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.

Wednesday, October 31, 2012

Top Ways to Collaborate – Start with the Basics

posted by: Teran Andes

A few years back, I was asked to speak at a business school panel about the most significant changes that have happened in the business world since I graduated. After I moved past the obvious changes in my waist and hair line, I talk about things like China and how it has transformed from not only a source of low-cost labor, but to an intellectual property driver and producer of high-quality, low-cost products. It is fascinating how things change – and the rate in which it happens.

Recently, I had the pleasure of having dinner with a wonderful thought leader in our industry, Lora Cecere (@lcecere). Lora, the founder of Supply Chain Insights, spoke passionately about collaboration. Specifically, how healthcare – in the face of unprecedented upheaval – is driving change to deliver outstanding patient care at reduced costs.

Things started to come together for me: change … collaboration … healthcare. What are suppliers and providers doing to work together to help transform their organizations and the industry as a whole? I have the unique perspective of working closely with many different members of the healthcare supply chain at GHX. The smartest organizations start conservatively with the basics and then expand from there. The following are the top three areas I’ve seen where providers and suppliers undertake to bring a level of collaboration and change to their businesses that never existed before:

  • Automating Small Suppliers: Most organizations already do electronic commerce with their prime distributors and top manufacturers. But a growing number of organizations are now looking at their small supplier base to automate 100 percent of their spend – and there are multiple benefits to this. When you are at 100 percent automation, you operate at a different level of expectation and efficiency. These are the organizations that also have 70 percent or more lines matching to contracts (the contracts they have worked hard to put in place but cannot always drive adherence to). They drive this through looking at their partners and requiring that they conduct business electronically. For their small suppliers, this is a change, but after they start to do business differently – in other words, transform themselves – they too see the benefits and want to expand to other trading partners.
  • 100 Percent Match to Contract: I recently had the pleasure of serving a leading organization in New York that was in the midst of a significant transformation. One of its key “breakpoints” was matching spend to contracts. It just launched a deep partnership with its prime vendor and when it looked at its percentage match to contracts it was relatively low. The organization became “relentless” in its approach to fixing it. This took the form of building a discrete action plan to clean up its master files (UOM, vendor catalog number, etc.) and then daily, weekly and monthly monitoring of both exceptions and metrics. It collaborated with its prime vendor and GPO and now it is in GHX’s “Best 50” for contract match. The power of collaboration …
  • Automating 810 Traffic: Yesterday, I was speaking with our team during a “retrospective” on a project to Automate 810s on behalf of one of our leading suppliers. Its goal was to improve, by order of magnitudes, the amount of paper invoices that it generated and mailed. We made excellent progress during the course of the nine-month engagement and were able to do so because many of its providers saw the mutual value of the project. Even more interesting was who decided not to move. Why was that? Complicated legacy business practices and resistance to change were the major reasons. But it highlighted how leaders on both sides of the community need to provide vision and empowerment to their teams to collaborate, simplify and automate.
When leaders in other organizations ask me what they can do to drive collaboration in their business, I find myself going back to these three core themes. These are the basics. The organizations that do them have a different cost structure and ability to execute. They drive change and do so with deep partnerships with their suppliers, distributors and GPOs. They start with the basics but move fast.

These leaders are also asking me about what is next. The discussion quickly turns to the Implantable Device Supply Chain (IDSC) and advanced transactions such as sales tracings (867s) and price authorizations (845s) and how organizations are increasingly using these to drive automation and increase revenue. More on these topics in a future blog post.

These are exciting times in the industry. Change is not coming; it is here and has been here for some time. Organizations are reinventing themselves on a daily basis. I hope to go back to my business school and talk about these changes in the not too distant future. It’s a great story – and will only get better. 

I hope you enjoyed the read … and the ride.