The hidden cost of growth: What Ochsner Health learned about clinical variation, supply chain, and perioperative performance

Ochsner Health has seen tremendous growth over the past two decades. Since 2006, the system has expanded to include 40,000+ employees, 47 hospitals, and more than 370 health and urgent care centers across the Gulf South.

Unsurprisingly, that growth has brought increasing complexity, not just in terms of events that demanded prodigious resilience—like historic floods, havoc-causing hurricanes, COVID-19, and policy changes like the Affordable Care Act and One Big Beautiful Bill—but also in the form of more patients that necessitate greater supply spend. Between 2018 and 2024 alone, Ochsner Health’s medical device spend increased by 141%, reflecting both the system’s expansion and the growing complexity of caring for patients across a rapidly enlarging footprint.

Those kinds of numbers inevitably lead to lessons learned. The biggest one, says René Gurdian, vice president, data analytics and transformation, Ochsner Health, is that margin doesn’t leak in one big, dramatic place.

Instead, “it leaks in quiet, invisible ways,” Gurdian told attendees in a recent Becker’s Hospital Review webinar where he and his colleague Nattie Leger, vice president, supply chain value and clinical performance, discussed how Ochsner Health is aligning perioperative performance, supply chain, and clinical variation.

Margin, they emphasized, can recede through thousands of small decisions and processes: a reorder point set too low, supplies ordered outside established channels, inconsistent preference cards, duplicate products inherited through acquisitions, or practice patterns that vary from one hospital to the next. Taken together, these individual factors erode financial performance and make it harder for health systems to invest in patient care.

For Ochsner Health, solving those challenges requires much more than contract negotiations or one-off cost-reduction initiatives. The organization has spent years building the infrastructure needed to understand variation, connect clinical and operational data, and create productive conversations between physicians, perioperative leaders, finance, and supply chain.

Along the way, they uncovered several lessons that extend well beyond perioperative services. Their experience offers a practical roadmap for health systems looking to improve performance while preserving physician autonomy, supporting innovation, and maintaining a focus on patient outcomes.

Feedback from webinar attendees

Lesson 1: Eliminate internal headwinds before fighting external ones

Every healthcare organization faces external pressures, from diminishing reimbursement to rising labor costs to supply disruptions. But one of the biggest obstacles is inherent in a different kind of challenge: the headwinds organizations create for themselves.

As Ochsner Health grew, leaders identified savings opportunities hiding within their operations. Off-contract purchases, expired inventory, non-tracked supplies, inconsistent contract compliance, weak barcode adoption, and preference-card variation all contributed to unnecessary complexity. Instead of focusing on a single “breakthrough initiative,” they prioritized systematically removing friction from everyday processes.

The big takeaway: Before pursuing your next savings opportunity, examine the operational practices that make it harder for your organization to achieve the goals it already has.

Lesson 2: Data governance matters more than analytics

Healthcare has no shortage of data, but what it often lacks is trusted data. Before clinicians could be confident in the system’s findings, Ochsner Health had to strengthen its underlying data infrastructure.

That effort included expanding the item master from approximately 45,000 products to more than 70,000, improving GTIN capture, increasing barcode-scanning adoption, and reducing reliance on free-text ordering. The result was a meaningful reduction in unidentified procedural spend—from approximately 9% in 2022 to 5% by early 2026, despite continued growth across the health system. That led to more productive conversations with clinicians because they saw the information as representative of reality.

The big takeaway: Data governance, not analytics tools, create trust. Organizations that invest in clean data, clear ownership, and transparent processes create the conditions for better decision-making long before the first dashboard is built.

Lesson 3: Focus on cost-per-case variation, not just contract savings

Traditional supply chain initiatives often focus on sourcing events and contract performance. Those efforts remain important, but Ochsner increasingly focused on a different question:

Why does the same procedure cost different amounts across physicians, facilities, and service lines?

