UPMC is finding ways to squeeze savings, prevent waste


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Blood is among the most precious, and most perishable, commodities in the health care universe. Red cells might last five weeks or so, and platelets, the key to clotting and injury repair, are good for less than a week. Because of the short shelf life, UPMC and every other hospital in America waste tremendous amounts of blood, worth hundreds of millions of dollars a year.

“We were throwing away 3,000 units of blood” annually, said Jonathan Waters, medical director of UPMC patient blood management program. “That’s $680,000 of waste.”

When he came to UPMC by way of the Cleveland Clinic a decade ago, it became Dr. Waters’ role to slowly drive that waste out of the system, partly through aggressive supply chain efficiency, and partly through installing new clinical guidelines. It’s a cost-savings mission that’s carried out across the UPMC footprint, and it’s a mission that’s arguably never been more important for Western Pennsylvania’s No. 1 hospital network than it is today.

UPMC hospitals, like most health networks, are under relentless pressure to cut costs. Operating margins are thin, overnight inpatient traffic is declining, and health insurers — Medicare and Medicaid programs included — want to force hospitals into new reimbursement models that reward quality outcomes and penalize the health systems that go over budget.

Those are universal factors; UPMC also has created some its own, unique to the market, through its refusal to sign a full-access contract with Highmark Health, the region’s largest commercial insurance carrier. The financial impact of that business decision has yet to be calculated, but for sure, UPMC will lose some Highmark patients starting Jan. 1.

So UPMC must cinch its belt. Some of that, by necessity, will come out of labor costs — in most health systems, staffing accounts for around 55 percent of total expenditures.

But the other 45 percent? That’s facility operations, supplies and clinical management.

And that’s where people such as Dr. Waters enter the frame.

‘Waste all over the place’

Twenty years ago, when he was in Cleveland, Dr. Waters was introduced to another doctor who had helped to develop a new blood recycling technology. Today, surgical blood salvage — collecting blood lost during an operation, filtering it, centrifuging it, then reusing it — is common practice. Recycling the patient’s own blood, naturally, means that surgeons don’t have to use as many donated units.

“There is waste all over the place in health care,” Dr. Waters said last week. It’s been “kind of a longstanding passion for me [to] reduce blood use.”

Step 1 was arguably the easiest one: examining the entire blood supply line, figuring out where blood was being over-ordered and under-used, then calibrating contracts with blood suppliers accordingly.

In other words, buy and store only what you need.

Easier said than done. Platelets, for example, have not only the shortest shelf life, but they are particularly temperature sensitive: If refrigerated, or transported on ice, platelets leave the circulation system too rapidly. So storage can be tricky, requiring platelets to be delivered at room temperature, if they are to be optimally effective. Keeping the right amount of platelets on hand, at the right temperatures, required a redesign of the blood supply chain.

Step 2 was a more sweeping probe into UPMC’s clinical guidelines, a process that was less about supply chain logistics and more about retraining doctors and nurses about when to use blood, and when not to.

In health care, clinicians have long believed that “blood is good, and more is better,” Dr. Waters said. “Certainly, you need to be transfused at certain times. But there’s a risk-benefit ratio. [And] the risks and benefits have evolved considerably since I went to medical school.”

One thing that’s changed is the old 10/​30 rule for patients needing an infusion of red blood cells because of anemia, hemorrhaging or to improve oxygen delivery. But the 10/​30 rule (transfusing when a patient’s hemoglobin level is less than 10 grams per deciliter, and when his red-cell blood volume falls below 30 percent) has been abandoned over the last two decades as the baseline transfusion trigger.

Instead, the 10/​30 rule has become a 7/​21 rule, giving doctors more wiggle room to observe a patient’s clinical symptoms before ordering a transfusion.

UPMC is trying to “reduce non-evidence-based transfusion,” Dr. Waters said. Not only does it save blood, but may improve patient health. For certain surgeries, “reducing utilization of blood had better post-operative outcomes. ... A lot of literature [has associated] transfusion and increases in infection rates,” particularly among critical injured patients.

But “getting doctors to change is really hard,” Dr. Waters said.

Some clinicians learn quickly. Others benefit from UPMC’s electronic decision-making system, which alerts doctors that a certain transfusion “is not consistent with UPMC institutional guidelines,” automatically canceling the transfusion and the blood cell order. Savings add up fast: A single unit of red blood cells can cost $200.

