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GPOs – Valued Partners in Healthcare
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The healthcare group purchasing organization (GPO) members of HSCA work closely with their provider partners across the continuum of care to reduce cost, add value, and improve outcomes for patients. Below you'll find some narratives that help to demonstrate why GPOs are valued partners in healthcare.

 

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Intalere Member Summit Pacific Medical Center Gets Strategic About Supply Chain, Bringing Big Savings and Process Improvements

Posted By HSCA, Wednesday, August 23, 2017

THE CHALLENGE

Summit Pacific Medical Center (SPMC) in northwest Washington, like many
other critical access hospitals, is continually faced with challenges including
keeping supply costs down, competitively negotiating with local vendors when
access and availability are limited, and creatively collaborating with strategic
partners to help achieve a better bottom line. Growing and moving from a
small 10,000 sq. ft. facility, to a newly constructed 45,000 sq. ft. building, SPMC
realized they needed an entirely new approach to supply chain and the process
in which they engaged with vendors. “We were still functioning with outdated
purchasing methods with department managers essentially making decisions
in silos for product changes, capital equipment and services contracts,” said
Carrie Wetzel, purchasing manager, SPMC. “This approach left little room for
further negotiations or to ensure Intalere’s group purchasing organization
(GPO) contracts were utilized. We needed to make sure we maximized that
partnership, in addition to engaging staff and working with our rural hospital
neighbors.”

THE SOLUTION

The SPMC team realized they needed to change the purchasing culture
throughout the organization. Tactically, this meant things like centralized
purchasing, implementing just-in-time (JIT) inventory management and
empowering managers to work directly with Intalere field experts, as well as
networking with their rural hospital colleagues. To ensure this was not only
achievable, but also supported at the leadership level, they included the work
required to improve purchasing workflows and methodology into their annual
strategic plan. This helped to ensure buy-in and support from the board and
leadership level all the way through to front-line staff. In all, there were
22 tactical measures surrounding purchasing processes and collaboration
added to the plan.

The objectives were strategically vetted by SPMC’s management team and
included:

• Implementation of an inventory/stocking plan.
• Training for all management staff on Intalere services and solutions.
• Utilization of your Intalere contract management resources.
• Implementation of an electronic ordering system.
• Completion of quarterly formulary reviews with department managers.
• Creation of a purchasing manager group for the Washington Rural
Health Collaborative (WRHC), a network of 13 critical access hospitals,
predominantly serving the rural areas of Washington State.

 

“Utilization of strategic planning software gave us the tools to add specific
measurable tactics, along with timelines, to ensure we could achieve each
objective chosen,” said Wetzel. “Another vital resource was the support team from
Intalere that took an ‘all hands on deck’ approach to the goals we set to achieve
during the year. From IT support, to on-site education and meetings, their support
was a vital and necessary component for us to succeed.”

THE OUTCOME

SPMC’s internal processes changed to include centralized purchasing workflows,
Intalere contract utilization and review as a required step, and quarterly Intalere
on-site meetings with department managers.

“A savings worksheet was created to help us track the savings our management
team was able to achieve by using the tools and workflows resulting from this
change,” said Wetzel. The worksheet highlighted significant annual savings of:

• 49 percent in facility service contracts.
• 38 percent in lab reagent agreements.
• 12 percent in lab equipment purchases.
• 10-15 percent on IT purchases (through utilization of an Intalere contracted
vendor for IT smallwares and licensing).

In addition, implementing the JIT stocking plan at three offsite clinics allowed
for the reallocation of several thousand dollars in supplies to other areas of the
hospital. “Our process improvements have had amazing effects throughout the
organization, providing much needed efficiencies, and staff availability of supplies
for patient care in a systematic and trusted way,” said Wetzel. “Due to our strategic
plan incorporation. We have a great platform to share these successes with the
community we serve in our ongoing efforts to provide cost effective, quality
healthcare.”

The purchasing managers group of the Washington Rural Health Collaborative
(WRHC) also presented an excellent opportunity to work together to create
solutions surrounding GPO involvement, as well as a platform for presenting
joint contracting opportunities to the WRHC board. Recognizing several Intalere
partners and a fairly high percentage of vendor matches among the collaborative
members, the purchasing managers group reached out to Intalere to explore the
option of creating an Intalere purchasing umbrella within the collaborative for
the members to aggregate volume. Intalere memberships for the WRHC and the
seven participating facilities were established. The WRHC group’s first joint savings
roadmap was subsequently completed, highlighting 52 percent annualized savings
opportunities.