Vizient Procedural Analytics allowed leaders to examine utilization patterns at the case level. Those insights revealed opportunities involving implant utilization, commodity products, preference cards, inventory management, and clinical practice variation while simultaneously creating a common language for discussions among physicians, supply chain leaders, and operational teams.

Since contract savings are inherently finite, understanding cost-per-case variation provides a more sustainable path to identifying unnecessary expense while preserving quality and clinician choice.

The big takeaway: For Ochsner Health, case-cost variation became less of a supply chain metric and more of an organizational learning tool.

Lesson 4: Supply chain must become the organization's connector

Supply chain sits at the center of many healthcare decisions, with supply purchases touching finance, clinical operations, physician practice, inventory management, contracting, technology, and patient care. That position gives supply chain leaders a unique vantage point—if, and only if, they actively build relationships across the enterprise.

Ochsner Health formalized that approach through service-line governance structures and its Executive Value Analysis Council (see above), which brings together physicians, administrators, supply chain leaders, analysts, and operational stakeholders around shared priorities.

Several examples demonstrated the value of that model. In one instance, discussions that began around supply utilization ultimately revealed gaps in pre-operative processes. In another, efforts to standardize products exposed workflow issues that required operational intervention rather than sourcing changes.

The big takeaway: Supply chain's value increasingly comes from helping stakeholders connect information that would otherwise remain siloed.

Lesson 5: Standardization requires balance, not mandates

Healthcare organizations often frame standardization as a choice between efficiency and physician autonomy, but Ochsner Health’s experience suggests the challenge is more nuanced.

The system has successfully standardized significant portions of its orthopedic implant portfolio and numerous commodity categories. Still, leaders repeatedly emphasized the need to preserve physician judgment, support innovation, and accommodate research activities.

That balance requires governance rather than mandates and an understanding of where variation creates unnecessary cost and where it reflects legitimate clinical differences.

The big takeaway: The most successful organizations can distinguish between preference-driven variation and clinically meaningful variation.

Lesson 6: Physician champions turn insights into action

Data can identify opportunities and supply chain teams can facilitate conversations, but real change requires clinical leaders who can engage their peers, provide context, and build confidence in new approaches.

Some of Ochsner Health’s most successful supply chain initiatives were driven by physicians who recognized opportunities themselves. One standardization effort involving surgical hoods and togas originated when a physician noticed variation while working across multiple facilities. The data validated the observation and ultimately supported broader systemwide alignment.

The big takeaway: Improvement happens faster when physicians help lead it.

Lesson 7: Not all variation is bad variation

One of the most sophisticated lessons from Ochsner Health’s experience is that variation should be investigated before it’s eliminated.

Gurdian and Leger shared an example involving drug-eluting stents. After standardizing products and improving pricing, they expected additional opportunities to be revealed through case-cost variation.

Instead, physician review revealed that much of the variation reflected appropriate clinical decision-making, differences in patient populations, and the use of complementary technologies.

The experience reinforced an important principle: data identifies questions, but clinical expertise provides answers.

The big takeaway: Not every variation signal represents waste—some represent innovation, specialization, or the realities of patient care. Understanding the difference requires collaboration, context, and curiosity.

Lesson 8: Operational excellence is a continuous journey

Neither Gurdian nor Leger described the organization's efforts as complete.

Ochsner Health continues to improve data quality, strengthen governance structures, refine inventory practices, expand physician engagement, and explore new technologies. Every acquisition, new service line, clinical innovation, and operational change introduces new complexity that must be managed.

For large health systems, operational excellence is a discipline that requires continuous foundational work long after the excitement of a new initiative fades.

The big takeaway: Margin improvement is built over time through hundreds of small decisions, disciplined processes, trusted relationships, and a willingness to keep refining the systems that support patient care every day.

Watch the webinar featuring Ochsner Health to learn why perioperative margin optimization fails without trusted data and the role of Vizient Procedural Analytics in moving from data visibility to decisive action.