The most striking area of blood waste was self-inflicted, found in UPMC’s system of collecting blood from patients prior to their elective surgeries. Called “pre-operative autologous donations,” or PAD blood, it means that patients essentially are donating blood to themselves in case they need it later.

Problem is, they often don’t need it later, or at least don’t need all of it. In 2005, UPMC was throwing about half of that blood away — 2,700 units in all, $537,000 worth of wasted blood that probably never should have been collected in the first place.

But by 2013, UPMC was disposing of just 100 or so units of pre-collected blood, at a value of $26,000.

It’s a 94 percent reduction in blood waste, achieved, once again, through evolving clinical standards — if the blood is never drawn, it can’t be wasted later.

“So, we have been campaigning to eliminate the use of this as a therapy. We can give the patient their own blood via blood salvage, which works a lot better,” Dr. Water said.

He has been tweaking UPMC’s blood management system since he got here, and about two years ago, the health system made a bigger investment in blood supply management, fully implementing Dr. Waters’ plan and hiring a full-time program manager.

Results: $5 million in direct savings and cost avoidance since 2012, and 40,000 fewer units of wasted blood.

Saving money, saving jobs

Dr. Waters’ fiefdom is blood management, but at UPMC, the lord of the kingdom is David Hargraves, ‎vice president of UPMC’s clinical supply chain. His job, he said, is a balancing act of controlling cost while maintaining adequate supply.

“If the product isn’t there when it needs to be,” he said, “you’ve done a bad job.” Exhibit A is the ongoing national shortage of IV saline and dextrose supplies. UPMC has managed that shortage through sheer scale — redistributing its stockpile from its in-house pharmacy to the non-acute sites running low on solution — and through old-fashioned conservation, using less intravenous fluid when possible in favor of oral hydration (translation: drinking fluids instead of IV-ing them).

The pressure to cut costs without causing shortages is constant, he said, but can be heightened by external events. (The looming separation with Highmark qualifies as such an event.) That heightened cost-cutting pressure can mean simply moving faster, or it might mean tackling larger projects that had previously been ignored because of their complexity, Mr. Hargraves said.

But mostly, it’s an ongoing process. UPMC has 32 work teams from across the system, each meeting monthly or quarterly to discuss supply chain issues in their specific clinical areas.

Those teams then report to an umbrella committee, which decides which savings proposals ought to be implemented, and calculates how much can be saved.

“All of these are in the margins,” Mr. Hargraves said. A new product or process might save “an eighth of a penny [on] a small consumable. You’re making a small change on one thing,” but it multiplies down the line.

Some recent examples:

■ UPMC needs to dispose of reams of confidential documents every day. Those documents are dumped at one of 600 drop-off points, and later hauled away. But why pay someone to haul away the documents if the bins aren’t full? By better monitoring the usage and capacity of individual drop-off points, UPMC was able to reduce the number of pick-ups from 14,000 annually to 6,300, resulting in a 55 percent reduction in cost, saving $138,000 a year.

■ The hospital used to trade in outdated medical equipment, or send it to a landfill, any time it bought a new device. Now, that equipment is remarketed through a third party for use “in other parts of the world.” UPMC now makes $200,000 annually in resale revenue, and avoids those landfill fees.

Conversely, UPMC has saved $2 million since June 2013 by refurbishing and re-sterilizing old devices — such as blood pressure cuffs, compression cuffs and catheters — and reusing them, rather than trashing them.

■ The hospital system buys orthopedic fixation pins — devices used to stabilize soft tissue during surgery, or bolt bones into place — individually packaged and pre-sterilized. But now, UPMC plans to buy the pins in bulk, and sterilize them on-site. Savings: $100,000 annually.

■ Hospital systems go through thousands of gowns a year, both the kind worn by patients and the isolation gowns worn by clinicians. UPMC is now using a new isolation gown, and is working with its supplier to ship them in bulk containers, a process that could save $20,000 a year.

The process of finding pockets of savings is exhaustive, said Matt Benton, a UPMC commodity manager.

“We look at the data. We look at the equipment ... we ask a lot of questions,” searching for a penny in a haystack, he said.

And over time, those pennies add up.

If we can “save a few million, we [do] feel like we’re saving jobs,” he said.


Bill Toland: btoland@post-gazette.com or 412-263-2625.

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