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Case Study

Penn State Health Hershey Medical Center saved $6,000 per case by:

• Reducing Supply Costs: 10%

• Reducing Length of Stay: 44%

• Reducing Post-Acute Care Costs: 49%


 
The data analytics have been tremendous for us by providing a better understanding of our actual costs.
— Charles Davis, MD, PhD Chief, Arthroplasty at Penn State Health Hershey Medical Center

The Challenge

Already a fiscally-responsible, high-performing organization and ranked a top 50 orthopedic hospital by U.S. News & World Report, Penn State Health Milton S. Hershey Medical Center was participating in a bundled payment program for joint replacements. Leadership sought innovation to better manage its costs across the care continuum for service lines including spine and joints. 


 

The Solution

Avant-garde Health’s solution delivered unique insights into the true costs of orthopedic care inside the hospital as well as the utilization and spend for patients post-discharge. Using new analytics, Hershey identified several cost-saving opportunities including reducing supply variation, improving length of stay, and decreasing discharge to high-cost settings. 


 

The Plan 

Driven by these goals, Hershey introduced new strategies to manage supply spending and introduce effective protocols for patient care. The action plan included:

  • Negotiating lower contract prices with supply vendors and standardizing supply trays with cost-effective items. 
  • Communicating in advance with patients on expectations for an optimal recovery process and time frame. 
  • Implementing best practices for care pathways that lead to a timely discharge to home.

 

The Results

10% Reduction in Average Supply Spending

To reduce variation, teams renegotiated vendor pricing and shared supply cost data with surgeons to drive down high-cost utilization. With all physicians reducing costs between 8% and 12%, the result was a savings of $471 per case totaling $280K per year.
 

44% Reduction in Average Length of Stay

Driven by a new goal to discharge patients on day of surgery, the average length of stay was reduced by over 1 full day. This improvement reduced personnel costs by $1,413 per case and increased capacity with an annualized margin potential of $4.3M.
 

90% Reduction on Discharge to High Cost Settings

The hospital set a goal to discharge more patients to home. The percentage leaving for high-cost post-acute care (PAC) settings was reduced from 35% to 3%. The discharge improvement resulted in a $4K (49%) average savings in post- acute care costs per case.