“GPOs Are Now
Consigning The Evaluation/Selection Process To Their Members With Their
Stream Of New Multi-Source Agreements.”
A recent news
release from a national GPO caught my attention when it stated that it
“has awarded multi-source contracts (for five–years) to seven
companies for IV systems and related products.” This is the NEW
BREED of GPO multi-source contracts now being developed and contracted
for by all GPOs in response to last year’s hearings by the U.S. Senate
Judiciary antitrust subcommittee, headed by Sen. Herb Kohl (D-Wis.),
into GPOs methods and practices. As I see it, these Senate hearings
have compelled GPOs to abandon a very effective weapon in their cost
containment arsenal -- SOURCE-SOURCE -- contracts. Now, what does this
mean to you?
This MONUMENTAL
change in GPO strategy and tactics means that GPOs are now consigning
the total responsibility for evaluation/selection of their GPO contracts
solely to your healthcare organization. As a consequence, Healthcare
organizations now need, more than every before, a proven scientific
time-tested process to evaluate and select the right GPO contracts for
their healthcare organization. Most healthcare organizations however,
don’t have an effective and efficient evaluation/selection system in
place to do so.
The answer to
this dilemma is for healthcare organizations to employ the value
methodology to determine the right GPO product, service or technology
contract that meets their exact functional requirements in this new
multi-source contract environment. On the other hand, this won’t happen
if your healthcare organization isn’t REALLY practicing the classic
tenets of value analysis, but are doing something else instead”?
Value
Analysis Has High Name Recognition, But Are You REALLY Practicing It.
Value analysis
has high name recognition in our industry, and is a term that is used
for all sorts of cost management initiatives. But, IS your healthcare
organization REALLY practicing value analysis or are you doing something
else –- bidding, sourcing, negotiations, brainstorming -- and calling it
value analysis?
The Value
analysis methodology has a minimum of three attributes that separates it
from everything else you are doing related to the evaluation and
selection of your products, services and technologies: customer
mapping, functional analysis and the search for alternatives. If
your value analysis process doesn’t have these three ingredients, then
YOU AREN’T TRULY PRACTICING VALUE ANALYSIS, you are doing something else
instead.
If you are doing
something else, you will find your healthcare organization has a real
CHALLENGE when you try to evaluate and select from the HUNDREDS of GPO
multi-source contracts that will be offered to you from at least 500 to
700 (by my calculation) GPO multi-sources vendors and still have time
left over for your other critical tasks.
Upside/Downside To This New GPO Strategy and Tactic
THE DOWNSIDE with
this new multi-source GPO strategy and tactic is that your healthcare
organization will be: (i) spending an enormous amount of time, resources
and money on new GPO contract evaluations, selections and administration
and, (ii) oftentimes picking the wrong GPO contracts for your
organization. This will cost you even more time, resources and money
to correct.
THE UPSIDE with
this new multi-source GPO strategy and tactic, IF YOU DECIDE TO REALLY
PRACTICE VALUE ANALYSIS, is that your healthcare organization will be: (i)
spending less time, resources and money on new GPO contract evaluations,
selections and administration than ever before, (ii) rarely, if ever,
picking the wrong GPO contracts, thus saving valuable time, resources
and money, (iii) saving HUGE additional dollars in waste and
inefficiency in your supply/value chain as a bonus and, (iv) installing
a new cost management process that will save you additional time,
resources and money on non-GPO contracts that you need to purchase on an
on-going basis anyway.
This Could Be
The Tipping Point For Value Analysis Practitioners
THE REALLY GOOD
NEWS for value analysis practitioners that will stem from this new GPO
multi-source strategy and tactics is that the healthcare climate will
look favorably on a solution to this challenge. We could see ahead of us
the TIPPING POINT for massive introduction of the classic tenets of
value analysis being introduced into all healthcare organization’s
evaluation, selection processes nation-wide. This is because change of
any kind always brings with it a seed of opportunity for those who will
understand this truism and use this knowledge to their advantage.
by
Robert T. Yokl, President