With large sums of money and critical services at stake, senior management of healthcare providers needs to consider a fresh vision: put more of their sourcing in the hands of collaborative, multidisciplinary sourcing teams and unify their work with the right shared system. Lower prices will be the end result for the healthcare supply chain.
To understand why this would lower prices, let’s consider why prices have been too high – and it’s a fact that some healthcare providers have paid too much, especially for non-commodity products and for purchased services. In the absence of a cross-functional team approach: vendors can dominate communication on new products and reorders, so physicians and Purchasing talk less together. Individuals in silos may not always follow company policies, and review of alternative products and vendors can be incomplete. It takes teams to track and develop knowledge on new products in an organized way.
The Right People Need to Work Together in an Organized Process
Prices inevitably can be pushed lower when the Big 3 of Purchasing, Contract Management, and Clinical follow a structured process for new product (or service) requests, and share knowledge about products and vendors. This supports well-considered decision-making that benefits patients. It enables more effective vendor negotiations and contract management.
In the absence of this collaboration, vendors tend to step in and fill the void, building strong relationships directly with clinicians. It becomes a problem when a vendor delivers a doctor’s product order to Purchasing as a fait accompli. The goal is not to exclude vendors; rather, it’s to include the Big 3 with an appropriate level of vendor participation at the right times.
Healthcare leaders may wonder how to upgrade communication between groups of skilled professionals who are (a) very busy and (b) accustomed to operating in relative isolation from other functional areas. It is difficult to mandate close collaboration between disciplines.
The answer is somewhat counter-intuitive. Leadership can require that new products and contracts are managed within a software system that works via collaboration, and makes it easy. Pick the right software, and it will bring cooperation among the Big 3. Hesitation about learning new software gives way quickly to acknowledgement that the new approach actually works well.
Collaboration Goes Hand in Hand with Centralization
A healthcare provider with dozens of facilities that has not moved to centralize sourcing and procurement is likely to have the following issues:
- Vendors that have multiple contracts with different entities in the IDN, each with different pricing, terms, dates of expiration, and products covered.
- On some products, a lack of vendor alternatives with competitively negotiated contracts.
- More negotiating power with vendors than it actually uses.
- Procurement and contract management professionals who operate in silos and are not aware of each other’s interactions with specific vendors.
- Work intake / new product requests that are merely handed off from one function to another, with no background or shared information.
- Disparate approaches to sourcing from one procurement group to the next.
A procurement system that brings all the participants (the Big 3 of Clinical, Purchasing, and Contracts) into a common workspace, and “enforces” a unique ID for each product and vendor, goes a long way to help the parties collaborate. They’ll know which contract and project their colleagues are talking about, and it becomes productive to work together. This approach also delivers relevant sourcing knowledge into a single repository, where activities are easily tracked.
Anyone who sets strategy for a healthcare provider can see the value of using the same process and approach to source all products and purchased services, across the entire company. Standardization makes it much easier to evaluate and compare new products and purchased services, negotiate with suppliers, and spot discrepancies in sourcing. Capturing and repeating workflows improves risk mitigation and compliance. Standardization also keeps multidisciplinary teams focused and efficient, where each member of a team know his or her role. Each professional can focus on their best practices when onboarding a new product, and reinforce “the right way” rather than constantly adapt to different scenarios.
Without team collaboration, one sees the opposite of standardization: unpredictable or so-called rogue purchasing, as people operate in silos without perspective across vendors and contracts. When collaboration is supported by software and built into the critical path to onboarding new products, standardization lets the team learn and improve efficiency together.
Flexibility: Configurable, Consistent, and 100% Customizable to the Workflow
If leadership promotes a new system, there may be concern from the operational ranks about the adaptability of the software: “Our sourcing processes are unique. It will be expensive and time-consuming to customize any software.” If the new platform has outstanding flexibility, this converts the discussion to “How do we apply this flexibility to our unique structure?”
Virtually every software application is described by its marketers as flexible. That used to signify that a client-server application could be reprogrammed by expensive consultants. Today, in the age of cloud-based enterprise applications, flexibility is delivered via configurability (not through programming changes). IT expects that a power user or system admin (not a programmer!) can easily define specific operations and processes. SpendVu’s VMS was designed to make this quite straightforward.
In healthcare procurement, not everything should be flexible. You want the solution to be consistent in regards to:
- Capturing input from each discipline
- Requiring the participation of all the Big 3.
- Ensuring the team reviews, approves, and adds information according to policy.
- Keeping all sourcing information, company-wide, in a single repository to break down the walls and establish a lingua franca between departments and separate facilities.
Appropriate rigidity in the system ensures consistent application and participation, and makes it much faster to deploy and learn the system. The flexibility you will need to see: freedom for a process designer to apply the organization’s procurement policies to a series of approvals and reviews.
The Vision and the Pragmatic Reality
Multidisciplinary teams collaborating to find optimal products and build beneficial supplier relationships can have a major impact in lowering prices. Just as IT managers may seek a senior-level sponsor to help champion a new system acquisition, senior executives who want to advance this vision can recruit IT leaders to test-drive the software alternatives. Collaboration-focused procurement makes intuitive sense when you see it built into a software system.