Twice the Savings, Half the Time: Carilion Clinic Identifies $40 Million in Savings Through Premier Partnership

As healthcare systems continue to face financial headwinds nationwide, Carilion Clinic, a Virginia-based not-for-profit system, renewed its group purchasing organization (GPO) and advisory services partnership with Premier in May 2024 — helping ensure resources are used efficiently so care teams can stay focused on delivering high-quality patient care.

Originally projected to pinpoint $20 million in savings opportunities over three years, the Premier-Carilion collaboration has already identified $40.1 million in saving opportunities in just 16 months.¹

“In today’s environment, health systems are under increased pressure to manage cost without compromising care,” said Bruce Radcliff, President of Supply Chain Services at Premier. “Our work with Carilion reflects what’s possible when data, expertise and collaboration come together to drive meaningful, systemwide savings.”

Through GPO portfolio optimization, participation in Premier’s committed purchasing programs, physician preference item (PPI) supplier standardization, purchased service contract renegotiations and a variety of SKU utilization initiatives, teams were able to exceed project expectations. During this time, teams also overhauled Carilion’s value analysis process, redesigned a clinical supply review to expedite clinical acceptance and implemented a new Enterprise Resource Planning (ERP) system.

“This work requires cross-disciplinary engagement and partnership,” said Luis Richard, Senior Vice President and Chief Supply Chain Officer for Carilion. “We’ve observed success by working in concert with our physicians and clinicians to ensure that frontline stakeholders were informing decisions driven by our shared mission of improving the health of the communities that we serve.”

Premier’s Field and Pharmacy, Purchased Services and Supply Chain Optimization Advisory Practice teams also came together to form the Carilion Clinic Cost Reduction Team, driving the initiative.

With a focus on patients, the Premier-Carilion team reduced costs across over 400 initiatives to enable Carilion’s clinicians to benefit from greater clinical standardization.

The team utilized Premier’s supply chain technology solutions and advanced purchased services technology to provide an extensive number of analyses and initiate pipeline updates. They also continuously refined the implementation schedule to yield expedited realization of savings while upholding Carilion’s commitment to quality care for more than one million Virginians.

Equally important to identifying savings is assisting with their realization. The system has implemented about two-thirds of the identified savings initiatives thus far. As a result, supplier contract standardization has improved by 23 percent.

“We’re always looking for ways to improve our processes to deliver the best possible care and experience for patients,” said Richard. “We look forward to seeing what’s to come.”

For more:

• Carilion Clinic’s success is just one example of supply chain optimization done right. Get your copy of Premier’s strategic guide to margin management in healthcare to explore how leading organizations are navigating financial pressure, optimizing operations and building more resilient, sustainable approaches to margin improvement.
• Premier is making a bold bet on the future of the healthcare supply chain. Learn more about the proactive steps that are essential for success at this critical inflection point.

1 Results may vary for individual health systems.