ROi: Delivering a Complete Provider-Driven Supply-Chain and GPO Strategy

In this business profile, Greg Firestone, vice president, strategic customer relations, discusses a revolutionary approach to supply-chain management.

Tell us a bit about your organization.

Resource Optimization & Innovation (ROi) is a vertically integrated accountable supply-chain organization that offers a comprehensive and viable alternative to traditional group purchasing organizations (GPOs). Based in St. Louis, we focus on all aspects of the healthcare supply chain, from planning through fulfillment, to ensure our customers deliver the highest quality of care in the most cost-effective manner. We believe in the transforming power of provider collaboration, achieved through customer partnerships focused on streamlining and/or controlling critical supply-chain elements, including contracting, sourcing, warehousing and transportation (when applicable), data management, clinical integration, and the overall accountability of daily supply-chain operations.

What are some key challenges that healthcare organizations currently face?

Hospitals and health systems are staring down increasingly challenging market conditions. Providers are continually working on improving the quality of patient care, boosting financial performance, and benefiting the communities they serve. At the same time, the uncertainties of healthcare reform can make it more challenging for organizations to deliver optimal results. For many hospitals and health systems, reduced reimbursement and increased costs are leading to razor-thin or negative margins. Because supply and service costs represent the second-largest cost center within a health care system—after personnel—there is a growing realization among industry leaders that improving supply-chain performance represents a significant opportunity to drive quality, enhance service, and increase operating margins. Yet, the conventional methods for optimizing supply-chain performance seem to be falling short. Inconsistent pricing; equipment under-utilization; over-utilization of costly supplies, devices, and drugs; and substantial variation across the care continuum can push costs up while limiting efficiency and effectiveness.

How does your company help organizations meet these challenges?

Fifteen years ago, ROi was founded as the supply-chain organization for Mercy—a Truven Top 5 Large Health System that owns and/or operates 43 acute care and specialty hospitals and more than 700 physician practices and outpatient facilities across Arkansas, Kansas, Missouri, and Oklahoma. Mercy tasked ROi to radically rethink supply-chain operations, acknowledging that conventional business practices were not producing expected and required results. ROi developed an innovative and transformational model that aligns supply-chain services and group purchasing organization (GPO) functions across the continuum of care, bringing together all relevant stakeholders. This model places the patient at the center while simultaneously recognizing the need to engage physicians and integrate systems. This radical approach has delivered more than $1 billion in savings to Mercy since 2002.

In 2011, ROi and Mercy decided to commercialize the supply-chain and GPO offerings. Today, ROi has successfully grown from a supply-chain department serving one health system into a cost-management and supply-chain solutions provider that supports multiple healthcare systems across the United States. We provide a variety of services, including:

• strategic contracting and sourcing;
• manufacturing and packaging operations, including pharmaceutical repackaging, custom procedure trays, medical device reprocessing, and IV compounding;
• in-hospital supply-chain management; and,
• self-distribution and transportation operations, such as consolidated service center design and management (when applicable).

Because ROi is uniquely experienced and has a focus that extends well beyond contracting, we look to share our experiences and successes with fellow providers, making us different from the traditional GPO. We believe it’s critically important that providers control their supply-chain destiny and not outsource all key components of the work to third parties. As such, we offer consulting and knowledge transfer to help other hospitals and health systems stand up their own supply-chain operations.

What organizational qualities set you apart from other supply-chain and GPO companies?

There are many ways in which ROi differs from the competition; however, the following are the five key factors that set us apart from others. More importantly, these help us deliver sustainable value to health system and integrated delivery network (IDN) customers:

We have a provider-owned and -operated vantage point. As we mentioned before, ROi delivers more than a traditional GPO model. Drawing from our day-to-day experience managing end-to-end supply-chain activities, including self-distribution and logistics for acute and non-acute care, we are able to assist our provider customers in understanding and implementing best practices in sourcing, contracting, standardization, utilization, and supply-chain management.

We are vertically integrated. In addition to facilitating a robust supply-chain operation, ROi also has a private label for several supply types. We leverage our self-manufacturing capabilities to provide our customers with additional savings through our custom procedure trays, private-label products, and IV compounding solutions. The company sources both branded products and our own brand of private-label products—known as Regard®—allowing us to offer the best prices for supplies without compromising clinical value and efficacy.

We enable a clinically integrated supply-chain model. We involve physicians and clinicians in contract decisions, which can increase buy-in and usage. Our service line contracting models provide an evidenced-based decision-making process for the selection and utilization of products and services—with special emphasis on physician preference items and purchased services categories. Our clinical apps and advanced analytics offer valuable intelligence about cost-per-case and other clinical metrics that are required to achieve a clinically integrated supply chain.

We guarantee sustainable cost savings. ROi employs a committed contracting strategy that delivers highly competitive pricing and broad contract coverage. Our proprietary benchmarking model demonstrates realized, long-term sustainable savings as measured by the reduction in supply expense per adjusted discharge (CMI) and supply-chain expense as a percentage of net operating revenue. We have found that our approach delivers a 6 percent to 12 percent price advantage over a conventional GPO.

We don’t charge any additional fees for service. Our company offers a completely transparent pricing model that provides full access to an extensive, a la carte menu of services. There are no hidden charges and no service or membership fees associated with accessing our comprehensive contract portfolio, or any other service offering.

In the end, ROi’s integrated supply-chain model delivers clinical, operational, and financial improvements that help providers deliver the highest-quality patient care at the lowest possible cost.

Are there any educational materials you would like to share to help healthcare providers learn more about your services?

To find out more about how ROi can help your organization, check out these case studies that quantify the benefits of our service at www.roiscs.com/results.

About ROi

A recognized leader in healthcare supply-chain management through a vertically integrated supply chain model, ROi was founded more than a decade ago by Mercy, one of the nation’s largest nonprofit healthcare systems. We now serve fellow providers across the country that share a passion for supply-chain excellence. As a provider-owned accountable supply-chain organization™, our insights and goals are uniquely aligned with today’s healthcare organizations that must find new ways to provide better care at lower cost. ROi works alongside fellow providers of all sizes to deliver end-to-end supply-chain solutions with significant results. We are the only provider to be ranked by Gartner as a top 10 healthcare supply chain for eight straight years.

Content for this Business Profile is supplied by ROi. This published piece is provided for advertisement purposes. HFMA does not endorse the published material or warrant or guarantee its accuracy. The statements and opinions of those profiled are those of the individual and not those of HFMA. References to commercial manufacturers, vendors, products, or services that appear do not constitute endorsement by HFMA.