Prisma Health Saves $450M with Systemwide Transformation
Prisma Health, South Carolina’s largest healthcare provider, has long been at the forefront of delivering exceptional care across the state. However, the challenges faced by the organization during the COVID-19 pandemic – including financial instability, supply chain disruptions, and the complexities of adapting to a merger from years earlier – pushed the system to reevaluate its strategies. To overcome these hurdles and create a more efficient, unified organization, Prisma Health knew it required more than just incremental changes.
In January 2022, the organization partnered with Premier, a leading provider of advisory services, technology solutions, and a robust group purchasing organization (GPO). The goal was clear: to streamline operations, optimize the supply chain, and align clinical goals to improve both financial health and patient care.
Clarence Sevillian, Prisma Health’s Executive Vice President and Chief Operating Officer, emphasized that this partnership wasn’t just about stabilizing finances. “It was about building a stronger, more efficient system that would allow us to continue delivering exceptional care in every community we serve,” he said.
Strategic Assessment and Planning
From the outset, Premier’s team took a hands-on approach, embedding themselves within Prisma Health’s operations to ensure every solution was tailored to the organization’s unique needs. Premier provided expert guidance through a comprehensive assessment of the health system’s operations, focusing on areas like clinical workflows, supply chain governance, and workforce structures. This assessment revealed several opportunities for improvement, allowing Premier to develop actionable roadmaps and strategies aimed at transforming the health system.
The partnership set an ambitious target: to achieve $450 million in value improvement over six years. However, by working closely with Prisma Health, Premier helped the organization exceed expectations, achieving the full margin improvement in just three years.
Execution: Operational and Clinical Improvements
With a detailed plan in place, Premier’s advisory team helped drive high-impact initiatives. One of the first and most significant changes was the systemwide transition to Premier’s GPO, which provided Prisma Health with access to a comprehensive contract portfolio. This transition enhanced product coverage, improved pricing, and aligned purchasing decisions with clinical care goals. Despite the complexity of the health system, the GPO conversion was completed in just seven months, unlocking significant savings and improving supplier relationships.
In addition to the GPO transition, the focus was on engaging clinical leaders to ensure that purchasing decisions supported patient care priorities. High-commitment purchasing programs, coupled with advanced analytics and contract management tools, allowed Prisma Health to standardize procurement processes, reduce variation, and improve compliance.
Prisma Health also expanded its centralized Materials Distribution Center (MDC), allowing more hospitals to rely on in-house logistics rather than third-party distributors. This initiative improved supply chain visibility, reduced costs, and enhanced resilience, particularly in the face of the disruptions caused by the pandemic.
Leveraging Data and Technology for Continuous Improvement
Another key element of the transformation was the integration of Premier’s advanced data and technology solutions. Tools like facility benchmarking, supply chain disruption management, and clinical data processing enabled Prisma Health’s clinical and operational leaders to collaborate more effectively. These insights provided valuable visibility into performance, compliance, and areas for further improvement.
Dr. Catherine Chang, Vice President and Chief Quality Officer at Prisma Health, explained how Premier’s data transparency and business intelligence tools helped connect clinical and operational leaders in ways that had never been possible before. “This was a turning point for us,” she said.
The technology also played a crucial role in addressing labor challenges. “We use Premier technology to assess whether we are hiring the right person at the right time for the right role,” said Abby Stonecipher, Prisma Health’s Vice President of Enterprise Business Transformation. By optimizing labor management, Prisma Health saw a significant decrease in labor expenses.
Transformative Results and Long-Term Impact
The results of the collaboration were transformative. Prisma Health achieved its initial $450 million margin improvement goal in just three years, far surpassing the six-year target. Other key outcomes included a $600 million increase in days cash on hand, $85 million in one-time cash savings, and reduced cost per case for 15 medical and surgical conditions through waste reduction and clinical standardization.
“These savings go beyond numbers,” said Jennifer Bair, Vice President of Pharmacy Services and Chief Pharmacy Officer at Prisma Health. “They are helping Prisma Health reinvest in patient care and in our communities, building a stronger foundation for the future.”
Prisma Health’s transformation is ongoing, with the foundation built through its partnership with Premier setting the stage for continued success. “We’ve done more transformative work in the last 18 months than most health systems do in a decade,” said Dr. Chang. The partnership with Premier has fundamentally changed how Prisma Health operates and approaches continuous improvement, creating a lasting impact on both patient care and organizational efficiency.
