Is your hospital or physician practice paying too much for the supplies you need to make patients well and operate efficiently? While technology has infiltrated exam rooms, operating theaters, and back-office operations, much of purchasing remains in the pencil-and-paper world. Stacks of documentation represent current contracts, but many questions remain about whether everyone knows the current contracted price of that implant or that case of copy paper.

A next-generation crop of technology is addressing these issues, everything from online contract management and compliance to standardization of items needed for patient care and the purchase of non-patient items. 

All organizations are tightening their belts these days, but implementation of purchasing technology can bring return on investment in weeks or months, so there’s no better time to take a look at your organization’s purchasing function.

Facebook for business

RollStream CEO Kristin Muhlner describes the company’s namesake product as Facebook for business. “It creates a controlled community of a company’s business partners that allows a more immediate way to interact, roll out programs, ensure compliance, and gather feedback.”

After tackling the healthcare distribution and manufacturing sectors, working with such multinationals as McKesson, Walgreens, and Owens & Minor, the company is focusing on hospital systems of 1,000 or more beds or 100-plus suppliers. Walgreens achieved an eight-figure ROI in just eight weeks and opted to accelerate rollout to its suppliers, and Owens & Minor saw a multi-million-dollar return from a streamlined dispute-resolution process, Muhlner said.

The RollStream product, which is delivered via the Web, can help in four ways to streamline the procurement process. As vendors are brought on board, the contract, terms, contact information, and other pertinent information are stored in one place where data can be accessed by anyone in the purchasing department.

Diversity surveys, policies, required reporting, financial health assessments, and other risk management and compliance materials can be delivered electronically. It can also be used for performance management and feedback, helping an organization create a list of strategic suppliers. Finally, the dispute-resolution feature can bring all parties to one place at the same time, eliminating the back-and-forth of e-mails, faxes, and phone calls that waste time and cost money.

Physician management is another feature of the RollStream product, creating a community of doctors to educate, communicate, and obtain value from the relationship, Muhlner said. And since the product is Web-based, no IT involvement is required unless the product is tied to an organization’s back-office systems.

Changing minds

Standardizing the items used in surgery can bring savings for hospitals, but changing physicians’ minds can be the challenge. The OrthoSource and CathSource software programs developed by Joane Goodroe, senior vice president of innovation at VHA, Inc., can give hospitals valuable information to improve outcomes in these two areas.

Both products allow hospitals to monitor in real time which products or procedures work best for patients. Then hospital administrators can make purchasing and clinical decisions based on what they’re seeing.

OrthoSource allows physicians and hospital purchasing managers to gauge what products have worked best for patients for certain orthopedic procedures. CathSource is a data warehouse that does the same as OrthoSource, but for cardiology and cardiac devices.

“It’s eye-opening to look at the data,” said Goodroe. “If you work in a hospital, every physician has his or her own preference card. I’ve never seen two preference cards the same—ever.”

Data is collected on 30 consecutive cases by each physician to create a baseline figure. Once the data is gathered, an analysis can reveal ways to improve outcomes and cut costs by re-engineering surgical practices. 

The key, of course, is obtaining buy-in from physicians to change long-standing practices. One way is to show that following certain procedures improves outcomes; another is proving the change is necessary to help a hospital financially. A third way is to make changing attractive through gainsharing, which appears to be growing in favor with the Health and Human Services Office of Inspector General.

“Physicians aren’t just going to make changes simply to save money.” Goodroe said. “My advice is to get physicians involved early. Many times, it’s not something material managers think about, and they should.”

ERP tie-in

Hospitals and physician groups can also save time and money by using technology to purchase non-patient items. The Baylor College of Medicine documented time savings of $730,000 and $4.1 million spending reductions from a strategic sourcing initiative after adopting the SciQuest software-as-a-service technology to handle purchases, said Deidra Peacock, director of product marketing for the company based in Cary, NC.

“The system identifies suppliers and specialty items organizations want at their contracted price of through their group purchasing organizations,” Peacock said. “SciQuest lets them choose the item at the right price up front, as opposed to buying at the list price and later having it fixed as an error.”

By automating what often remains a manual process, an organization can better understand its spending habits, not only how much of a particular item but which vendors are used. By combining implementation with a strategic sourcing project, an organization can identify key vendors and negotiate or renegotiate contracts to save even more

Available modules of the SciQuest product tie in to an organization’s ERP system to help track total spending and store contracts, and access them online. “A large percentage of clinical spend is done very well,” Peacock said. “But that other type of spend is often overlooked. Every dollar that’s saved can be invested in operations that improve patient care.”

Projects are typically initiated by the CFO or the purchasing manager, who can be in materials management or purchasing. Peacock said companies typically save 12% on every purchase made.

“With every manual step, there’s a greater chance of error,” Peacock said. “A product such as this can very quickly show ROI, and that’s money saved that can be returned to the business.” 


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