Many hospitals are overpaying for supplies because of lack of communication about supply contracts.
Michael DeLuca and Bob Pavlik noticed the inefficiency when they entered the healthcare industry from the manufacturing industry. Approximately 65 percent of the average hospital's purchases are under contract, leaving the other 35 percent to be purchased at market price instead of the negotiated contract price, Mr. DeLuca said. Prodigo Solutions' goal is to change that.
Prodigo Solutions provides a hospital supply chain technology platform targeted for healthcare providers. Mr. DeLuca, the executive vice president of technology & client service at Prodigo Solutions, and Mr. Pavlik, the executive vice president of sales, marketing and business development, said the company's goal was to reduce costs for hospitals because reimbursement is declining and CFOs are looking for places to trim expenses.
Prodigo Solutions brings together the hospital's current contract, complete with pictures, robust descriptions, prices and contract numbers, into a marketplace accessible to any provider logging into the procurement system.
"We're creating a grocery store for our clients," Mr. DeLuca said. "We're putting on the shelves what all of our clients contracted to buy at a contracted price."
The impact of cutting $100,000 from a hospital's operating expenses is the same as bringing in $11.7 million in new revenue, Mr. DeLuca said, referencing a report by Deloitte.
"What CFOs are realizing now in healthcare is that with the declining reimbursement across the board, they have two choices: they can chase revenue or they can attack cost," Mr. DeLuca said. "As a CFO, are you going to build a new cancer center or are you going to look at the supply chain and go out and say, 'Go out and find me $100,000?'"
Prodigo Solutions was recently purchased by Alliance Healthcare Partners, which allowed the company to take another step: guarantee savings. The company claims it can save a hospital 12 percent, according to Mr. DeLuca.
If a hospital does not save the amount Prodigo Solutions promises, it will reimburse the hospital and uninstall the software at no cost, Mr. Pavlik said. With an assessment team, the company consults with the hospital about how much it could reasonably save, implements the system and follows up with the same assessment in a year to see if the system worked. If it does not, the company reimburses the hospital for the services.
Mr. Pavlik said IT solutions focused on saving money will grow into a more important role over the next several years as well.
"When you're looking at where things are today, people are trying to drive cost out of the business, people are investing an exorbitant amount of money in new EMRs, but now they are looking at the analytics of it," Mr. Pavlik said. "I think what you're seeing is the data finally starting to come together so people can make good financial decisions based on the overall total cost of something, and that’s something that they're not going to be able to do without a good partnership with IT."