Open and shut case:
Debating the pros and cons of automated supply storage systems
by Rick Dana Barlow

Maybe you’ve faced this scenario or you’re facing it right now. Maybe it’s you. Someone either fresh from college or graduate school or someone from the procurement world outside of healthcare decides to join the hospital materials management ranks. Armed with either textbook knowledge or non-healthcare industry experience, this person must hit the ground running in the hospital because the facility seems to be in perpetual crisis mode (along with that perpetual inventory program).

Healthcare Purchasing News Senior Editor Rick Dana Barlow questioned some of the thought-leaders and key executives in the field for what sage advice they as seasoned professionals would give this person to help him or her make a good impression and achieve some winning results right out of the gate.

We asked that each go beyond the obvious and focus on individual professional practice, We sought the kind of wisdom (that only comes with experience) that each wishes he or she had when they launched their careers, along with the key fiscal and operational qualms and quirks of the job that hospital materials managers tend to overlook (e.g., relationships with colleagues, customers, GPOs, vendors).

 Some of what they had to say might be new revelations; others might be useful reminders. Either way, we’ve collected more than 100 helpful hints and useful tips from experienced and knowledgeable industry sources you won’t find anywhere else.

• Listen to and involve the caregiver/end user before, during and after the contract negotiation process.

You must recognize that you are not in [clinical] operations and therefore must understand their challenges, needs and objectives if you are to be successful in your contracting role. A lot of people think contract "compliance" comes from a top down, forced approach. True compliance is only achieved when the caregiver believes you are contracting for products and services that are right for the patient and meet the needs of [clinical] operations.

• Surround yourself with great people who have common, cultural values. From my experience, the best people are service-oriented, team players who love to work with other people in achieving organizational goals and objectives. Also, organizational improvement is more easily attained when you have people who have an innovative spirit; people who are always striving to do things better versus trying to maintain the status quo. Finally, most managers look to hire the most technically competent people. While technical competence is vitally important, it is only a starting point. Surround yourself with technically competent people who practice the Golden Rule, treat others the way you would want to be treated.

• Realize that vendor and provider objectives are not aligned. Vendors will throw the word "partner" at you a lot in your new role. Understand early on that real partnerships, where objectives and interests are totally aligned and mutually beneficial, are not possible in a vendor/customer relationship. For example, the provider wants to lower their costs (purchase less) and the vendor wants to increase their revenue (sell more). Having said that, positive vendor relationships are critical to your success. Therefore, it is very important to understand where objectives are not aligned, accept it and find ways to negotiate/mitigate the negative impact. The only successful contracts and relationships for the long run create wins for both the vendor and the customer.

• Establish a standard process to follow for all contracting projects. At HealthTrust Purchasing Group, we follow a standard process that includes:

– Involving the care giver/end user in all phases of the project. The rational is discussed above. 

– Ensuring all contracts receive appropriate legal due diligence. This includes not only the traditional legal role of defining and protecting you and your customers rights but also ensures compliance with all governmental rules and regulations.

– Ensuring all contacts receive appropriate financial due diligence. Financial processes include validation of financial projections, savings calculations and assumptions as well as contractual financial terms such as payment terms, freight, inventory, etc.

• Based on my experience, contracting personnel like to handle all phases of a contracting process. You should recognize and value the diversity of technical experience (eg., clinical, legal, financial, etc.) needed to complete a project that is financially and operationally successful in the eyes of your customer. You don’t have to be an expert in all technical areas. You must follow a standard process and involve appropriate technical expertise when needed.

• Having and controlling the information is critical. If you are primarily relying on the information that others provide you to make decisions, then you are probably making decisions in the best interest of those who gave you the information. At HealthTrust, we have made significant investments in standardizing our systems, product and vendor numbering methodology and our underlying databases. This investment has provided the highest ROI possible for our members. For example, this information provides critical intelligence to ensure new contracts provide the best pricing for all our membership, to understand current and projected volumes, which is the basis of price negotiation and to understand HPG vendor market share data versus national or vendor provided data.

• Within your first month on the job, spend one full day performing each of your department’s functions. That means one day transporting patients, one day picking and distributing floor stock, one day receiving and delivering non-stock orders, one day filling the storeroom shelves, one day EDI’ing orders and creating requisition templates, one day wrapping and delivering packs, etc. You’ll get to know your staff, they’ll respect you more, you’ll gain insight into their day-to-day concerns and maybe come up with helpful solutions to be implemented right away.

