Bayhealth and Premier Extend Supply Chain Partnership, Driving $8M in First-Year Savings

Key Takeaways

• Facing staffing shortages and fragmented data, Bayhealth struggled with inventory optimization, cost management and aligning procurement with clinical needs.
• Through a co-management model, Premier embedded its supply chain optimization team at Bayhealth, enhancing workforce stability, improving data visibility and optimizing sourcing and contracting strategies.
• The partnership delivered more than $8 million in savings in its first year, leading Bayhealth to extend its agreement with Premier through 2028 and expand co-management services to cover expanded end-to-end supply chain functions.

Every supply chain tells a story, not just of savings but of strategy, resilience and care delivery. For Bayhealth, central and southern Delaware’s largest healthcare system, that story took a major step forward in 2023.

As a Premier group purchasing organization (GPO) member since 1996, Bayhealth has leveraged national contracts and sourcing tools to effectively help manage costs. Over time, that relationship evolved from traditional GPO engagement into a deeper, strategic supply chain partnership focused on end-to-end performance improvement.

To tackle new operational challenges and unlock more robust performance improvement, Bayhealth turned to Premier’s supply chain optimization team for support. Together, they embarked on a multi-year partnership designed to enhance supply chain transparency, streamline operations and align procurement with clinical goals.

The Challenge: Gaps in Workforce and Data Integrity

The lingering impact of the COVID-19 pandemic left Bayhealth struggling to fill key supply chain roles, forcing the system to rely on short-term, costly solutions that weren’t sustainable. Without dedicated in-house expertise, procurement and inventory processes became fragmented, leading to supply shortages, waste and inefficient spending.

Equally challenging was the lack of standardized data across Bayhealth’s supply chain. Inconsistent product descriptions and purchasing records made it difficult to track utilization trends, optimize contracts, or align procurement with clinical needs. Without clean, integrated data, supply chain leaders lacked the visibility needed to make strategic, cost-effective decisions.

The Solution: A Hands-On, Data-Driven Co-Management Model

To address these challenges, Bayhealth and Premier developed a co-management model that embedded Premier’s supply chain optimization team directly within Bayhealth’s operations. These experts filled critical workforce gaps and provided strategic oversight across:

• Value Analysis: Ensuring sourcing, contracting and procurement decisions align with clinical, financial and patient care goals.
• Sourcing & Contracting: Leveraging Premier’s GPO portfolio, aggregation groups and performance programs to enhance supplier engagement, improve compliance and drive savings.
• Purchasing: Optimizing automation, analytics and customer service.
• Inventory & Logistics: Implementing leading practices for demand planning, a complete inventory control redesign and improvements in stock asset management.
• Data Management & Reporting: Standardizing data for better analytics and decision-making, while developing advanced reporting visualizations to enable strategic insights.

A key addition to the team was a Value Analysis Registered Nurse (RN), who helped ensure that product selection and purchasing decisions were clinically driven, balancing cost, quality and patient outcomes. Data analysts provided advanced insights into utilization patterns, while inventory and logistics specialists redesigned Bayhealth’s entire inventory model using a two-bin system and optimized its 70,000 sq/ft warehouse.

With Premier’s supply chain optimization team working alongside Bayhealth staff, the system didn’t just implement quick fixes but rather it built a smarter, stronger supply chain capable of driving long-term success and sustainability.

Leveraging Data for Smarter Supply Chain Decisions

At the core of Bayhealth’s transformation was the implementation of Premier’s advanced data technology. By standardizing product data and integrating analytics into decision-making, Bayhealth was able to:

• Improve supply visibility and accessibility for clinical staff.
• Reduce waste by identifying unnecessary or misused products.
• Enhance demand planning by linking purchasing data to clinical utilization.

With clean, structured data, Bayhealth moved from a reactive supply chain approach to a proactive one, ensuring the right products were available at the right time, in the right place, at the right cost.

Optimizing Contracts and Strengthening Supplier Partnerships

Beyond staffing and data improvements, Premier helped Bayhealth refine its sourcing and contracting strategies, building on a 30-year history as a Premier GPO member.

By actively engaging in Premier’s performance programs, first through Ascend, then AscenDrive and now SURPASS, Bayhealth was able to drive additional value from its purchasing portfolio. These programs collectively yielded more than $7.5 million in verified savings. In addition, Bayhealth tapped into over $2 million in aggregation group savings and secured more than $1.3 million in value through the national portfolio alone.

Premier’s embedded team also supported contract optimization efforts by improving vendor alignment and identifying new savings opportunities across multiple categories. A more structured value analysis process helped Bayhealth standardize product selection, strengthen supplier partnerships and negotiate stronger pricing, all while ensuring procurement decisions reflected clinical priorities.

By combining Premier’s data-drive insights with its GPO contracting scale, Bayhealth was able to reduce variation, improve compliance and generate sustainable savings across its supply chain.

Tangible Improvements in Supply Chain Performance

The partnership between Bayhealth and Premier’s supply chain optimization team has already driven measurable results, including:

• $8 Million in First-Year Savings: Cost reductions and operational efficiencies delivered tangible financial improvements.
• Stronger Workforce Stability: With embedded Premier specialists, Bayhealth eliminated workforce gaps and built a high-performing supply chain team.
• Smarter Inventory Management: The redesign of 65+ clean supply locations and the off-site warehouse improved stock visibility and reduced waste.
• Data-Driven Decision-Making: Standardized product data improved supply tracking, procurement accuracy and inventory control.
• Enhanced Clinical-Supply Chain Alignment: A stronger value analysis process ensured that purchasing decisions were driven by cost, quality and patient outcomes.

A Foundation for Continuous Improvement

The success of Bayhealth’s co-management model led to an early contract renewal with Premier’s supply chain optimization team in February 2025, extending the partnership through 2028. With the renewal, Bayhealth has expanded Premier’s role to oversee all end-to-end supply chain functions. As part of this evolution, Premier’s embedded team has grown to 23.5 full-time experts, reinforcing Bayhealth’s ability to continuously optimize costs, streamline operations and enhance supply chain resilience.

By building on its foundation as a GPO member and deepening its partnership with the supply chain optimization team, Bayhealth is creating a smarter, more resilient supply chain built for long-term success in an increasingly complex healthcare environment.

Learn More:

• Explore key healthcare data and technology challenges and discover specific steps you can take to achieve resiliency, standardization and consistency.
• See how Premier’s technology and optimization services can support your supply chain and performance improvement efforts.