Intalere’s flexibility and willingness to work on developing tailored solutions was
also instrumental to this part of the process as well. “Without their assistance and
access to industry experts we would have not been able to achieve our goals in the
timeframes set by our team,” said Wetzel. “Their representation was phenomenal. It
allowed our financial leaders to ask crucial questions regarding facility savings and
how to navigate the data presented.”

Tags:  Intalere  Savings  Washington 

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Seattle Children’s Achieves $965,000 in Additional Realized Value

Posted By HSCA, Friday, October 16, 2015
Updated: Friday, November 27, 2015

CHALLENGE

Seattle Children’s wanted to improve its supply pricing and benchmarking, as well as obtain leverage to improve vendor negotiations, when it signed up for Vizient's Predict|Price Performance solution in August 2013. And while Dan Salmonsen, Seattle Children’s director of strategic sourcing and value analysis, felt that the hospital’s item master was in fairly good shape, he enrolled in Optimize|Item Master as well.

SOLUTION

The Price Performance solution identifies cost-reduction opportunities and specifically addresses benchmarking needs by helping users:

·         Leverage benchmarking data from the industry’s largest, most robust database comprising more than 7 million products, 2,500-plus hospitals and more than $70 billion in spend information

·         Receive a true market view of pricing trends, including both contracted and noncontracted items

·         Review historical pricing to analyze market fluctuation

·         View trend performance by hospital, vendor manufacturer or the United Nations Standard Products and Services Code® (UNSPSC), and drill down to line-item details

“This is just one tool that I can provide my employees for their toolbox to help them do their jobs and allow us to drive supply savings and help Seattle Children’s reduce costs,” Salmonsen said. While Price Performance has revealed some surprises, it also has provided validation for strategic sourcing. For example, the solution showed that while the department had secured a reasonably good price on a spinal implant request for proposal in 2011, there was still money left on the table.

“We again completed a spine RFP in 2014 and leveraged the price points we now have using the Price Performance tool,” Salmonsen said. The results were positive, driving significant savings. “The tool definitely provides us with significant leverage in many instances like these,” he added.

The solution also provides analysis that reveals vendors’ spend for like items that have been purchased via UNSPSCs. “This gives you significant influence to persuade your incumbent vendors to lower their prices, or move the business to competing vendors who will provide lower prices,” Salmonsen said.

The hospital has achieved cost-reduction success by taking a holistic approach for items it already purchases. “When the Price Performance tool shows that we’re paying too much on one item, we look at the entire book of business with that vendor instead of focusing on just that one item,” Salmonsen said.

He offered this example: Of 10 items purchased from a single vendor, the solution showed a high price index on two items and an average price index on the remaining eight. “By looking at the entire book of business, we’re able to lower the price on all of the items — even those where our pricing wasn’t that bad initially,” Salmonsen said. “We wouldn’t have driven as large a savings if we’d just focused on the two initial items.”

Seattle Children’s also worked Price Performance into its value analysis process for new items. “Previously, we had no way of knowing if the price the vendor offered was market fair, so often, we just negotiated for a target cost savings and accepted the reduction in price,” Salmonsen said. “But now we do know, thanks to these benchmarking capabilities.”

Salmonsen said that Price Performance has helped his organization do something it was not able to do previously. “Because we can now benchmark proposed pricing on new items before they’re approved, we can get in front of negotiations instead of discovering after the fact that we’re paying too much.”

Vizient’s Price Performance provides not only data, but also the expertise to gain actionable results quickly. It also:

·         Reduces valuable time necessary to analyze spend, validate data and synchronize item masters

·         Improves and implements work flow capabilities by monitoring trending, prioritizing opportunity and tracking overall progress

·         Offers efficiencies through enhanced/effective processes using the solutions/support offered through the service

 

 

RESULTS

Seattle Children’s has successfully negotiated 37 new vendor contracts since launching the tool almost two years ago, resulting in more than $680,000 in savings, with an additional $285,000 in cost avoidance.

Salmonsen cautioned his peers that while having an analytics tool is absolutely necessary, the tool itself isn’t all-knowing. “Your data needs to be accurate, and you must do your own due diligence using your organization’s purchase history to see what the true payout will be,” he said.

“Even though you may have Price Performance data that shows your prices to be high in the market, you still have to perform old-school negotiations to reduce your costs,” Salmonsen continued. “Vendors don’t just look at the data and say, ‘Sure, we’ll give you the lower cost.’ But, with this tool, we have a more level playing field with our vendors. They definitely have to come to the table more prepared, and it’s allowed us to hold them more accountable.”

Tags:  Cost  Vizient  Washington 

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