• Make it a habit to meet weekly with your boss for a minimum of 90 minutes – no excuses. Have a formal agenda, with documented cost savings and other facts at hand. This face-to-face prevents a lot of surprises at your annual review time.

• If you’ve got a Value Analysis Team that seems "stuck in neutral" (Same agenda items month after month, no documented cost savings, non-productive lunch meetings, lackluster attendance, no cath lab or O.R. products reviewed, minimal administrative support, etc.), it’s time to kill the committee and take some time to restructure/reorganize the process for success.

• Get in early and meet the director of surgery daily for coffee. It’s always good to know what’s on the mind of your largest customer. You’ll also want to keep them in your back pocket if you need an ally. It’s good to know what small fires you can extinguish before they turn into out-of-control blazes.

• EDI to every vendor who has the capability and take every "early pay" discount when offered.

• Don’t do stupid things – you know what they are, and you know better.

• Push your GPO to do some free analysis work for you.

• Communicate your department’s successes, communicate your five-year M/M Project Plan to everybody whom it impacts, communicate via monthly staff meetings, communicate via a M/M Newsletter, communicate.

• Benchmark your operations against itself; place charts for all staff to see how they’re doing.

• Meet with peers at local hospitals to see how you can help each other (benchmarking, "emergency" supplies, backup stock, common supplier problems, "economies of scale" purchasing, similar capital purchases, shared educational initiatives, etc.).

• Start with small wins to build credibility and momentum, prior to taking on bigger, more risky endeavors. Do what you say you are going to do and don’t make promise you can’t keep. 

• Trusting one source of information can be suicidal. Reliable data and information is hard to come by, but essential if you are going to be successful. Let sales representatives do the analytical work to prove their point, but never trust the results until you have validated all of their assumptions and calculations. Be aware of all of the supplies and/or services that will be impacted by any change you are considering. Always consider the impacted contracts, their contract terms, and your options of how and when you can get out and what the penalty for doing so is. Finally, always involve the stakeholders in your decision process.

• GPO contracts are a great place to start, but don’t stop there. Negotiate improved tier levels/discounts or local contracts where you have superior leverage and an opportunity to achieve significant savings over what the GPO contracts offer.

• Never underestimate how much leverage you may have to negotiate the best deal possible. Know the facts, your numbers, benchmarks and competitive offers. Use your physicians, managers and administration at the negotiations table. Some of the best pricing and terms have been negotiated by small, standalone hospitals. You will never have as much leverage as you do prior to awarding a contract to a vendor. Use it to your advantage to get all you can.

• Balance the value generated with the effort exerted. Unfortunately, you will never have as much time as you would like to analyze, evaluate and gain consensus prior to making a decision. Spending your valuable time on a low-value opportunity is not worth the effort. However, investments in effort to generate high-value results will make you a hero. 

• What we do is not very complicated. It is just applying common sense to getting supplies and services to where they need to be, when they are needed, at prices that are competitively generated.

• Build your professional network. You’ll need it for advice, fellowship and probably your next job.

• If an individual is just starting in a new position he/she may want to begin with a GPO relationship. Self-contracting may be an ultimate goal for the department depending on the size and location of the hospital. I think in contracting there are times an organization can negotiate more aggressive pricing by self -contracting. This is especially true if the organization is large and holds the majority of beds available in their location. Self-contracting takes time, so I would start off with the GPO relationship maximization in order to receive discount pricing before I begin a self-contracting program, using the 80/20 theory. This is assuming the hospital politics have been considered. It’s always best to start with a project that will lend to the credibility of what you are trying to accomplish.

• Most important in life as well as business be honest, fair and trustworthy. There is nothing that will kill your ability for success than a reputation of less.

Some of the additional points I learned along the way are:

• Know your current contractual situation, study the current contract and know all the issues

• Know your benchmark pricing and where you want to go

• Know your usage and volumes prior to entering negotiations

• Get your clinical end users involved and educate them on the role they are to play

• Know your objectives and financial goals prior to negotiations

• Work collaborative approaching from a win-win position

• Meet with the vendors as a team with a well defined negotiation strategy prepared

• Consider leverage points before you meet with the vendor; know what you are willing to give up and what you will not compromise on

• Know your data/business volumes and any potential changes in volumes

• Lastly, never forget that your job is to take care of the hospital’s needs, and the vendor’s job is to take care of his company’s needs. They may be very nice people and you might begin to think of them as friends, but we all have a job to do!

