In anticipation of massive changes for healthcare providers that would require greater rigor to maintain financial health, Ascension empowered the creation of a new model for resource and supply management: The Resource Group.
Ascension is formed through the sponsorship of the Daughters of Charity, and Sisters of St. Joseph, and the Sisters of St. Joseph of Carondelet
Ascension commissions a study to see what could be accomplished in supply cost reduction
Ascension consolidates its contracting in St. Louis and begins to explore new models for a more efficient, scalable model. It implements User-Directed Strategic Sourcing.
Ascension supply chain leadership begins to develop a nationally-coordinated supply chain and contracting function across Ascension.
Ascension introduces its centrally-coordinated contracting and supply chain model under single leadership. The new organization is called The Resource Group.
The Resource Group receives a favorable opinion from the Office of the Inspector General (OIG) to become the first and only wholly provider owned group purchasing organization (GPO).
The Resource Group tops $900 million in annual savings and $2 billion in cumulative savings.
Ascension grew rapidly through acquisition after its formation in 1999, quickly becoming the largest nonprofit healthcare system in the United States and the world’s largest Catholic health system. As Ascension grew, leaders across the system recognized the opportunity to substantially lower non-payroll costs and support consistent caregiver satisfaction by centrally-coordinating the fragmented resource and supply management. After gathering feedback and research from 121 leaders across the organization and analyzing purchasing data, Ascension determined it had the opportunity to save $400 million annually by implementing a centrally-coordinated strategic sourcing model and embedding change management talent at its hospitals. Ascension hired Scott Caldwell to lead the charge in transforming Ascension’s resource and supply management function.
From the Basement to the Boardroom
Named “The Resource Group,” a small team led by Mr. Caldwell began dismantling the traditional healthcare function and developing a new model. This model challenged the status quo by:
- Elevating resource and supply management from the basement to the boardroom by recruiting top talent from a multitude of industries beyond healthcare
- Developing an innovative new approach to contracting, where practicing caregivers from our Participants guide all decision-making, and products and services are contracted for based on attributes rather than brand preference
- Standardizing and optimizing operations and logistics by closing warehouses, improving inventory management, and improving operational key performance indicators.
The collective implementation of these components has delivered over $1 billion in annual savings, surpassing all initial expectations, and improving Ascension’s Supply Expense as a percent of Net Patient Service Revenue from a baseline of 19.6% to 15.5%.
This success validated the new model of healthcare resource and supply management, now called the Integrated Change Management Model. After successfully implementing the model at health systems across the United States, The Resource Group realized its model was transferable to all providers and started sharing it with non-Ascension organizations so other providers could also reduce expenses to sustain care in their communities.
Today, The Resource Group serves 2,500 locations including 160 acute care hospitals across 24 states and Washington D.C.