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WORTH REPEATING


“A mere deviance of a label can result in patient harm; not allowing correct exposure time, not knowing when to test a product or not mixing correctly. It is the responsibility of CS/SPD to guard each patient and protect him or her from exposure to extremely dangerous and growing pathogens that are present in healthcare.”


Alison Behn-Gartland, Customer Technical Sales Director, Micro-Scientific


“Some may claim that use of dispos- able products is only a matter of con- venience and a ‘nice-to-have’ thing. The performance and ease-of-use of dispos- able cleaning textiles is convenient. But, convenience leads to compliance, and compliance has been shown time and time again to generate improved outcomes.”


Matt Schiering, Chief Marketing Officer, Contec


“Multiple independent third-party re- searchers world-wide have confirmed that applying site generated mono- chloramine to the domestic hot water system is the most effective method of remediating systems that are inocu- lated with Legionella bacteria.”


John Baum, CWT, President, Craft Products Company, Inc.


“It’s difficult for most people to say they aren’t looking at sustainability, particularly with the [media] featuring climate change research fairly regu- larly and emphasizing the critical point we all are at for making meaningful change to prevent future catastrophes. Therefore, these responses probably reflect the opinion that healthcare or- ganizations are all doing ‘something’ with sustainability. The challenge is to do enough to make a dif ference”


Mary Starr, Vice President, Greenhealth Exchange


“I strongly believe Supply Chain should be involved in all discussions and analysis. They can be the gatekeepers for products and services coming into the healthcare environment, and what happens as things exit our operations. They can carry our message to our sup- pliers and use our purchasing power to force needed change.”


Jeffrey Stoner, Purchased Services Administrator, Dignity Health


PEOPLE & OPINIONS


GPOs transforming cost center to revenue center


by John Kupice, CEO of H-Source


ospitals all across the country are facing declining margins for a whole host of reasons. Reimburse- ments are declining due to welfare reform and new reimbursement formulas, while at the same time labor and supply-chain costs are increasing. According to some, supply costs are on pace to exceed labor costs by 2020.


H


“In 2019 and beyond, health systems will continue to see significant pressure placed on revenue and cost structure, accelerated cost growth, aggressive reductions in federal health spending (reductions in payment rates), provider consolidations and regional plays, payer provider integration, and a transition to the retail environment,” said Dan Pak, Assistant Vice President at Nexera. “Given these changes in the market, the role of supply chain must shift from a transactional model to a strategic model with an emphasis on increasing C-suite presence, holistic approaches to expense management (all non-labor spend), clini- cal supply chain integration, and revenue generation. We are seeing group purchas- ing organizations (GPOs) expanding their expertise to support a strategic supply chain and their transformation efforts to get there.”


Hospitals that effectively leverage sup-


ply chain as a competitive advantage will be the most successful. That calls for creative, out-of-the-box thinking in man- aging supply chain costs. Here are a few predictions: 1. Hospitals will need to implement single warehouse or self-distribution solutions to move idle or stale inventory assets within hospitals or networks. If the in- ventory does not move internally, it will be sold on a larger marketplace of medi- cal facilities to enhance cost recovery.


2. Hospitals, networks, IDNs, and groups will continue to develop new methods to purchase directly from manufacturers, removing cost layers from the healthcare supply chain.


3. GPOs will assist hospitals and mem- bers in transforming the traditional supply chain cost center into a revenue center. GPOs have been reducing costs


52 December 2018 • HEALTHCARE PURCHASING NEWS • hpnonline.com


through staff reductions by offering early retirement, implementing layoffs, or not replacing staff as they turnover. GPOs will also need to be creative in this changing environment of tightening margins, new technologies, population health, and changing reimbursement models. This has been done success- fully with Information technology de- partments, IT executive or accounting services via a shared services model. An IT department, for example, becomes a stand-alone entity that provides services to the hospital or network, as well as non-member facilities for additional fees. The fees for services cover not only the associated costs to provide the services, but also provide a profitable revenue stream.


4. GPO consulting groups will hire ad- ditional talent with extensive supply chain optimization experience inside and outside of healthcare. GPOs realize the need to offer these services to assist their members, differentiate themselves from their peers, and help hospitals and GPOs succeed in this changing environment.


5. It will be necessary to view supply chain as strategic instead of transactional. This will lead to a change in how supply chain departments are structured, staffed, and accounted for. The GPO consulting groups can then help transform supply chain departments from a cost center to a revenue or profit center. The consul- tants will do this by charging fees for their services and value-based billings/ contracts tracking measurable savings and cost recovery for various member facilities and departments. The savings, cost recoveries, and waste reductions must be measurable!


How will these new supply chain groups become a profit center? Here are some initiatives that GPOs will likely facilitate and some of the barriers as well:


Enablers: • Reorganize supply chain departments and leadership to align as a strategic versus transactional organization


• Implementing a self-distribution/single warehouse platform to manage distribu-


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