Todd Ebert, president and CEO of group purchasing organization Amerinet discusses healthcare reform's influence on the supply chain and increased concerns for efficiency and cost.
Q: How has healthcare reform impacted how hospitals and other healthcare providers manage their supply chains?
Todd Ebert: There's still a lot to be figured out as we go forward with reform under the newly signed legislation. As I understand it, there are over 1,000 references to "the Secretary shall," so there is a lot yet to be determined and a number of adjustments to be made. However, from the supply chain side, I do believe the pressure to reduce expenses through a number of routes has been intensely present for the past two to three years, and reform puts even more of a spotlight on supply chain efficiency. In the past, a number of organizations were more comfortable financially, but that has changed and there's much more of an urgency to strongly evaluate and take advantage of supply chain savings opportunities.
If you went back eight or ten years and surveyed healthcare CEOs on what's important to them, the supply chain probably wouldn't make the top 10. Now, you would see it in the top five. Leaders have recognized the opportunity to reduce expense and cost through tactics such as standardization and product utilization. They've realized it's a key component to help them meet their organizational goals of providing high-quality healthcare at an appropriate cost. In the past, the supply chain was handled by the materials department, now many CEOs and CFOs are very engaged.
Q: What is the role of GPOs in helping healthcare providers bring down their expenses and, ultimately, healthcare costs?
TE: GPOs play a very important and focused role in this area. All GPOs have become very good at using data to identify savings opportunities. First, the GPO can make sure the facility is on the right contract at the right tier, so it's getting everything it can from a pricing perspective. GPOs can also aid in making sure providers are paying the appropriate price for what they're buying under their contracts. With vendors, manufacturers and GPOs all a part of the supply chain, these transactions can be very complex, and errors do occur. You should always check to make sure you are paying the appropriate price.
Benchmarking is another area where GPOs can work with providers. All GPOs have become very good at gathering data and benchmarking pricing and utilization. When I started in this business, a GPO really only provided a price in a catalog. GPOs have since experienced a tremendous growth of services and a growth in the requirements of the customers they serve. Evaluating data will uncover a number of ways to save money. It really comes down to an organization's willingness to make changes, such as standardization or switching to a comparable high-quality but not name-brand product.
Q: Will the movement toward integration that we're seeing in many markets among hospitals and physicians impact how organizations manage their supply chains?
TE: Absolutely. Exactly how this will occur, no one knows for sure yet. Hospitals and health systems that are already integrated with physician offices and surgery centers already participate in their supply chain as one. As healthcare reform moves forward, there is a lot of uncertainty about what's going to happen or what model(s) will prevail, but those paying attention to the industry do not doubt that healthcare will become a more collaborative environment. We've all seen healthcare changes come down in the past, and somehow the ingenuity of the American business person always figures out how to make it work within the means and constructs allowed. There will be winners and losers, but the most adaptable, nimble organizations are the ones that will be successful.
Learn more about Amerinet.
Read other Becker's coverage on Amerinet.
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Q: How has healthcare reform impacted how hospitals and other healthcare providers manage their supply chains?
Todd Ebert: There's still a lot to be figured out as we go forward with reform under the newly signed legislation. As I understand it, there are over 1,000 references to "the Secretary shall," so there is a lot yet to be determined and a number of adjustments to be made. However, from the supply chain side, I do believe the pressure to reduce expenses through a number of routes has been intensely present for the past two to three years, and reform puts even more of a spotlight on supply chain efficiency. In the past, a number of organizations were more comfortable financially, but that has changed and there's much more of an urgency to strongly evaluate and take advantage of supply chain savings opportunities.
If you went back eight or ten years and surveyed healthcare CEOs on what's important to them, the supply chain probably wouldn't make the top 10. Now, you would see it in the top five. Leaders have recognized the opportunity to reduce expense and cost through tactics such as standardization and product utilization. They've realized it's a key component to help them meet their organizational goals of providing high-quality healthcare at an appropriate cost. In the past, the supply chain was handled by the materials department, now many CEOs and CFOs are very engaged.
Q: What is the role of GPOs in helping healthcare providers bring down their expenses and, ultimately, healthcare costs?
TE: GPOs play a very important and focused role in this area. All GPOs have become very good at using data to identify savings opportunities. First, the GPO can make sure the facility is on the right contract at the right tier, so it's getting everything it can from a pricing perspective. GPOs can also aid in making sure providers are paying the appropriate price for what they're buying under their contracts. With vendors, manufacturers and GPOs all a part of the supply chain, these transactions can be very complex, and errors do occur. You should always check to make sure you are paying the appropriate price.
Benchmarking is another area where GPOs can work with providers. All GPOs have become very good at gathering data and benchmarking pricing and utilization. When I started in this business, a GPO really only provided a price in a catalog. GPOs have since experienced a tremendous growth of services and a growth in the requirements of the customers they serve. Evaluating data will uncover a number of ways to save money. It really comes down to an organization's willingness to make changes, such as standardization or switching to a comparable high-quality but not name-brand product.
Q: Will the movement toward integration that we're seeing in many markets among hospitals and physicians impact how organizations manage their supply chains?
TE: Absolutely. Exactly how this will occur, no one knows for sure yet. Hospitals and health systems that are already integrated with physician offices and surgery centers already participate in their supply chain as one. As healthcare reform moves forward, there is a lot of uncertainty about what's going to happen or what model(s) will prevail, but those paying attention to the industry do not doubt that healthcare will become a more collaborative environment. We've all seen healthcare changes come down in the past, and somehow the ingenuity of the American business person always figures out how to make it work within the means and constructs allowed. There will be winners and losers, but the most adaptable, nimble organizations are the ones that will be successful.
Learn more about Amerinet.
Read other Becker's coverage on Amerinet.
Amerinet Announces Achievement Award Winners
Amerinet Signs New Agreements With Ansell, Siemens