How One Decision Saved New Jersey’s Largest HMO $10M
By Medline Newsroom Staff | January 31, 2019
Ever since the Affordable Care Act passed in 2010, managed care organizations have had to juggle growing enrollments and the mandates to continually improve care and lower costs. New Jersey’s largest HMO was excited to see their population grow through additional Medicaid enrollees, but when they took over handling incontinence supplies for that population they discovered a system a tangled web of over 40 suppliers who provided inconsistent service and pricing. They knew they needed to make a change. By moving to a single supplier for incontinence products, the HMO was able to reduce annual related supply expenses by 35.6%. These savings meant that even with a 37% increase in enrollees with incontinence, the organization realized savings of $10.4 million over 3 years.
Before making the switch, case managers were forced to select appropriate incontinence products from a long list that varied in price and quality, with some incontinence products not even meeting the HMO’s minimum quality standards. The decision to transition to a single provider was driven by the appeal of having a single point of contact in addition to higher product quality and lower, manufacturer-direct pricing. That single point of contact helped ensure a smooth transition, as Medline representatives worked closely with the HMO to update formulary guidelines, establish new ordering procedure and make sure case managers were on board. Since consolidating incontinence management with Medline, the HMO has been able to serve more patients at a lower cost. A concise and effective formulary and single-source ordering has simplified their processes and reduced waste. So while most decisions health organizations face are mired in complexity, this one proved to be an easy fix to improve care and lower costs.