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Healthcare Providers Gain Control of Demand Channels With GHX Procurement Suite; 12 Percent Supply Spend Savings Achievable
Oct 08, 2010 (09:10 AM EDT)
Financial modeling demonstrates 12 percent savings when hospitals control spend that occurs outside of materials management
LOUISVILLE, Colo., Oct. 8 /PRNewswire/ -- A growing number of healthcare providers are choosing the Procurement Suite solution by GHX to gain better control over non-file, off-contract spending, focusing on high-cost medical-surgical supplies. Leveraging the capabilities of Procurement Suite, healthcare decision-makers receive sound content, accurate contract price validation and contract alignment during the procurement process, rather than after the fact. With greater contract compliance, financial models calculate that providers can reduce their supply chain costs by 12 percent.*
Supply chain costs typically account for 30 percent or more of a hospital's total operating expense—second only to labor—and are increasing faster than any other operating expense. And Datamonitor Group, a provider of global business information, estimates that 40 percent of the average hospital's annual spend is non-file, meaning it is not in the hospital's enterprise resource planning (ERP) system or materials management information system (MMIS). As a result, that spend is not easily managed.
Procurement Suite combines the healthcare supply chain's most accurate content management platform, contract optimization capabilities and connectivity to suppliers from which hospitals purchase products to enable process efficiency while driving contract compliance. The solution provides a foundation of accurate data with an easy-to-use interface designed to capture procurement occurring outside of materials management, helping ensure the correct products are easily identified, sourced and procured.
Among those selecting Procurement Suite is Champlain Health Supply Services, a shared service organization that provides integrated supply chain services to 12 hospitals in the greater Ottawa area.
"Building on a foundation of accurate, up-to date data—which is crucial—we will be able to capture demand electronically at the time the demand is generated while also having a better view into our supply chain," said John Martin, director Hospital Services, Queensway Carleton Hospital, and regional lead for Integrated Supply Services for CHSS. "That will help enable our member hospitals to cut supply chain costs by better managing their supply spend to take advantage of contract pricing. It is a large part of our vision to make our supply chain a strategic asset."
Rammi Gill, executive director of Finance and Procurement at GHX, said the source and quality of the data available through Procurement Suite is the key to achieving the greatest savings. "Unlike any other solution in healthcare, the data presented within Procurement Suite can have enriched, normalized descriptions and UNSPSC categorization," Gill said.
"The GHX content management platform leverages the largest online repository of data, which has been validated by both GHX content experts and healthcare suppliers," he said. "This means it's the most current and accurate source of data available to healthcare providers, driving greater accuracy in the reports generated by Procurement Suite and enabling providers to reduce costs by 12 percent."
* Savings were calculated using a process validated by PRTM, the global management consulting firm that developed a supply chain operations measurement process. Small, medium and large facilities were independently modeled and results showed that no matter the size of the health system, 12 percent savings can be realized.
As the business hub for healthcare, Global Healthcare Exchange, LLC (GHX) enables healthcare providers and suppliers in North America and Europe to reduce costs and improve margins by automating processes, reducing operating expenses and increasing knowledge-based decision making. Products and services include trading partner connectivity, order and contract management and validation, data synchronization, sales force automation and business intelligence. Equity owners of GHX are Abbott Exchange, Inc.; AmerisourceBergen Corp.; Baxter Healthcare Corp.; B. Braun Medical Inc.; BD; Boston Scientific Corp.; Cardinal Health, Inc.; Covidien; C.R. Bard, Inc.; Thermo Fisher Scientific Inc.; GE Healthcare; HCA; Johnson & Johnson Health Care Systems Inc.; McKesson Corp.; Medtronic USA, Inc.; Owens & Minor; Premier, Inc.; Siemens; University HealthSystem Consortium; and VHA Inc. For more information, visit www.ghx.com.