Specific transactions include:

• Product and price updates (832)

• Purchase orders (850)

• Acknowledgements (855)

• Invoices (810)

• Advanced shipment notification (856)

• Functional acknowledgement (997)

• Electronic check remittance (820)

• Electronic sales summary reports (867)

It is true that e-commerce has been a work in evolution, but continues to show great promise. During the dot-com years, expectations got ahead of adoption, primarily because of the limitations in bandwidth, inability of legacy applications to integrate easily with new web services, the large cultural and training hurdle and the investment required to upgrade infrastructure at a time when Y2K was diverting resources and attention.

However, steady progress has been made on all these fronts. The technology has matured and become integrated within mainstream applications and operating systems, familiarity with the Internet is near universal and e-commerce has become woven into the fabric of business across industries.

Broadlane’s view has always been that technology is not deployed simply for marketing reasons, but to generate productivity and efficiency gains, and hence has been highly targeted and specific. Rather than fancy websites and auctions that no one uses, and a business model that hopes for transaction fees that create more barriers to adoption rather than incentives, Broadlane focuses on integration with industrial applications, real-time transactions and workflow automation that produce a direct payback in terms of cost savings.

Broadlane provides several distinct types of technology services: data management, e-commerce and electronic contract management. All are designed to help healthcare providers accelerate contract implementation, improve measurement of contract performance, increase transaction accuracy and support the ability to make better operational decisions. Clients who use Broadlane’s technology can order more than 70 percent of their supplies electronically, track the status of those transactions on line in real time, and get immediate alerts of the wrong price is paid. This ensures discipline procurement and high contract compliance and saves time and money on both ends.

Broadlane differentiates itself through our ability to:

• assume accountability for an organization’s supply chain expenses

• provide a portfolio of more than 575 contracts for goods, purchased services and capital equipment that are managed by a team of over 150 professionals

• deliver a comprehensive suite of business processes and supporting technology to manage supply and service costs from "requisition to check"

• deploy expert resources to implement these solutions

• provide services in a leveraged delivery model that can potentially result in a lower cost to the provider

We are unique in the healthcare industry in that we seek accountability for managing an organization’s supply chain expenses. We seek relationships with providers where we become an integral part of the management team and are held accountable for results. We’re also the only company in healthcare that can provide comprehensive supply chain management services via multiple, synergistic activities, including:

• contract negotiation (national and local)

• contract implementation and utilization management improvement via clinical implementation activities deployed to the client site

• "hard wiring" contract compliance and price verification via use of technology that monitors purchases from the purchase order to invoice reconciliation

• leadership of all facets of the supply chain expense reduction initiative with an established methodology and means to track and report results

A number of market competitors claim to provide the comprehensive suite of services described above. However, Broadlane has developed a compensation model that puts us at risk for achieving contractual results.

In addition, some organizations such as Broadlane also employ technology, which connects individual providers with a large number of suppliers and improves the efficiency and accuracy of purchasing, reducing cost to both sides. Providers benefit by eliminating price discrepancies and not overpaying, and suppliers reduce their cost of fulfilling purchase orders, reducing their sales and marketing costs and their days in sales outstanding (DSO.) These services are costly to provide, yet bring tremendous value to both sides, hence the justification for the admin fee.

There is an argument being made by manufacturers of some clinical preference items that their products are unique and they should not be forced to compete or pay admin fees, especially if they are in a position to successfully market directly to physicians and drive physician demand and product loyalty (which forces hospital administrators to pay retail prices). In this minority of cases, where the product category has truly unique choices, the solution is to contract for shorter periods, allow multi-vendor contracting, and most importantly, provide extensive information and decision support to clinicians to help them make informed choices and manage demand. In these cases, there is still benefit GPOs can provide, especially when the decision support they provide is combined with technology that streamlines the timeliness and accuracy of contracting, purchasing and utilization management.

The GPO Safe Harbor to the anti-kickback statute, which allows payment by the vendor for GPO services provided to the provider, does not compromise competition. It merely allows for an efficient, fully disclosed method to assess the value of, agree to, and pay for GPO services, while providing guidelines for ethical behavior.

Therefore, the admin fees paid by suppliers are justified for several reasons: 1) suppliers benefit by reduced sales and marketing costs, market share growth, and reduced cost of processing and fulfilling purchase orders (where the GPO provides connectivity and technology services), and 2) some providers do not have the financial resources to invest in specialized contracting services, and rather than have the admin fee passed through as a further reduction in the cost of the goods (which would probably be wishful thinking to obtain anyway), the fee is paid to a third party (GPO), who provides supply chain contracting services on their behalf.

Additionally, we are strong believers in actively using data to better manage business process activities. We provide advanced technology tools to accelerate savings by automating contract management processes and ensuring clients pay the right price by rigorously maintaining their item files.

Our capital equipment program provides access to the clinically preferred products that our client physicians and staff desire at some of the most aggressive discounts available in the nation – up to 10 percent savings. It also allows for a degree of customization of an equipment portfolio that makes it possible for clinicians to obtain the equipment they want at prices our clients can afford.

And since we know that pricing is a primary factor in determining which company can best assist healthcare organizations in achieving their cost management objectives, you will be interested to know that as a rule, when Broadlane has gone head to head with group purchasing organizations, our pricing has been superior. According to third party audits, prices available through Broadlane’s contract portfolio are consistently lower than those of traditional group purchasing organizations – often to the tune of 10-12 percent. We target non-supply-chain related expenses too, including labor management as well as other controllable expenses such as logistics and facilities management.

Having said that, in some cases it makes sense to custom contract, especially where an IDN has particular programs or expertise that allow special manufacturer relationships for selected items – some orthopedic devices, cardiac devices or imaging equipment, for example. However, even if these special circumstances exist, no IDN can cost-effectively support the contracting infrastructure needed for maintaining 800+ contracts necessary to cover the 200,000 – 300,000 SKUs typical of an IDN. Broadlane, for example, has more than 200 contract specialists and dozens of highly specialized attorneys with years of supply contracting expertise, which even the largest IDNs cannot replicate, without prohibitive cost.

In Broadlane’s view, a custom contracting approach is often justified to support unique IDN needs, such as special clinical programs, the existence of important regional manufacturers or minority businesses that must be included. Broadlane’s approach in these cases is to blend a national portfolio of contracts with custom contracts, optimally designed for the unique needs of the IDN. Broadlane then provides the support for identifying, executing and managing those custom contracts on behalf of the IDN, leveraging Broadlane’s contracting infrastructure, expertise and technology.

Let me share an example: There was a time when both Continuum (NY) Health Partners and Kaiser Permanente thought self-contracting was the best solution for lowering costs and gaining control of their procurement activities. That was before the years that both systems struggled against the complexities of their own internal organizations in an attempt to self-contract. Continuum even tried contracting with a large national group purchasing organization and then attempted to establish its own GPO. Both Continuum and Kaiser Permanente learned that it was simply impossible to manage the more than 500 complex agreements required for an IDN of that size, especially with a modest materials management staff. And in each case Broadlane performed an assessment that showed Continuum and Kaiser Permanente that instead of reaping cost savings from their self-contracting programs, their supply costs actually went up. That’s why they came to Broadlane.