Category Archives: Healthcare Matters

Attacking Costs in Healthcare: Tactical Procurement Can Address Up to 40% of a Total Operating Budget


There’s often a mistaken viewpoint that says labor costs form the dominant and often hard to address costs of healthcare service delivery in the United States (for example, the physicians, nurses, administrative staff). Granted, labor costs are a significant and core component of healthcare. But so are capital expenditures as well as overall procurement. In fact, a recent article, “7 Reasons to Merge Revenue Cycle and Supply Chain Management,” cites research from the Health Sector Supply Chain Research Consortium at Arizona State University (HSRC-ASU) that suggests the potential impact better procurement can have.

The Hospital Revenue Problem, and How Better IT Cost Control Can Help

Spend Matters welcomes a guest post written by Jon Winsett, CEO of NPI, a spend management consultancy, focused on eliminating overspending on IT, telecom, and shipping. Last week, Moody’s Investors Service released a dismal report on the financial state of nonprofit hospitals. For the second year in a row, revenues have declined and their rate of revenue growth has reached historical lows. The trends that are driving this downturn reflect a rapidly changing healthcare payment ecosystem – including low rate increases from commercial payers, more reimbursement cuts from the federal government and more high-deductible health plans contributing to bad debt. […]

GPOs: An Emergency Response Role for Sourcing and Procurement

When it comes to group purchasing organizations (GPOs) in healthcare and beyond, most procurement professionals first think about how such organizations can potentially bring value through leveraged contracts/agreements. Yet GPOs are fighting to differentiate themselves and their value in new ways. Over on HC Matters, our sister site, we recently ran a guest post by John Sganga exploring how GPOs can bring value in cases of emergency response. We reprint some of the salient learnings below, which we believe extend outside just the healthcare industry: GPOs excel in two areas that make them uniquely qualified for emergency response efforts: relationships […]

3PLs Move Into Healthcare Supply Chain

Today, we thought we'd feature a recent post on Healthcare Matters: Third-party logistics firms (3PLs) are essentially travel agents for freight. They generally do not own transportation equipment, but instead buy capacity from the carriers who do –the truckers, railroads, steamship lines, or cargo airlines, and then mark it up and resell it to the shippers. The cost of purchased transportation is highly variable for 3PLs because they primarily buy capacity in the spot market. As a result, in periods of macroeconomic weakness when capacity loosens and carrier pricing falls, 3PLs can pass those declines to shippers on a lag, […]

The Elusive Group Buy: GPOs, Healthcare and Beyond (Part 2)

In the first post in this series, we examined how healthcare GPO provider Premier is tackling group-buying opportunities and the success it has realized for members above and beyond the standard leveraged pricing that GPOs typically provide. Yet to make group buys work, as my colleague Tom Finn on Healthcare Matters observes, technology is what can (and will) form the basis of making this technique a more frequent (and successful) means of negotiating optimal pricing, terms and service levels with suppliers. On the most basic level, the following requirements are necessary to enable group buys through technology-automated approaches (note this […]

The Elusive Group Buy: GPOs, Healthcare and Beyond (Part 1)

The concept of group buying is one that many seasoned procurement buyers and managers often get excited about, given the leverage such an initiative might bring in getting suppliers to sharpen their pencils (and ideally improve service levels). Yet the number of effective group buys (different from leveraged contracts!) are tiny in the scheme of overall corporate spending. Might this be changing? Over on HealthCare Matters, my colleague Tom Finn recently covered Healthcare GPO Premier's Success with Group Buying Initiatives. Noting a recent Premier announcement on its program, Tom captures the elements of the news from the announcement: "Traditional group […]

HC Matters: GHX Customers = SCM Leaders, Premier’s “Group Buy” Saves $165M, Healthcare M&A

Here's what Tom Finn has been up to over on Healthcare Matters this week. SCM Capabilities Drive Imperial Holdings Move into African Healthcare -- Imperial Holdings is a diversified industrial services and retail group with activities spanning logistics; car rental; tourism; financial services; vehicle distribution and retail. The holding company operates primarily in South Africa, Africa, Europe and Australia; it is listed on the Johannesburg stock exchange (JSE); the group is highly decentralized in its management structure and operating principals. And today, this company of 40,000 employees announced that it would buy the pharmaceutical and consumer healthcare supply chain services […]

Healthcare Matters Round-Up

Another Hoax: Samsung Did Not Pay Apple in Nickels -- I have to admit it. When my daughter informed me with a "guess what Dad, Samsung paid Apple its billion dollar fine in nickels," I actually fell for it. Naturally, I first questioned her hard, but she's a smart kid and not prone to believe everything she hears. And definitely not gullible... Ascension/Marian Merger Reflects Industry's Appetite For Consolidation -- Ascension Health Alliance, the parent organization of Ascension Health, announced an agreement late yesterday to acquire Tulsa, Okla.-based Marian Health System, which operates 36 hospitals and 150 clinics in the […]

Best of Spend Matters: Healthcare Matters

We've hit the official dog days of summer. For Jason's last official week of vacation, we'll be featuring a "Best of" series every day this week. Have no fear: after Labor Day, we'll be revived and ready to hit the ground running! How Much Does Your Doctor Make? -- There's an old joke about a housewife who complains about the $175 she just paid her plumber. Briefly, when she sees her plumber's bill for fixing a leaky faucet, she grumbles and says: "I paid less than half of this the last time I visited my doctor." The plumber responds, saying: […]

Procurement Fighting the Good Fight: Benefits Sourcing and HR Complacency (Part 2)

Please click here for Part 1 of this post. This content is based on the research, analysis and opinions contained in the following Spend Matters Perspective: Human Resources & Sourcing Turf Wars -- HR Departments Lose their Prescription for Sourcing Immunity. When it comes to opposing the HR and HR benefits consulting firm status quo, our above-linked analysis suggests that the big players (IBM, Deloitte, Claro Group, Accenture and Paladin Associates) are now entering the HR benefits procurement game by applying pressure from the top down, promoting their abilities to more effectively source such benefits and/or broker arrangements with other […]

Sourcing Construction and CAPEX: Expanding the Role of GPOs (Part 1)

On Healthcare Matters, Tom Finn recently talked about how MedAssets, a group purchasing organization (GPO) in the healthcare arena, is expanding outside of its core services to deliver project-based construction and CAPEX sourcing enablement. If this sounds like the lines are blurring between GPOs, BPOs and consultancies that deliver sourcing services, you're right. We'd argue that the lines aren't just partially clear these days. They're pretty much nonexistent inside many firms (especially the BPOs delivering consulting services and also talking to GPOs about using leveraged contracts). However, for a healthcare GPO to make a move into what we could describe […]

New Spend Matters Research: Human Resources Loses Its Prescription for Sourcing Immunity

This post was cross-posted from Healthcare Matters. Unless the law expressly prohibits it (e.g. taxes), should most every non-contracted area of spend be in the strategic sourcing professional's scope? The transformation of the purchasing function from a passive, administrative process to a proactive, strategic and boundary-spanning function has been ongoing for the better part of decade. Whether the "blame" rests with our general economic malaise or customer demand just isn't what it used to be, organizations that have adopted a more strategic orientation to their procurement function have been handsomely rewarded. As a result, the strategic sourcing footprint has continued […]