Reducing Blood Service Agreement Costs

This article was written by Pandush Mitre.

When was the last time you reviewed your blood services agreement with a view to reducing your blood service costs?

Blood services are a big part of patient care, so hospitals will always incur costs associated with their blood service agreement. What steps can you take to ensure you are optimizing your blood services costs?

At VIE Healthcare Consulting we recommend the following options to address this issue:

“Transfusion of blood and blood products is one of the most frequently performed procedures during hospitalizations”

Option 1: Analyze Your Cost Drivers

Analyzing the cost drivers in your blood service agreement is a good place to begin.
From my experience with VIE Healthcare and reviewing countless blood service agreements for hospitals and health systems of all sizes, around 70% of blood banks’ costs are derived from Leuko-Reduced Red Blood Cells.

Reviewing this one area could reveal significant cost saving opportunities and have a major impact on your margin improvement. While carrying out a review, ask questions such as:

• How many vendors are currently providing blood services to your hospital?
• What is your commitment level?
• What has been your red blood cell utilization for the past two years?
• Is that figure increasing or decreasing?

Once you have this information in detail you must be willing to explore what the market can offer you. If a hospital is committed to taking these steps, the outcome in terms of cost savings achieved can be rewarding.

Option 2: Negotiate with your current vendor

Before requesting a proposal, your second option is to simply negotiate your current red blood cell price with your current vendor. If you don’t ask your vendor for a cost reduction, they are unlikely to offer one.

Although your vendor may not agree to an immediate cost reduction, there are other creative actions you can take to leverage your position and reduce your red blood cell cost.

For instance, if you utilize multiple vendors, can you consolidate to fewer vendors in order to meet a certain commitment level? If your hospital uses more than one vendor, it does not mean that your pricing should vary significantly from one provider to the next.

Notifying your current vendors that you are serious about your request for a proposal will provide you with greater leverage to reduce this cost.

Option 3: Quality Assurance

Another way to creatively approach cost reduction of your Leuko-Reduced Red Blood Cells is through quality assurance. If 70% of your blood services cost is coming from red blood cells, how can you reduce your usage in this area?

Rodrigues and Ramakrishna (2015) found that:

“With regard to patient blood transfusions, the incidence of patient harm is high; the transfusion practices and thresholds are, in general, heterogeneous within the United States of America (USA); and it is estimated that approximately 40% of the blood and blood products transfused in the USA may not be necessary”

If a hospital shifts some of its focus on quality assurance and becomes open to modifying the current practices of their healthcare professionals, it is possible to reduce the unnecessary use of red blood cells.

That could result in up to a 28% reduction in the cost of Leuko-Reduced Red Blood cells.

Optimizing your healthcare practices is absolutely necessary if you want to optimize your cost savings and improve your patient care.

Hospitals can also look at other areas of blood services to identify cost savings. For example:

• What does your hospital do with unused or expired blood?
• Are you being reimbursed for using blood with a short timestamp?

Hospitals must be aware of Medicare rules and regulations in order to optimize their costs.

According to the American Red Cross Biomedical Services National Headquarters.

“Hospitals may never bill Medicare for unused blood units”

If a transfusion is not performed, hospitals are not able to bill Medicare, therefore implementing quality assurance practices with the healthcare professionals in your hospital is essential as it impacts additional cost savings.

On the other hand, the American Red Cross also points out that hospitals can bill Medicare for laboratory services:

“Bill for medically necessary laboratory services related to a specific patient (such as cross-matching), even if the blood is not transfused.”

Being aware of these facts can have a major impact on achieving significant cost savings for your hospital and improving the value of your patient care.

For hospitals concerned about staying up-to-date with this information or having access to sufficient resources to analyze and implement these cost reduction strategies, a solution is available. Independent consultants such as VIE Healthcare can carry out this work on their behalf and deliver the high level of optimization they are striving for.

For a complimentary consultation, call our office today at 1-888-484-3332, Ext 500 or email us at info@viehealthcare.com.