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Rural hospitals have unique financial challenges. Independent community hospitals in less populated areas have government-heavy payer mixes and physician recruitment challenges. This creates difficulties with growing revenue, leading to organizations that must streamline expenses or face consolidation with larger, more financially stable health systems.

Modern Healthcare’s continuing focus on Rural Healthcare has recently highlighted two key organizations in the OpenMarkets community: CHRISTUS Good Shepherd and TPC.

Each of these organizations has taken an innovative approach to improving the financial standing for rural hospitals. Good Shepherd Health System, bought by CHRISTUS Health in February 2017, has been able to reduce expenses by $40 million. TPC, a group of nine independent health systems in Texas, is a highly innovative group purchasing organization with a demonstrated track record of supporting community healthcare by aggregating capital needs, revenue cycle management and standardizing physician-preference items.

CHRISTUS Good Shepherd (OpenMarkets partner since 2017)

Financial challenges at Longview, TX based Good Shepherd Health System created an opportunity for consolidation. Following acquisition by CHRISTUS Health in February 2017, the financial picture has improved. Per Modern Healthcare: 

Good Shepherd reported a $37.3 million operating loss in 2017, but has improved to $12.2 million in operating income in the first quarter of 2018 following a series of changes.

“The organization hadn’t been able to manage its expenses,” CHRISTUS Good Shepherd CEO Todd Hancock said. “It couldn’t invest in its technology and infrastructure for about five years, which hurt morale and increased turnover.”

Post-merger, CHRISTUS Good Shepherd was able to invest in and deploy OpenMarkets CAP Connect to budget, approve, research and buy capital equipment. More from Modern Healthcare: 

“CHRISTUS Health formed teams of administrative and physician leaders to analyze each expense category. It helped save money by bundling services and renegotiating supplier contracts. Ultimately, CHRISTUS helped Good Shepherd cut out about $40 million in expenses,” Hancock said.

132 administrators, physician leaders, supply chain managers and financial officials use OpenMarkets CAP Connect for their daily management of the capital process. The system is integral to how their supply chain team has contributed to the $40 million in expense reduction. Department directors are able to reach out through the platform to equipment suppliers to learn about products and get quotes. This online collaboration cuts the cost-of-sale for the suppliers and creates competition. These factors lead to lower equipment prices. 

CHRISTUS Good Shepherd has also started selling old equipment on The OpenMarkets Exchange

After posting a list of used equipment for sale on The Exchange, the team at CHRISTUS Good Shepherd was able to chat online with potential buyers and received offers for the list of equipment the very next day. 

The team ultimately choose to work with Grandview, TX based PT Medical. The offer from PT Medical was higher than others, creating $24,000 in revenue back into the health system. 

TPC (OpenMarkets Since 2015)

For TPC, innovation, collaboration and efficiency is essential. Per Modern Healthcare: 

TPC is a group of nine independent health systems including 20 hospitals in Texas, Arkansas, and Missouri that primarily bundle their purchases to drive savings. It has about $1 billion in purchasing volume, and has achieved around $250 million in savings since 2010, TPC CEO Geoff Brenner said.

“While the advantages of scale are real, about 80% of those can be done without merging,” he said.

Each TPC member organization uses OpenMarkets CAP Connect to run a centralized, streamlined capital process. Data is normalized across the members and TPC’s corporate team is able to evaluate collaboration and contracting opportunities in real time. This creates efficiency and savings for members.

According to Dan Turner, Director of Implementation at OpenMarkets, TPC and the member organizations benefit by now having a centralized process. “Leaders at the health systems have been able to move away from paper-based systems and now manage capital activity in real time. Furthermore, leaders at TPC are able to organize and see data in a way they haven’t been able to before. Powered by consistent taxonomy across the members and normalized workflow, TPC is is able to create better capital contracts for both members and the suppliers they work with.”

Allison Farley

Allison is a member of the marketing team at OpenMarkets, with responsibilities including content generation, client communication and message testing. She is a also a... More about Allison Farley