Synchronization can expose rogue purchasing in the OR

by Krista Fuller

Several factors compound this challenge. Today’s scalpel-thin margins, rollercoaster raw material prices and a growing number of uninsured patients are putting unprecedented pressure on the balance sheet. Add to that the fact that the current healthcare financial model is based on managing the high-volume, low-cost goods – those typically managed in the item master – and low-volume, more expensive medical goods, such as implantable cardioverter defibrillators (ICDs), pacemakers, and artificial hips and knees are some of the most under-managed products in the hospital.

Lack of transparency adds to the challenge. In many cases prices are not available, making value analysis and benchmarking impossible. In addition, ORs manage purchasing decisions and activities by a specific set of rules and procedures. Instead of managing to contracts at the purchase-order level, many ORs set up vendors on blanket POs, making it difficult to track spending by product, product line or across general ledger codes.

A more effective way to manage costs across goods and services with widely varying price tags is to adopt a synchronized supply chain. In the synchronized supply chain, data management best practices that apply to inventoried items can also apply in the OR – assuming the right content management tools are supporting the effort.

The synchronized supply chain starts by applying best practices from the purchasing and supply chain teams to what is happening behind the closed doors of the OR. Key opportunities include:

• Shift the focus from limiting access to products to ensuring the right price for any product used. Current so-called best practices often focus on limiting the number of items available. With a content management solution in place, the healthcare organization can make virtually all of the items available to the physician so they can be ordered on contract when needed.

• Eliminate blanket POs. The detailed data needed to make informed decisions is missing with today’s processes. Using a content management tool will allow clinicians to choose from a number of contracted goods and services, tying each order to a unique line item and giving the supply chain group detailed spend data. This provides spend visibility that will help the supply chain team map pricing in support of value analysis.

• Source key vendors directly to secure the best prices. Since PPI goods are not commodities, hospitals achieve significant savings by working directly with the vendor to source important large-dollar goods and services. The ability to impact the vendor’s market share gives the hospital an advantage in negotiating a preferred price.

A content management system makes contracts from various sources and vendors available in a single repository. This empowers users to search for all goods or services across all suppliers, while the hospital builds in control by prioritizing the contracts and suppliers that the user can access. It is a natural solution for managing the purchase of commoditized items that hospitals use in high volumes every day.

But this same content management system can be used to provide controls and visibility into the supply base of the hospital’s most expensive purchases, too.

Surgical packs save significant time for hospital personnel by eliminating the time-consuming task of picking individual items from storeroom shelves. Hospitals typically spend millions on them in a year and purchase them through blanket POs. But that blanket PO obscures important details, like unit prices and annual volume.

A content management system lets the user "punch out" to the supplier ordering website of a preferred provider and select the contracted surgical pack. The shopping cart is then automatically returned to the hospital’s ERP system for PO completion. The result is not only a fast and easy way to purchase an item at the contracted price, but it also provides data. The healthcare organization will now have detailed information about the number of surgical packs ordered annually and can use this to negotiate a better price with that supplier.

A synchronized supply chain driven by an integrated content management system can enable significant benefits across the organization, starting from the depths of procurement and stretching all the way to the physicians in the OR:

• Spend data can be used to track usage and actual product preference

• Data analysis can uncover opportunities for new contracts or preferred vendor relationships

• Support for the value analysis team’s efforts toward standardization using price and clinical outcomes can be provided

• Physician preference for key vendors can be supported – while at the same time creating controls to reduce costs.

The ongoing economic uncertainties in today’s healthcare environment dictate that it’s time to banish ghost supply chains. The good news is that with the right processes and content management technology, hospitals can achieve spend transparency and still accommodate physician preference – even in the OR.