An editorial by Tom Derrick, co-founder and senior VP of OpenMarkets
There’s no denying that inefficiency is present in the health care supply chain. This inefficiency is what’s attracting Amazon and billions of dollars of Private Equity investment to the industry. Where there’s waste there’s opportunity.
Nowhere is inefficiency more obvious than in the $30 billion equipment segment of the health care supply chain. With an average SG&A of 51 percent, it’s simply expensive for suppliers to sell equipment to providers. This drives up costs and is the core of waste.
So what are we doing about the waste?
Let’s take a look at a few organizations innovating on the front lines.
Can the supply chain perform a miracle? On August 1st, 2017 the CEO of CHRISTUS Sulpher Springs Hospital in Texas was facing a dilemma: it was time to buy a new C-arm, but cash was tight and there was no shortage of pressing capital needs.
CEO Paul Harvey turned to the supply chain team asking them to perform a miracle.
CHRISTUS Trinity Mother Francis, the health system Sulpher Springs Hospital is a part of, has employed a proactive capital process since 2015. Led by Todd DeRoo, AVP of the Supply Chain, this capital process gives department directors a simple way to submit and justify capital requests. This allows the supply chain team to easily vet requests for aggregation and contracting opportunities. This also allows them to better work with suppliers.
This proactive process allowed DeRoo to work seamlessly with the hospital’s surgical team on the C-Arm project.
“[The surgical team] was able to seamlessly communicate to our team in Tyler, Texas, what their clinical needs were,” DeRoo said. “Our strategic contracting team, in partnership with OpenMarkets, was able to find several suppliers able to offer a solution for the department. Ultimately the department gave us direction on the supplier of choice, as well as the latitude to find the most effective way to get the equipment into the hospital.”
The lesson here? A proactive, data-oriented capital process can put a supply chain team in position to create cost-avoidance miracles.
Buying two imaging tables for the price of one Kettering Health Network of Dayton, Ohio, and Oakworks Medical, a Pennsylvania-based manufacturer of medical tables, patient positioning devices and more, recently teamed up online to start collaborating on a transaction for imaging tables.
This meant the Oakworks team didn’t have to send a rep out to Kettering.
By engaging each other on the OpenMarkets platform, the supply chain team at Kettering was able to quickly evaluate Oakworks and several other suppliers at once. Once engaged, the Oakworks team and their distribution partners seamlessly provided the insight and information the Kettering team needed to purchase imaging tables for a non-acute facility. As it turns out, the total value proposition delivered by Oakworks to Kettering was attractive enough that Kettering doubled their planned order.
