Kaleida Health’s Journey to $75M in Savings and Health System Transformation

Key takeaways:

• Kaleida Health recognized the imperative to develop a systemwide operating model that supports cost savings, growth and the continued delivery of outstanding patient care.
• Aligning clinical and supply chain teams with data around cost, quality, safety, outcomes and reimbursement aided the team in product evaluations and enabled smarter purchasing decisions that saved $75 million from 2018 to 2023 – all while helping the system maintain quality patient care.
• Learn more and get a behind-the-scenes look at Kaleida Health’s transformational success.

Alongside consolidation, heightened consumerism and technology advances, hospitals and health systems today are seeking innovative solutions for operational efficiencies, differentiated performance and greater value.

Kaleida Health – the largest healthcare provider in western New York – recognized this opportunity and embarked on a journey to unlock the value of the supply chain and develop a systemwide operating model for cost savings, growth and high-quality patient care.

In five years, Kaleida Health recognized more than $75 million* in total savings – all while maintaining quality care and strong clinical outcomes.

Here we outline key areas of success and Kaleida Health’s core strategies in advancing cost, quality and outcomes (CQO) for a future of better, smarter healthcare.

Putting Value Analysis at the Center

A clinically integrated supply chain presents a significant opportunity, with value analysis a core operational mindset for Kaleida Health.

As a foundation, Kaleida Health worked with Premier’s supply chain consultants to align team structure and organizational goals with the value analysis process and deploy a systemwide, physician-led decision-making structure. The organization leveraged Premier’s group purchasing organization (GPO) to manage nonlabor spend and augment existing GPO agreements through the value analysis lens, alongside a dedicated team and actionable data to consistently identify products and services that support CQO improvement.

Robust business intelligence capabilities – including integrated and real-time clinical, supply and operational data analytics – gave the organization a leg up in achieving standardization, savings and price parity across the system. In 2022 alone, Kaleida Health recognized more than $17.7 million* in savings from its data-driven value analysis methodology and process.

Value analysis is also at the center of Kaleida Health’s core quality initiatives this year, including coordinated efforts to reduce central line-associated bloodstream infection (CLABSI) and catheter-associated urinary tract infection (CAUTI) rates, implementation of a unique enteral feeding connector, and decision making through Premier’s pediatric-focused collaborative and purchasing alliance, Kiindo™.

Tackling Purchased Services

The healthcare supply chain has evolved as a strategic enterprise-wide function – capable of delivering greater value, margin improvement and positive outcomes for providers and the communities they serve. For improvement efforts, providers need to look beyond low-hanging fruit and begin to tackle areas that historically have been difficult to manage, such as purchased services.

Kaleida Health recognized this imperative and turned to Premier’s purchased services arm to reference their services pricing, develop processes to centralize this purchasing and avoid waste, and aggregate spend for best price contract negotiations.

The organization’s optimization of purchased services contract categories drove $1.1 million* in savings in 2023, and 15 initiatives have been identified for 2024, representing a spend of $64 million.

What’s more? A comprehensive technology platform is helping Kaleida Health save money and time – rapidly surfacing actionable analytics, benchmarks and powerful insights to source competitive contracts and easily measure purchased services usage and spend.

Advancing Clinical Care Delivery

For 2024 and beyond, Kaleida Health is taking on strategic initiatives central to their mission in continuum of care alignment, quality and safety, and health equity.

With important services delivered through two long-term care facilities, outpatient clinics and home healthcare, Kaleida Health is working with Premier to address shifts in site of care through an integrated ambulatory care and physician enterprise strategy – aligning relationships with local providers and expanding its focus on population health. The collective team will continue its efforts to establish clinician standards and expectations across the ambulatory enterprise – underpinned by transparent data sharing – to increase efficiency, reduce provider variation of care and drive revenue enhancement.

Kaleida Health is also driving quality and safety advancements to enable a systemwide, streamlined framework for clinical decisions and standardization. The team will look comprehensively at measuring and analyzing risk-adjusted clinical outcomes, cost, resource utilization and efficiency, and is working towards integrated data sets to help understand cost per case and other drivers to create new value streams.

Additionally, Kaleida Health is working with Premier and other organizations to develop its Quality and Safety Institute, with the primary goal of eliminating inequity in healthcare and enhancing outcomes for diverse patient populations across western New York. The Institute will focus on understanding and factoring social determinants into both health measures and reimbursement – leveraging newly integrated, AI-enabled data and analytics to measure results.

Based on the transformation work to date, Kaleida Health is well poised for future success – comprehensively tackling CQO improvement that is generating positive results for the organization and the communities and patients it serves.

“Kaleida Health’s success has been achieved with Premier as our partner through the sharing of goals and strategic imperatives and working together over the years to execute scalable plans. We’ve established a trusted process for service line leads, clinicians and executive stakeholders to make decisions together. We look forward to our ongoing partnership that continues to build on strategic plans to manage payer risk, identify variation, improve clinical and financial outcomes, and help make our organization as efficient and effective as possible.” – Edwin Streeter, CPIM, Vice President of Supply Chain Management, Kaleida Health

Contact Premier to learn more and explore transformational objectives for your own organization.

*Data on file. Results may vary based on each provider’s circumstances. Trademarks are the property of their respective owners. Copyright © Premier, Inc., all rights reserved.