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 as category sourcing enablement around a specialty category is something new indeed.

Tom's take on the news is that as "procurement roles continue to evolve... [so] do GPOs. From the purchasing of traditional commodities to managing the project-based sourcing of services, as we have said, no category of spend seems sacred anymore. If you can see it, you can professionally source it. Enter construction services and the related capital equipment. Some of North America's largest retailers as well as its largest and most well known retail financial institutions are successfully sourcing this area of spend. And it's catching on in healthcare too, where new construction, renovation projects and capital expense is huge. When combining subject matter expertise with software that has been customized to replicate the business processes of the trade, including the front-end bidding, design processes, budgeting and project management, automating these familiar processes is not just saving millions, but it's quickly becoming recognized as a best practice."

But the question is whether or not such a service is a good fit for a GPO. Here, Tom suggests, "MedAssets thinks so and has partnered with a construction and capital equipment technology company called Attainia to start the process. Attainia provides solutions to manage the capital equipment lifecycle. Its systems are the world's most widely used healthcare planning and budgeting applications. Customers include some of the largest healthcare architectural and planning firms, as well as healthcare integrated delivery networks and individual hospitals ...What isn't known is how aggressively MedAssets is going to get involved in supporting the electronic bidding side, because sourcing for a national contract portfolio and optimizing a competitive bid for a local construction project are not the same thing."

The Spend Matters quick take is that back in the earlier B2B days, MedAssets was ahead of its time in the adoption of e-sourcing tools (actually Broadlane was, which is now part of MedAssets). However, the expertise needed bid and source construction must go beyond the strategic sourcing piece. Contract implementation, project management and auditing are all key. As is risk management. So while we wish MedAssets luck, we'd rather wait for a reference or two before taking the plunge on an end-to-end offer they might try to sell you (however the individual components, as part of a broader solution an IDN or hospital puts together, might make complete sense off the bat).

We'll continue the exploration of this topic in Part 2 of this post.

- Jason Busch

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  1. Tool crib software:

    I truly agree with this post and I am looking forward to read its part 2 . Thanks for sharing this exploration.

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