Getting a good deal on things we need. These days, it’s not a “nice to have,” it’s a “must have” for managing our personal expenses.
Consumers have grown accustomed to comparing prices online. The web has made it easy to compare prices not only for different products, but also the same products being offered at different locations. This sort of clarity is good for consumers.
These same kinds of cost comparison and savings strategies are also important to healthcare providers in the United States to ensure they are getting the best value when purchasing what they need for quality patient care and safety. Outside of paying for medical professionals and staff, hospitals spend more money on supplies than any other expense. Hospitals have gotten smarter about the way they purchase these supplies over the years by not only leveraging through healthcare group purchasing organizations, but they have also benefited from the ability to compare prices for the thousands of items they purchase.
And while this price comparison concept might seem commonplace to most consumers, for those who spend millions purchasing healthcare supplies, it’s nothing short of a revolutionary change. It’s hard for a hospital to get a market price for various healthcare supplies, but when they can, they are in a much better position to negotiate better pricing.
Recently one of the nation’s largest medical device manufacturers decided to disrupt hospitals’ ability to compare prices for products when it began cancelling agreements with some of the nation’s largest GPOs. With this single act, it denied the hospital the ability to benefit from contracts negotiated on their behalf, and their ability to compare prices and share pricing data.
At a time when national leaders are calling for more transparency in healthcare – this is going in the opposite direction. Transparency is here to stay. There are many trends today in business intelligence, but they all fall under the umbrella of transparency.
In healthcare, strong analytic capabilities enable hospitals to have the needed visibility into their supply chain spend. As an industry we have been talking about this for many years, but it has not been until recently that technology has caught up with the need. Without this new technology, hospitals never truly understood the full impact of their spend decisions. They were essentially buying in the dark.
Until now, hospitals had to rely solely on negotiation skills to get the price they asked for. It’s a familiar scenario: hospitals would pressure suppliers for lower pricing; suppliers would push back. Ultimately, the supplier had the upper hand because in the long run, the hospitals needed the product. Because of the lack of transparency in healthcare, the hospitals couldn’t compare prices and couldn’t share pricing data.
While this scenario continues to be played out, the tide is changing and hospitals are gaining ground. Hospitals are becoming more savvy in their purchasing decisions and are demanding price transparency and the technology needed to analyze their spend.
Given the intense pressures hospitals are facing, they need help sorting through the vast amounts of purchasing data that they have. They need the technology to help them analyze spend patterns and determine purchasing strategies to reduce costs. This can’t be done under the current system with the lack of pricing transparency and “gag clauses” being demanded by some in the supplier community.
GPOs exist in the healthcare market as a means to level the playing field. We help create a more transparent and rational market place by providing benchmarking data and contracting assistance to hospitals. We provide hospitals with the ability to analyze hospital-specific purchasing and pricing trends so the facility can improve supply chain costs and efficiencies. GPOs are able to provide these services because of the pricing and purchasing information the hospital provides.
Consider the uproar if car dealers suddenly pulled pricing information from consumer websites, basically requiring that we visit numerous dealerships, compare features we may not understand and develop our own tools for determining which cars represented the best value.
Consumers have the right to understand where and how to get the best value for their hard earned money. Shouldn’t we expect at least as much in our healthcare system?
Topic: