Integrated healthcare delivery and financing company UPMC is taking steps to thwart wasteful spending and high costs in forming an independent company called Pensiamo, which aims to help hospitals improve supply chain performance with a source-to-pay offering, including cognitive analytics with IBM Watson Health Technologies. IBM is a minority owner of Pensiamo.
The Institute of Medicine estimates that nearly one-third of healthcare spending is waste. UPMC has said that it formed Pensiamo partly in response to the fact that providers face mounting pressure to improve the effectiveness of patient care while controlling costs. Understanding their costs at a patient-specific level is necessary to succeed under performance-based payment systems, the company said in a statement, yet few can derive such insights.
UPMC, which boasts $12 billion in revenue, will own a majority of the new Pittsburgh-based company and will be the initial customer under a long-term contract. IBM, with more than $57 billion of spending under its management, routinely manages procurement with key suppliers in healthcare and a number of other industries, including travel, technology and telecommunications.
James Szilagy will transition from his current role as chief supply chain officer for UPMC to CEO of Pensiamo.
[Also: UPMC cost management tool slated for market under Health Catalyst deal]
"At a time when patients are demanding higher quality and value, traditional approaches to providing health care supply chain services are no longer sufficient," he said in a statement. "The new company will combine the best of UPMC's healthcare supply chain experience with IBM's expertise in non-medical procurement services, as well as IBM Watson capabilities infused with UPMC's domain expertise. The aim is to offer providers a supply chain management approach tailored to each institution's specialties, patient population and other unique needs, and which will learn and respond over time to the changing needs of the business."
Twitter: @JELagasse