As they say…you only get what you negotiate. 

• Treat everyone you deal with, including suppliers, as a potential future employer. The etiquette will pay off in your day to day dealings. And this is a remarkably small industry. You never know if the person you’re negotiating with today is someone you may be reporting to tomorrow. 

• When conducting negotiations, remember it’s business and not personal.

• Know your goals and objectives before starting your negotiations. Try to understand what are the goals and objectives of the person with whom you’re negotiating. Then work for an outcome where both parties walk away satisfied with the deal.

• When negotiating don’t be afraid of the silence. Give the guy on the other side time to think and respond. Use the "silence pause" to your advantage. And, when the deal is done, "shut up" and move on. Don’t continue to negotiate or squeeze after you’ve reached an agreement.

• The term "contract management strategies" has a nice ring to it but there is a huge difference between tactically wanting lower prices and strategically knowing how to actually get them. Contract management tactics are all around us. We find out someone has a lower price and we want it, too. Or our CEO says we have to save money on supplies so we dutifully call in our reps and give them the speech about how they had better shape up. (Of course, they have heard it all before and are not nearly as impressed as we hoped they would be. Maybe we should speak louder.) Tactics don’t really accomplish much, although they do convince our reps that we really don’t have a plan even if we say we do.

• A strategy, on the other hand, has definable goals (a result of market research and economic modeling) and a real plan with steps. Tacticians demand a lower price. Strategists use leverage to obtain a specific price. Tacticians don’t think about what they have to offer to the supplier on whom they are making demands. Strategists know what they will offer to get the exact price they want. From a sales standpoint it is easier to deal with a strategist because they will tell you what they want whereas tacticians often leave the seller guessing. Sellers don’t like guessing so they are certainly not going to go out of their way to offer a better deal because there is little incentive for them to do so.

• A comprehensive contract management strategy should account for how each of the three product areas is approached. A good strategy won’t waste too much time on sole source products because there is normally little one can do to improve the pricing. A good strategy will place the most resources initially on physician preference items because if the hospital’s personality is open to purchasing commitments a great deal of money can be saved. The last area, commodities, is often best left in the hands of the GPO, at least until the physician preference area is under control. Then some exploration of opportunities is advisable. Relying on a GPO may be the obvious choice but over-reliance on a GPO can produce undesirable outcomes. The tactician will dutifully follow the directives of his GPO even if the results are not all that spectacular. The strategist will manage his GPO relationship to maximize the results.

With my retirement from the healthcare industry on the near horizon, this is an interesting opportunity to look back over 40 years and impart words of wisdom to those entering the healthcare materials management field.

• First, you will need to embrace a broad view of the purchasing function. The financial and clinical impact of the materials management role in a hospital is significant and touches every department and executive office. This role is no longer about just purchasing supplies; it is managing the supply chain from purchase and utilization to charging and reimbursement.

• Materials management is a people-oriented role – you will interact and need to understand many job functions, from environmental services personnel to physicians, from executives to vendors. You will come into contact with many strong personalities with a personal interest in product choices. Remember that your role is to provide cost-effective and clinically appropriate supplies; you must maintain good relationships while standing firm for what is best for your hospital’s financial welfare. You cannot please everyone; and if you try, you will end up pleasing no one. Managing relationships is an art, and you should devote significant time developing this skill.

• As hospital margins decrease, executives are examining all cost drivers. The supply chain is becoming the last frontier for cost savings as it is the second largest financial driver behind labor costs. Most hospitals have cut personnel costs as much as possible, moving the supply chain to an area of greater visibility and influence. Many practices that were acceptable in the past will no longer be tolerated, so you must not be tied to past practices and need to be ready to face scrutiny and visibility in the front office. You will need to exhibit initiative in finding ways to make improvements and reduce costs. Your role directly affects the bottom line.

