Kaleida Health: Achieving $75 Million in Savings and Transforming the Health System

Amidst the backdrop of healthcare consolidation, rising consumer expectations, and technological advancements, hospitals and health systems are increasingly turning to innovative strategies to enhance operational efficiency, performance differentiation, and overall value.

Kaleida Health, the largest healthcare provider in western New York, has seized upon this opportunity by embarking on a transformative journey aimed at optimizing its supply chain and implementing a systemwide operational model focused on cost savings, growth, and delivering high-quality patient care.

Central to Kaleida Health’s success has been the alignment of clinical and supply chain teams around critical metrics such as cost, quality, safety, outcomes, and reimbursement. This alignment empowered the organization to make informed product evaluations and strategic purchasing decisions, resulting in a remarkable $75 million in savings from 2018 to 2023, all while maintaining excellence in patient care.

Here, we delve into the pivotal areas of achievement and Kaleida Health’s core strategies in advancing cost-effectiveness, quality improvements, and enhanced outcomes (CQO) to shape the future of healthcare.

Elevating Value Analysis as a Cornerstone

Kaleida Health has embraced a clinically integrated supply chain approach, placing value analysis at the forefront of its operational philosophy. Partnering with Premier’s supply chain consultants, the organization streamlined team structures and organizational goals to enhance the value analysis process. This included establishing a systemwide, physician-led decision-making framework and leveraging Premier’s group purchasing organization (GPO) to optimize nonlabor spending. By integrating robust business intelligence capabilities for real-time data analytics across clinical, supply, and operational domains, Kaleida Health achieved significant standardization, savings, and price parity across its network. In 2022 alone, these efforts yielded over $17.7 million in savings, showcasing the efficacy of data-driven methodologies in driving operational efficiencies.

Value analysis remains integral to Kaleida Health’s ongoing quality initiatives, including targeted efforts to reduce infection rates and enhance care delivery through innovative product solutions and collaborative partnerships.

Addressing the Challenge of Purchased Services

Recognizing purchased services as a critical area for improvement, Kaleida Health partnered with Premier’s specialized services to optimize pricing, centralize purchasing processes, and negotiate favorable contracts. This proactive approach resulted in $1.1 million in savings in 2023, with plans to expand efficiencies across 15 identified initiatives for 2024, totaling $64 million in spend. A comprehensive technology platform has further empowered Kaleida Health to efficiently manage and analyze purchased services usage, driving operational insights and financial stewardship.

Advancing Clinical Care Delivery and Strategic Initiatives

Looking ahead to 2024 and beyond, Kaleida Health is committed to enhancing clinical care delivery through strategic initiatives focused on continuum of care alignment, quality enhancement, and health equity. The organization’s integrated ambulatory care and physician enterprise strategy aims to optimize care settings, foster community partnerships, and advance population health initiatives. By standardizing clinical practices and leveraging transparent data sharing, Kaleida Health seeks to reduce care variation, enhance efficiency, and drive sustainable revenue growth.

Additionally, Kaleida Health is pioneering advancements in quality and safety through its Quality and Safety Institute, which prioritizes health equity and leverages AI-enabled analytics to measure and improve clinical outcomes. This institute underscores Kaleida Health’s dedication to addressing social determinants of health and driving measurable improvements in patient care across diverse populations.

As Kaleida Health continues to evolve, its partnership with Premier remains pivotal, fostering collaborative decision-making and strategic alignment to achieve shared objectives. Edwin Streeter, Vice President of Supply Chain Management at Kaleida Health, emphasizes the importance of this partnership in driving operational excellence and preparing the organization for future success.

In summary, Kaleida Health’s journey exemplifies a proactive approach to healthcare transformation, marked by significant cost savings, quality improvements, and innovation-driven outcomes that benefit both the organization and the communities it serves.

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