Data+ Awards: Novation helps hospitals get better deals on supplies

Big data helps slash the high cost of healthcare equipment.

Medical, surgical and pharmaceutical supplies account for up to 30% of hospitals' healthcare expenditures, second only to medical staff salaries, according to management consulting firm Booz & Co. Prices can change quickly in the industry, and supply chain managers need to act fast to ensure that they're getting the best deals.

With that issue in mind, Irving, Texas-based Novation worked with healthcare systems network VHA and university hospital alliances to develop a suite of price-benchmarking and cost-management analytic applications to help healthcare providers secure the best prices on everything from latex gloves to surgical equipment.

In 2011, Novation developed a mobile app that pushes information and alerts on changing prices to decision-makers and prompts them to take action.

Novation's database holds information from more than 2,400 member organizations representing $70 billion in annual expenditures. It includes several thousand terabytes of data culled from hospitals' spending histories, plus Novation's own data from a broad range of healthcare contracts it has facilitated.

"We're not sharing data" from one hospital to another, "but we're giving them enough information to make intelligent purchasing decisions," says Hari Subramanian, director of mobile solutions at Novation. "When they get that kind of information, they're armed with better insights to make better decisions."

Mayo Clinic, which is both a member of and a shareholder in VHA, spends a lot of money on supplies, services and equipment. Joe Dudas, vice chairman of category management at Mayo, says using Novation's tools has made it easier to be fiscally responsible while meeting patient needs.

"The tools are important to our contracting and management process," he says. "By coupling [the tools] with key clinical data, proven best practices and our talented negotiations team, we have achieved significant value that also allows us to reduce patient costs."

Despite Novation's success, Subramanian says mobile apps may not be for everyone. "ROI is proportionate to the business value it can provide," he says. "Don't do it just because everybody else is doing it."

Next: Procter & Gamble puts global BI data in executives' hands

Collett is a Computerworld contributing writer. You can contact her at stcollett@comcast.net

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