• While your position is business-focused, you will need to familiarize yourself with clinical applications for the supplies you purchase. By understanding how a product is used, you can offer suggestions and find new alternatives when circumstances call for it.

• Dealing with government agencies is one aspect of the role that can be tedious, and the landscape is getting more complex. You must learn your craft and the associated legal requirements very quickly. You will be responsible for meeting requirements of the FDA, Department of Health and Human Services, EPA, OSHA, National Fire Protection Agency and others.

• You will be managing the vendor interface for your hospital and the buying process in the midst of these interactions. Supplier representatives have financial goals and extensive training in how to meet these goals. You must be familiar with your hospital’s financial goals and willing to negotiate what is best for your organization. It is also important to be respectful of vendors and treat them fairly. Many vendors have close ties with physicians and hospital executives, and the person who treats a vendor unfairly may find themselves looking elsewhere for a job.

• Supply chain management is becoming more technology-driven. As a young professional entering in the workforce, you probably have knowledge of technology that will be very useful to your organization in taking full advantage of the data and capabilities of current technology. Boldly use your knowledge to make a positive change in your hospital.

• Create a strategic sourcing plan first. Examine areas of spend and consumption. Evaluate the difficulty of making changes, and create a timetable and plan for each major product category.

• Work with administration to identify the value of product evaluations. Communicate why you are taking a look at these categories.

• Determine with administration if some of the value of a product switch can be shared with the departments who are actually making the change.

• Involve physicians and clinicians in the product evaluation process. Treat all clinicians as part of the team. Ask for cooperation and confidentiality. Be impartial.

• Describe the benefits of evaluating a product category for the evaluation team. Perform the analysis yourself. Do not rely on supplier analysis or presentations.

• Do your homework. Examine the how and why of a current product’s utilization in your facility. Know the "political" environment. Does the current supplier pay any of your physicians as consultants?

• Engage the team in the contract negotiation process. There is no one better to debunk sales tactics than the actual user(s) of the product. Determine in advance who will participate, how they will participate, and insure that they support your facility’s position.

• Anticipate counter-detailing by the incumbent supplier. Have answers ready to communicate to all product users. You’re your own "counter-detailing" materials ready to deploy. Insure that suppliers are aware of your vendor control policy that limits sales access to the departments in your facility without materials management approval. Enforce the policy.

• Create a written set of guidelines for product evaluation that are agreed to by the team before the evaluations start.

• Document everything in writing.

• Once negotiations start, keep a written record of the offers made by both sides. Use this as the basis for writing the agreement, and refer back to it to insure that everything that has been agreed to gets in the final contract.

• As yourself whether your GPO contract can be utilized. You may be able to save a few more cents by doing your own agreement, but will that value be lost in the increased cost of negotiating and writing your own deal?

• Have a written set of supplier expectations that have been approved by administration.

• Put everything, absolutely everything, in writing when you negotiate the contract. Insure that there are no ambiguities that will be hard to understand three years from now.

• Communicate your successes. Communicate in the words of the participants.

• Be honest about failures, and determine why the evaluation failed, so you do not repeat the mistake. Look at them as an opportunity to learn.

• Don’t let a failure stop you from trying again. You will never advance unless you try again.

• You may never save real money unless you demonstrate that you are willing to change brands from time-to-time. No one likes to change products — but it strengthens your negotiating leverage if you demonstrate that you are serious about making a change if necessary.

– John Strong, president and CEO, Consorta Inc., Schaumburg, IL

• Always get input from the end users and always let them know what you are doing. For a person in this position to build credibility with the end users of the product the supply chain department is managing he/she must build trust and credibility with those end users. This can only be done through strong interaction with those departments and all supply selection issues.

• GPO or no GPO, all supply chain personnel involved in product acquisition and management must work very closely with the manufacturers representatives. These reps have more product knowledge and information on what their companies can and cannot do than we will ever have. Get to know them. Stay close to them and learn.

• Know your systems finances. Spend time with your finance department and learn how the decisions you make in supply chain will impact on the budgets and the general ledger of the departments you work with. Know how to read and interpret the hospital’s financials. It’s a very powerful tool.

• Always document and communicate your successes to senior administration and give credit to the departments you work with. You don’t need to take the credit for your success to get the credit.

• Surround your self with winners. You cannot afford to have people working with you that are not totally committed to the success of your department, your healthcare system, and the community you serve. Hire winners, train them well and reward them and you will all win.

