Healthcare Contracting Challenges | GHX

John Puckett

Director of Corporate Accounts
Thursday, July 21, 2016

The Price Alignment Equation

Healthcare contracting is a highly complex, multi-step process and cutting costs in contracting is directly attributed to pricing alignment. The lack of pricing synchronization across supply chain constituents creates pricing errors that result in significant rework between providers and suppliers. In addition, suppliers and distributors require numerous back office personnel to support the highly complex rebate and chargeback process necessary to support group purchasing contracts.

Current solutions to address this complexity are fragmented and do not include all parties in the supply chain. There is not a solution that offers visibility to information across all relevant parties to maintain price accuracy. Additionally, many of the current business processes are manual, creating latency issues that prevent providers from realizing the benefits of their contracts and adding costs for trading partners. 

Contract changes during the life of a GPO contract are also common, creating further challenges as organizations attempt to achieve and maintain price accuracy. As a result, significant time and effort is spent reconciling provider pricing errors as well as rebates/chargebacks and GPO administrative fee payments. All four entities agree that the current process is broken and highly inefficient. They recognize the issue and want to find a solution but there are numerous roadblocks facing the industry.

  •         Disparate data systems
  •         Lack of automation
  •         No visibility for distributors
  •         Customer identification

The answers lie in a collaborative effort between healthcare supply chain stakeholders.

Industry leaders, led by Cardinal Health and GHX, have formed a coalition comprised of providers, manufacturers, distributors and GPOs to collaboratively drive solutions to the challenges associated with healthcare contracting. There are significant benefits all parties can derive from solving the problem, from greater process efficiency to hard dollar savings. Because it is an industry-wide problem, it requires an end-to-end solution solving for all of the breakpoints in the current process.

It will take all of the healthcare supply chain stakeholders working together to find solutions to the contracting challenges. Join the discussion and be part of the solution.

Recently GHX participated in the AHRMM16 conference leading a session exploring the price alignment issue, Cutting the Costs of Contracting.

We continue the conversation in an upcoming webinar "Contracting Solutions for Manufacturers" where Scott Witoszynski, Director of Product Innovation & Strategic Accounts, will discuss how using GHX Collaboration Portal and our Contract Pricing Solution addresses many of the common industry issues by:

  • Aligning GPO roster and customer data for customer identification and tier assignment
  • Consolidating contract and pricing processes via one, online multi-party solution
  • Automating data transfer between manufacturers and distributors to increase timeliness and price-loading accuracy
  • Allowing manufacturers to communicate with their distributor partners in real time when pricing updates and changes occur on GPO and local contracts
  • Providing a solution that enables both small and large suppliers to transact with the industry’s distribution partners

Sign up for the webinar here.