Northwell Health expands in the Northeast, brings two systems together.
June 2024 – The Journal of Healthcare Contracting
Northwell Health births the most babies in New York state. It’s a $18 billion organization with 87,000 employees and it recently acquired Connecticut-based Nuvance Health. The two nonprofit, mission-driven healthcare organizations form a new integrated regional health system serving communities across New York and Connecticut.
The new regional system brings together access to primary, specialty and hospital care through a network of a combined 14,500 providers and over 1,000 sites of care, including 28 hospitals.
“We’ve made a commitment to understand our community’s sustainability needs and include them in our resiliency preparedness,” Donna Drummond, chief sustainability officer for Northwell Health, told the audience at IDN Insights East this year. “We’re a member of Premier for pharmaceuticals and food but all of our other contracts are Northwell alliance contracts that benefit all of our hospitals as well as hospitals and other organizations that aren’t a part of the Northwell Health system.”
“We believe in looking at things a little bit sideways to see where the best opportunity lies. We always listen,” she said. “We’re welcome to hearing new ideas and we believe prevention and early detection is the best and wisest use of healthcare money, and the least expensive.”
Supply chain spend
Northwell Health’s supply chain is over $5 billion in spend. It has two warehouses and manages a supplier diversity program that’s supportive of Northwell Health’s sustainability initiatives.
“Supply chain has always been a core operations function of our health system,” Drummond said. “Some of the functions that don’t fit other places like waste management and linen all gets managed in our supply chain. And pharmacy has always been a part of our supply chain.”
Each hospital in Northwell Health’s system has an executive director as the leader of the hospital and a team underneath to run the hospital.
“We’re a highly matrixed organization,” Drummond said. “We’re purposefully complicated but it works well for us. We can nimbly respond to any issue that comes up.”
Med/surg supplies are only 27% of the spend at Northwell Health. “That’s a little surprising to most people,” Drummond said. “But our pharmaceutical spend is high because we have a very successful specialty in retail pharmacy. So, our spend there is over $1 billion this year.”
Drummond also pointed out that its purchased services spend was 19%. “That’s a significant number,” she said. “We don’t outsource food for the most part or engineering or environmental. But we outsource snow removal and elevator repair, for example, and those kinds of things are in that number.”
Value analysis, physician preference and clinical oversight
Northwell Health has a value analysis program and has a procedural product committee that addresses physician preference items.
“We consider cost and how much we’re going to utilize the product,” she said. “We’re never going to stop a surgery or a process but we’re constantly monitoring to find opportunities to reduce variability and utilization, or shift utilization to where it needs to be focused.”
Northwell also has a clinical oversight committee that meets once a month. Surgeons, procurement staff members and financial staff members are all a part of it.
“When a new product is presented, we’ll look at the costs, compare it to existing products and we’ll look at the impact on revenue,” Drummond said. “It’s not always black and white. There are a lot of analytics that happen. Commercial products can be highly variable, and we need to make sure we analyze the entire bottom line margin impact.”
It’s all about the data for Northwell Health and making sure there’s accurate pricing and product substitutes. It’s critical when there’s a recall.
“It’s important for our procurement team to have frank conversations with our suppliers and distributors. These lead to great relationships,” she said. “I was so proud to be a part of the team living through Covid and the relationships built with vendors. There was a mutual trust and commitment to doing the best for our patients. The responsiveness, innovation and ability to deliver truckloads as fast they as could was inspiring.”