• Data integrity: In order to make any contract decisions the data being analyzed must be accurate and valid. Too many times contract negotiations commence with inaccurate baseline of data. This leads to making an uneducated decision regarding contracts implementation. All materials managers need to ensure that data is being captured correctly and consistently in their MMIS in order to ensure educated decision making when it comes to contract options.

• Physician and clinician relationships: Materials managers need to have good relationships with both physicians and clinicians. Materials managers need to interact and build credible relationships with physicians and clinicians and provide advice when it comes to contract implementations along with repercussions (good and bad) for certain contracting decisions.

• GPO tier maximization: A close eye needs to be kept on tier allocation for GPO contract purchases. Especially in multi-hospital systems, individual facilities are at separate tiers on GPO contracts. Acting like a single buying entity/ an IDN for these contracts can drive tremendous value provided all hospitals volume is accounted for and the correct tier price is assigned to all facilities. 

• It is critical to have all the team players well prepared regarding strategy, roles, data and information, deal breakers, etc., before engaging the supplier in any contract renewal process and negotiation. Also, to Atul’s point, there are data/info sources for prices paid by organizations across the country that are a great reference source, in addition to the GPO’s, that can help determine if contract offerings are truly competitive.

• Finally, for some high-tech, "clinical" products or devices, research the actual manufacturer to determine who makes it, who else makes it, are the production specs any different, or any better? Are the production specs and quality for this item, used in a hospital setting, any different from those manufactured for the consumer market, and, therefore, worth any cost differential?

– Jamie C. Kowalski, vice president, McKesson Provider Technologies, McKesson Corp., San Francisco HPN

• Physician and clinician relationships (part II) – Knowledge sharing: Materials managers must utilize their relationships with the physicians to share pricing information on high-dollar physician preference products. Oftentimes, physicians have no idea of the price of the products they utilize. Once advised about the price differential between two products that will provide similar outcomes for their patients, physicians are more likely to utilize the cost effective product as long as quality of care is not jeopardized.HPN

• Gateway pricing and an open vendor policy: Standardization is not always the most valuable option when negotiating a contract. Many facilities have realized cost savings by negotiating sole source agreements for many physician preference products (orthopedic total joints, spinal implants, drug eluting stents, etc.). While this can be cost effective in the short term (years one and two of the relationship), in the long run, standardization can actually lead to higher cost and lower quality of care. Standardization can limit physicians’ and patients’ access to new technology, which can ultimately decrease the quality of care provided by the hospital. Additionally, standardization increases the dependence on a particular vendor that will negatively affect the leverage of the hospital when the time comes to re-negotiate the contract, unless the hospital is willing to change vendors every time a contract is expiring and actually does that if one vendor presents a lower total cost deal. Implementation of an "open vendor policy" with "gateway pricing" (one price for a particular product regardless of vendor) provides the physicians and patients access to all vendors’ technology at a fair, level price, with no volume commitments to adhere to. Healthy competition is created between the vendors, and since the hospital is paying the same price for a product regardless of the vendor, the quality of the product will drive utilization, rather than volume commitment clauses.

• Price up front and rebate tracking: Rebates should only be utilized as a last resort to achieve savings targets. It is far too commonplace for a materials department to receive a rebate check and accept it at face value. The tools to validate the volume purchased and rebate accuracy are not readily available. Hidden costs are also associated with rebates in the form of hours utilized to try to validate the rebate, allocate the rebate to the appropriate cost center, etc. When a rebate program is agreed to, it is important to closely track the utilization of the product to which the rebate is tied in order to determine that the amount of the rebate is correct. When at all possible, materials managers must ask for "(net) price up front" from all vendors. If a vendor is pushing for a rebate instead of discounted pricing, all they are really trying to do is get the hospital to agree to a hidden volume commitment clause (i.e., the price will decrease if you purchase more).

• It is critical to have all the team players well prepared regarding strategy, roles, data and information, deal breakers, etc., before engaging the supplier in any contract renewal process and negotiation. Also, to Atul’s point, there are data/info sources for prices paid by organizations across the country that are a great reference source, in addition to the GPO’s, that can help determine if contract offerings are truly competitive.

