UPMC and IBM Watson Health have formed a joint venture to help hospitals get smarter about ordering supplies, targeting the estimated one third of health care spending that is wasted.
Jim Szilagy, UPMC chief supply chain officer, will become CEO of Pensiamo Inc., which will be located in Pittsburgh although the exact place hasn’t been determined. Under the arrangement, 150 UPMC employees will move to the new company, Mr. Szilagy said.
Pensiamo Italian for “we think” gathers information about hospital supplies from a variety of sources, including physician’s notes, to help buyers choose the best product quickly. Watson boasts that its software can read 40 million documents in 15 seconds.
“It’s really analyzing the total cost over time, length of hospital stay for each device, quality differences, physician experience,” Mr. Szilagy said. “It’s putting a lot of context around a decision, not just price.”
UPMC’s partnership with the Cambridge, Mass.-based company is the health care giant’s latest effort to build new sources of revenue at a time when reimbursement for medical care is stagnant. Other for-profit UPMC companies include group purchasing service Prodigo Solutions, Health Care Pharmacy Central for drug purchases and BioTronics, which calibrates and services medical equipment for hospitals.
UPMC will be Pensiamo’s first customer, but Mr. Szilagy said other health systems have expressed “strong interest” in the company’s services. UPMC will have a majority stake in Pansiamo.
Supply chain costs are the second-largest and fastest-growing expense behind labor costs for health care providers, and the Institute of Medicine estimates that nearly one-third of health care spending is waste. Under contract with clients, IBM already manages procurement services with suppliers in travel, technology, construction, telecommunications and other areas.
Date: July 08, 2016