Healthcare

healthcareAs healthcare sourcing professionals in today’s challenging market you are challenged like never before to look for every cost savings opportunity while at the same time you must as be sure that the sourcing project that you are undertaking will have a positive impact on your patient experience. We all know that healthcare sourcing is different than any other industry. That is why you should rely on a company that knows the healthcare industry and can back it up with a team that has direct experience in this field. That is why Buy Rite Technologies is just what the doctor ordered to help you in these turbulent times.

In addition to drugs and medical devices, hospitals are spending billions of dollars each year on non-medical supplies such as office and cleaning products, linens and food. Traditional methods for sourcing these items, via telephone, fax and mail are expensive, time consuming and inefficient. Buy Rite Technologies enables hospitals to move beyond paper-based procurement procedures to a seamless electronic process that is designed to substantially reduce order-processing cycle times and administrative costs by 40%. On average, Buy Rites Technologies healthcare clients have realized an average saving per sourcing event of 18% over their current GPO pricing. This comes as no fault of the GPOs. In many cases there have been dual awards made by the GPOs for the same product categories. By utilizing our e-sourcing services we are able to create a highly competitive environment. In the case of office supplies 70% of your actual spend should be coming from your “Core Items”. In most cases these core items are left up to the hospital or IDN to negotiate on their own. The other 30% are considered to be “Off Contract” items. The discounts on these items are never clearly understood. You may hear something like “the off items have a weighted average discount of X”. The problem here is that this includes heavily discount items like catalog furniture that you will almost never buy.

Achieving cost efficiencies in physician preference items (PPIs) remains the largest challenge for supply chain professionals, and that’s not likely to change anytime soon. These items—mainly implantable devices such as cardiac stents and artificial hips and knees—account for as much as 60% of a hospital system’s materials spending. Absent significant change in current trends, that figure will only continue to rise. New implantable devices arrive every day—literally. In 2008, the Food and Drug Administration reported that 3,370 new items were submitted for FDA approval and that number continues to climb. In fact, in 2011, the Healthcare Advisory Board predicts that 35% to 45% of all procedures will use an implantable device.

The speed at which these items arrive, and payers’ willingness to reimburse for them almost immediately after rollout, means that these items often bypass many of the checks and balances of a hospital’s typical purchasing process. Payments aren’t keeping up with costs: Hospital reimbursements from Medicare for total joint replacements between 1991 and FY 2008 rose 27%, while the average selling price for hip implants rose 132% from 1996 to 2006, according to Orthopedic Network News. Because most insurer payments to hospitals are determined by a contracted rate instead of incurred costs, the hospital’s profit from each case depends on whether the device is purchased from a vendor with which the hospital was able to negotiate low prices, whether the device is covered by such a contract or whether it is considered a novel technology that must be reimbursed at a higher list price.

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