• Finally, for some high-tech, "clinical" products or devices, research the actual manufacturer to determine who makes it, who else makes it, are the production specs any different, or any better? Are the production specs and quality for this item, used in a hospital setting, any different from those manufactured for the consumer market, and, therefore, worth any cost differential?

• In the words of Sgt. Joe Friday… "Just the Facts." Always focus on the facts of a situation or circumstance. Stay away from relying on innuendo, hearsay and opinion. Access to quality information and the skills to interrogate the data are essential. If you don’t have them, find someone who does and can support you or learn.    

• Think big and act small. Consider the broader ramifications of any agreement and get specific input from affected stakeholders to detail the buy. Your stakeholders will make you or break you. Make sure they are with you through out the sourcing process.   

• Get to market. The deals you do directly impact the cost of care and can impact the quality of care for the patients that enter your healthcare system. Use your stakeholders to detail the buy and your ability to commit, engage the suppliers in a fair and transparent competition, and then award the business to the supplier that demonstrates best value for your specific buy. As the supply community works to differentiate their offerings…see the first two tips.

• There is more to cost than price. Always consider the total cost of ownership and your organizations cost to serve/be served. Annotate the intangibles, calculate the tangibles. Also, consider the cost to negotiate the deal. Prioritize your activities to ensure you are delivering the best return on your organizations investment in you.  

• Network. Tap the experiences of your peers and share your experiences freely. Leverage learning from industry publications and studies. Constantly challenge your skill set and expertise.

• Learn the culture, both of the healthcare environment, as well as your own organization. Decisions made in healthcare are often influenced/based upon how, and for what, payers reimburse providers, and do not necessarily always seem to follow what might make the most sense. In addition, since physicians rule the roost and control the use/deployment of resources it is critical to understand what they want/need, and more importantly, how to best support those efforts in as cost-effective manner as possible. What was learned in either school or industry about running the numbers, making decisions and providing services must be tempered with the political and cultural realities of an industry that produces a "product or service" that is difficult to define and measure yet which is extremely personal to everybody in the country.

• Learn the three ways to play catch, and how/when each is appropriate. You can’t stop somebody from "throwing the ball at you" (e.g., writing that nasty memo or calling and complaining to your boss), but you certainly can decide whether your response will be to: 1) Catch it (respond to the issue and thereby give it credence). 2) Stand there and let it fall to the ground without any action on your part (no response, your complaint is not worthy of any action). 3) Not only catch it, but turn around and throw it back to the person who threw it to you (fire back a memo, giving your perspective on the issue, letting the other person know you do not take such complaints lightly). The best response may be any one of the three, depending upon the nature of the complaint, its legitimacy and the political/organizational status of the person complaining. Learning how and when to play catch can be key to influencing how others see you and ultimately respond to you.      

• Learn to market your successes in an appropriate way. The mistakes and "failures" you might have along the way will no doubt get noticed. Make sure your successes are remembered and receive appropriate notice as well through a semi-annual "report card" to your boss. Formally documenting and summarizing your activities, along with plans for the future, can be an effective way of communicating many of those successes that may not reach high on the radar screen but are nonetheless indicative of good work on the part of your department. 

• Talk to and visit with your customers. You can’t possibly have a real picture of how effective you and your department are if you never ask. Make it a regular, planned part of your week to get out of the office and go say "hi" to the nurses on the unit, the chief tech in the lab and radiology, the director of the O.R., the A/P manager, etc. Most people are happy to have a chance to share their perspectives, and in addition by getting to know you personally (and that you care about how well your department is meeting their needs) will become more willing to "cut you some slack" when that inevitable problem does arise.  

• Be a good customer to your vendors so you can ask more of them in return. Understand that your vendors may have legitimate business concerns that you might help influence (e.g., systems out of sync and creating discrepancies, payment for large orders being held up because one of the 120 lines needs resolution, repetitive processing errors at the hospital causing problem POs, etc.). A willingness on your part to help resolve these issues (and ultimately getting the vendor paid) can put you in good stead when you need more from your major vendors (such as changes in delivery schedules that will benefit the hospital but inconvenience the vendor, better fill rate management on their part, willingness to help out in a critical backorder situation for an item you don’t normally buy from them). A good business partnership means that both parties try to understand the other’s needs as well as how the two organizations’ business activities can impact each other, both positively and negatively. 

