The Healthcare Hub

GHX provides a wide range of perspectives on how greater collaboration and visibility across the supply chain can improve both clinical and financial performance in healthcare.

Friday, December 4, 2009

The WHATs and HOWs of Changing the Supplier-Hospital Relationship

As I was flying back from the Medical Device Supply Chain Council (MDSCC) meeting this week, a book excerpt in an airline magazine caught my attention. The lead was: "Information is king, hyperconnectedness puts that information in the hands of the many, and transparency reveals all." That's certainly the reality we are moving toward in healthcare. In the book, "How: Why HOW We Do Anything Means Everything," author Dov Seidman underscores what hospitals had to say to suppliers this week.

Seidman effectively makes the case that success no longer depends so much on "WHAT you do, but HOW you do it." In a world of reverse engineering, he argues it is much harder to innovate in WHAT, at least not in a lasting way. Even process improvement for many industries, he says, has become a commodity. Everyone's doing it. While many in healthcare are still learning how to adapt the principles of process improvement to this industry, we, too, are headed that way.

What "cannot be commoditized," in Seidman's words, is "HOW we do WHAT we do." "If you reach out and inspire more people through your global network…If you collaborate more intensely…you win." Seidman adds that "the emerging trend for leading-edge businesses today involves delivering not so much a better product, but a better experience for your customers."

Consider this in the context of what two hospital executives had to say to suppliers at the MDSCC meeting. One commented that supplier sales people are all the same; "vanilla" was the word he used. "They don't differentiate your companies, but the supply chain can." He gave an example of how his organization is working with a manufacturer to reduce the costs of delivering a product to market, which impact the price hospitals pay for products. Another hospital executive called on suppliers to be more transparent about backorders. She said sales people are afraid they will lose a sale, when, on the contrary, giving a hospital enough notice to make other plans will actually build customer loyalty.

Greater transparency and better data are also improving the relationship between a supplier and provider who met recently at a meeting to help plan the annual GHX Supply Chain Summit. The supplier showed the customer that her organization was ordering the same thing dozens of times in the same month and how consolidating those orders into fewer purchase orders would save both the supplier and the healthcare system time and money.

It's this kind of transparency and innovation that I believe will take the traditional supplier-provider relationship to the next level, beyond just discussions about price. With increasing pressures on both sides, real healthcare reform can start just by changing HOW we work together to better achieve the real bottom line: delivering the best patient care at the most optimal price for all.

Tell me how your organization is changing HOW you are doing business with your trading partners? Where are the greatest opportunities? What are the biggest challenges?

You can read the excerpt of Dov Seidman's book at

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Karen Conway

Vice President, Healthcare Value