiled wet linen to clean dry
(WI)
• Regionalize 9 separate contracts with 4 vendors to 1
vendor.(WI)
• Source for new Laundry supplier due to incumbent sale of
market andAssessCBA of COG vs. Rental. (SOIL)
• RenegotiateT &Cs – Strong language, penalties, rates too
high, auto increases and change per piece UOM. (MV)
Resolution
• Achieved reduced rates. $291K
• Achieved savings of $240K
• Achieved Aggregate contract savings of $322K
• ReducedVendor Pool from 4 to 1. Awarded new
Supplier and transitioned from COG model to
Rental model. Achieved $170K savings.
• Achieved new contract terms and changed per
piece UOM to clean poundage. $110K
RESULTS
Achieved 16%
Annual Cost
Reduction
Contract terms
improvements
Improved
Competitive rates
per pound
Added SLAs for
quality
$1,132,341Annual
Cost Reduction

23. Questions and Answers