Many hospitals and health systems have their supply chain management down to a science — at least that was the case at St. Joseph Health System Northern California, according to Laurie Clayton, its regional director of contracts. On the other hand, purchased services at the system were "all over the board."
But now, St. Joseph has its purchased services under control. Ms. Clayton, along with Beverly Schierer, vice president of research and analysis at MD Buyline, discussed how that happened at the Becker's Hospital Review 6th Annual Meeting May 8 in Chicago.
In the late 1990s, St. Joseph Health had a lack of protective language in purchased services contracts and a lot of duplication of services. "Time and a lot of money were being wasted," Ms. Clayton said, but then the system centralized the program in the Centralized Contracting and Purchased Services Department.
One of the key challenges in centralizing purchased services is finding the right talent, according to Ms. Clayton. "You need to develop a talent for purchased service contracting," she said, as most contracts are long and dense and the process requires negotiations.
Part of gaining control of purchased services at St. Joseph involved a narrow signing policy. To prevent duplicate services, all contracts can only be signed by the CEO or CFO after a thorough review. Additionally, with the new program, no money is allowed in a department's budget unless there is a contract that coincides with it, Ms. Clayton said.
One consideration would be that it will take longer to get contracts signed than administrators are used to. "These things now take months where the initial scenario it only took one day," Ms. Clayton said. "You'll get a little kickback when you start these types of programs."
Even though there may be some resistance at the beginning, it's important to remind people of the positives a program can produce for the organization. "When rigor is applied, it impacts the bottom line," said Ms. Schierer.
Through the system, St. Joseph has seen high-dollar returns in the following areas:
- Blood services
- Temporary staffing
- Linens
- Security and valet services
- Property leases