formance improvement company with a deeply integrated sourcing component. We are working every day to tackle the expanding range of struggles our custom- ers face — changes to their reimbursement model, achieving core quality measures, competing in a consumer-driven market, delivering on the expectations of medical advancements, preparing for the shift in demographics as our population ages, in- creasing competition from alternate sites of care. These trends are reaching into every aspect of the way they run their hospitals, and they lack the capacity to invest in the expertise that we can bring them.” An online retail marketplace cannot

deliver beyond its extensive fulfillment expertise, Allen insisted.

“An online exchange doesn’t seem like much more than an automation of a cur- rent process, which is a capability we’ve also invested in,” he said. “While it might deliver some degree of efficiency and savings, an online exchange is not really set up to address the array of issues we help hospitals manage through every day. Hospitals can’t save their way to great- ness — they have to be better in many other ways. That’s why we have invested in areas such as clinical expertise, data management, analytics, strategic consult- ing, workforce management, purchased services and many others.”

Allen cited one example of how Vizient works to pull everything together for a healthcare customer. “We are currently working with a hospital around the fi- nancial and operational considerations of their orthopedic service line,” he said. “They need to align 25 of their orthopedic surgeons that are currently doing a certain procedure. They need supply and clinical data to understand how the different de- vices and processes being used by doctors are impacting patient outcomes as well as their organization’s cost structure. They also need data to benchmark their per- formance for like procedures against that of peer hospitals in California and New York to understand best practices. And, they want help in facilitating discussions between physicians and the supply chain team to ensure that service line improves the health of their community. Bringing all those disparate pieces together is what we do every day.

“An online exchange is not really set up

to address any of these critically important issues,” he added. “Hospitals are clearly looking for these services, and we are far better equipped to deliver them.” Julius Heil, President and CEO, Intalere, St. Louis, acknowledges the attractiveness of online exchanges but cautions against

allowing that allure to mis- read depth of service. “Certainly healthcare providers are focused on non-labor expense reduc- tion activities, with the ma- jority of their focus placed on reducing supply and

Julius Heil

purchased services costs,” Heil said. “As the dynamics of the market have changed, yes, online exchanges have gained a bit more of a foothold in terms of simple transactional purchasing engagements. The true value of group purchasing or- ganizations has been, and continues to be, the value we provide outside of, or in addition to, that simple interaction. Things like supply chain planning, sourcing and procurement, operations, logistics and dis- tribution. We look at it as an opportunity for us to provide solutions that advance the supply chain operations of members and stakeholders, especially with the unique best practice perspective of our owner Intermountain Healthcare to draw upon.” Heil urges healthcare organizations not to underestimate GPO capabilities and contributions.

“The challenge is that hospitals and health systems have historically under- funded supply chain operations and narrowly focused the scope of operations resulting in an inability to realize savings through transformational expense man- agement concepts,” he said. “We feel that we, and GPOS in general, can be uniquely positioned to provide value through infor- mation, services and solutions that result in high value healthcare and improved operational performance.” GPOs offer healthcare organizations too much to be discarded or ignored, ac- cording to Joshua Sandler, Vice President of Group Purchasing, ROi, St. Louis, but that doesn’t represent a “too-big-to-fail” excuse.

“GPOs continue to de-

velop offerings around data management and analytics, clinical advise-

Joshua Sandler

ment and physician engagement ca- pabilities which will be hard pressed to duplicate by the online exchanges,” Sandler said. “As reimbursements con- tinue to shift to quality over quantity, engagement between providers and GPOs will continue to evolve around patient outcomes versus just pricing. GPOs will be advisors to hospitals to ensure the right product/medicine is utilized on the right patient at the right time. GPOs will help providers to reduce variation in product selection and pro-

cedural process to ensure best outcomes are achieved. Providers will also look to suppliers to carry additional risk with regards to patient outcomes, which can’t be facilitated by an online exchange.” Todd Ebert, R.Ph., President and CEO, Healthcare Supply Chain Association (HSCA), Wash- ington, recognizes the com- petitive environment in which GPOs operate and urges healthcare organiza- tions not to count them out or sell them short. “While product pricing is very im- portant, GPOs also recognize that a number of other services are needed and provide value to their customers, and have orchestrated a collaborative environment for providers, suppliers and the GPO,” Ebert said. “For example, providers require, beyond pricing, a predictive and dedicated supply of the products they use on a consistent basis (i.e., reliable contracts), confidence that the products they use are always high quality and meet all federal and state requirements, and reliable data for their product acquisition and usage process. Clinicians require consistency and standardization. Suppliers also benefit from their GPO relationships. They are able to reduce their selling costs, benefit from standardization and predictive ag- gregated demand, receive clinical and operational field support and product recall support, just to name a few.” But GPOs support other critical areas, too, such as utilization of and coor- dination of clinical data and supply chain data, according to Ebert. “Many GPOs are very active in working with clinicians and supply chain experts to coordinate clinical best practices with supply chain data — reducing variabil- ity, improving quality care and reducing overall costs,” he said.

Todd Ebert

GPOs also assist in disaster prepared- ness and support, Ebert noted. “In the recent hurricanes, GPOs played an important role in supporting their customers and the patients they serve, providing critical medical supplies and support under very adverse conditions,” he added.

Becoming something else? Virtual marketplaces may excel in a “fragmented consumer marketplace,” according to Premier’s Hargraves, but healthcare GPOs can customize supply chains and unify the processes between providers and suppliers, including inject- ing clinical expertise into decision making

Page 12 • HEALTHCARE PURCHASING NEWS • March 2018 11

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