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A five-year supplies contract signed today is designed to help Erie County Medical Center save as much as $5 million over the next five years.

Chief Executive Officer Paul J. Candino said the contract with Buffalo Hospital Supply will eliminate the need for in-hospital warehousing of as much as $1 million in supplies and eventually free 12,000 square feet of space on the Grider Street campus.

"We needed a program that would reduce expenses and maintain quality," Candino said.

Under the delivery system he described as "just in time," the medical center will control product selection, ordering and purchasing, said John Gervase, the hospital's director of support services. Buffalo Hospital Supply will accept supplies in bulk and deliver according to the hospital's immediate needs.

By July 1996, the hospital hopes to implement what officials described as a "stockless inventory system," in which Buffalo Hospital Supply will unpack and divide materials into smaller amounts for direct deliveries to units and floors.

"Buffalo Hospital Supply will be here two or three times a day," Gervase said.

However, supplies for emergencies will be stocked in the hospital, Candino said.

Buffalo Hospital Supply will charge nothing for the extra service the first year but will receive a total of $500,000 for the next four years.

For starters, Gervase said, the hospital will buy approximately$4 million worth of supplies through Buffalo Hospital Supply.

"There are price breaks of $200,000 to $300,000 a year we receive by signing the distribution agreement," Gervase said. "Some employees in the warehouse and supply areas will be reassigned to other parts of the hospital. We expect to save $750,000 on salaries annually."

Michael J. Burke, president of the supply company, predicted more business for local hospital suppliers and possibly more jobs under the system.

"We expect to provide more product lines at a cost advantage to (the medical center) and other Western New York health-care facilities," Burke said.

Buffalo Hospital Supply is located at 130 Pineview Drive in Amherst. The warehouse space that no longer will be needed is on the ground floor of the hospital's main building, and suggestions for its use are being considered. One proposal is an employees' health club and child-care center.

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