• Get to know your customers. If you want to be an effective contract manager in healthcare, there is no more important aspect to your job than getting your customers on your side. Yes, negotiation skills are important. So are good contract formation and an understanding of purchasing law. But without the active cooperation and support of your internal customers, you can not ultimately be successful.

In my opinion, the relationship between suppliers and purchasing is different in healthcare than in most other industries. Suppliers are much closer to the end-user. In some cases (like most physicians) the end-user is not even part of the organization. Add to that the "patient care" aspect and you have a situation where purchasing may have little true authority. One solution to this dilemma is to develop influence. And there is no better way to develop influence than to get to know your customers on a personal and professional level. This rapport will help you to understand their needs and allow you to demonstrate how to work together to meet them.

• Get out of your office. There are few better ways to get to know your customers than to meet with them in their work environment. No only does it show your willingness to meet them more than half way, but you also get to see some of what they do. This might even include observing a procedure in the O.R. or cath lab.

• Learn the lingo/products. Another corollary to knowing your customers is being able to speak to them in their specialized language. Often learning the healthcare language will help you to understand the products and services you are helping to procure. Don’t be afraid to ask what something means. Most customers will see this as a positive indicator that you care. But supplement questions with some research on your own. Tapping into your supplier representative is a great way to learn more.

• Make the GPO work for you. While group purchasing organizations can help to contain costs, too many members are complacent in the way they use the services. You are a customer of the GPO and should act that way. If the GPO is not meeting your needs, let them know. When pushed, many GPOs can get creative. You should use as many of your GPO contracts as you can – consistent with your organization needs and the quality of the contracts. You should not blindly use every GPO contract available.

• Think total cost. It is easy to get caught up in the unit price trap. Getting a lower unit cost can result in savings. It can also result in a cost increase depending on how it affects other costs. Sometimes paying more for one item can lower costs in another way. But be prepared to sell it to your customer. Remember that they are responsible for their own budgets. Lower total cost can sometimes mean a higher cost for one department. Having a great relationship with your customers can make it easier to sell the total cost concept.

• Always be honest with sales reps. Your office needs to the one place they know they will hear the truth. How many times has a representative told you that nursing personnel love their product, and you find out later that is not true? Most people will tell the rep what they think the rep wants to hear. You have to be strong enough to be the bearer of bad tidings.

• Unless you have a strong clinical background, don’t spend much time being detailed on the clinical aspects of a product. Use your facilitating skills to bring the appropriate parties to the table. Get the clinical people to hear the sales pitch. Try to get the clinical people to stay away from pricing discussions. 

• Never publicly take the side of a sales rep over a hospital co-worker, even if the rep is right.

• If you don’t need it, it isn’t a bargain at any price.

• Being "personal friends" with physicians and sales representatives is not a good thing. Your objectivity will be questioned as may your ethics.

• Always look at the medical staff as the hospital’s partner – not the enemy. Get to know them and make them your partner in decisions.

• Physicians are educable so always have facts to back up what you say. And check the reliability of your facts – are they facts or opinions or what some salesperson told you?

• Just because you are busy, don’t think you are accomplishing something. Have the departments that you serve rate you on how you and your department are accomplishing your job and eliminating problems for them.

• Do every job right the first time. Healthcare does not need "do-overs."

• Everyone who works in the institution – be it hospital, nursing home, ambulatory surgery center, etc., needs to constantly remind themselves that the job is not done until the patient is satisfied. Said another way "Is this the way I would want to be treated?"

• The first thing that strikes me is something that one of my first supervisors told me in one of my early materials management roles. His name is Don Edmundson. He said, "If I call and most of the time you are in your office, we have a problem. He said that what you need to do is get one of those coffee travel mugs and every morning walk the floors and talk to your customers. Really talk to them and pay attention to what they are saying and how they are saying it."

• My advice to someone coming from outside the industry would be to use your "ignorance" to your advantage. Ask people to teach you about what they are doing and what they need to get it done. Ask lots and lots of questions and then use those to develop a dialogue with those individuals around possible solutions. As a rule, people love to teach and in teaching they lower their guard and their resistance to new ideas and new ways of looking at problems. Starting this way, I think that your customers will be more open and also much more forgiving when problems occur.