10 People to Watch in Healthcare Contracting 2007

Welcome to the Journal of Healthcare Contracting’s fourth annual listing of people to watch in healthcare contracting, each of whom was selected based on suggestions received from readers and industry sources.

Their stories are about the relationships of contracting professionals with clinicians, co-workers, department directors, staff and GPOs. They balance new ideas with changes in the industry, all the while learning from mistakes and empowering others to help move the ship forward.

Enjoy meeting this year’s interesting, dynamic healthcare contracting professionals:

Charles Agins
Montefiore Health System

Dan McDow
Iowa Health System Contracting Services

Donna Drummond
North Shore-Long Island Jewish Health System

Kim Sandstrom
University of Wisconsin Hospitals and Clinics

Larry Fogarty
Methodist LeBonheur Healthcare

Nancy LeMaster
BJC Healthcare

Pam Scagliarini
Yale New Haven Health System

Rosaline Parson, R.N.
Healthcare Purchasing Alliance

Tomi Ryba
UCSF Medical Center

Valery Ramsey
Grady Health System

 

Charles Agins
Vice president of finance and executive project director of business information systems
Montefiore Health System
New York, N.Y.


In an IDN as large as Montefiore Health System – with $2.3 billion in revenues, 1,000 salaried physicians and more than 13,000 employees – managing the supply chain can be a challenge. Some years ago, Charles Agins and Montefiore’s executive team recognized the potential financial benefits of reengineering the IDN’s supply chain.

“Every year, we would cut 3 percent, 5 percent, from the budget,” says Agins. But “off-the-top budget cuts” were a temporary solution, and ultimately, counterproductive. What Montefiore needed was something more comprehensive, something Agins refers to as process redesign.

“Basically, it’s how you use [information] technology to take a major leap forward and do something different,” he says. “It’s about standardizing what you do every day in an organization to meet the customer’s needs. When you do that, people will use the system, and you ultimately pay a lower price for a higher quality [outcome] by eliminating rework. You do that by changing the process and then automating it with a state-of-the-art information system.”

Montefiore remains focused on process redesign. It has established par levels, improved its stocking and distribution system, and – through automation – reduced the time to transform a requisition into a purchase order from 24 to 37 days in 1996 to about 19 hours today. “So there’s no excuse for [Montefiore staff] not getting on the system to order what they need.”

The IDN has established a disciplined contracting process, using Premier and Greater New York Hospital Association contracts as a springboard for greater savings. “We buy truckloads, we deal with vendors electronically, and we pay per our agreements. I can use all these things [to negotiate better prices],” says Agins.

The Journal of Healthcare Contracting: What’s the most challenging project you’ve worked on over the past 12 months?

Charles Agins: One is [severing] what I call “tie-in deals.” For example, when you buy solutions, pumps and sets, you’re not buying one thing, you’re buying all three things. Breaking that down and understanding what you’re getting and paying for is not an easy thing to do. [For example], we have transformed Montefiore from a copier/printer service agreement to a per-print-copy agreement.

JHC: What are you looking forward to implementing or working on in the next 12 months?

Agins: We are working with Office Depot to eliminate warehousing and handling costs and make them responsible for delivering office supplies directly to each individual at their desk. At the same time, we’re doing something to benefit people here at Montefiore: They get a discount if they get their supplies from Office Depot. So we are appealing to the personal interest of each individual. When people think in terms of what’s good for Montefiore and them, it’s a home run.

JHC: In your opinion, what’s the major thing that’s right with healthcare (products) contracting today? What can be done to reinforce and improve on it?

Agins: There are more vendor options. This idea was promoted by group purchasing so that small vendors didn’t get pushed out. But having more options isn’t necessarily good in healthcare. Prices have been going up.

JHC: In your opinion, what’s the major thing that’s wrong with healthcare (products) contracting today? What can be done to change it?

Agins: We talk about [mission] on the one hand, but on the other hand, we’re a business. No one wants to make a decision. I can say to an employee, “We have picked Office Depot as our office supplies vendor, and I’m not going to pay for products you buy elsewhere.” They might say, “You’re not going to let me go to Staples, even if it’s cheaper?” But I’m looking at the overall business equation.

JHC: Name one or two key directions in which healthcare contracting is headed and where you expect that trend to take the industry in five years.

Agins: First, group-purchasing organizations will have less influence over large integrated health systems, such as Montefiore. GPOs want everyone to pay the same “price at the pump,” but that’s not real. Second, the non-price issues will determine whom we contract with. Service, quality, achieving delivery time frames, and innovation – these are the factors that are more important to us. Third, the potential for fraud is greater than ever, with electronic commerce. You have to develop appropriate controls to make sure you’re paying for what is actually delivered to you.

 

Dan McDow
COO
Iowa Health System Contracting Services
Des Moines, Iowa


When Dan McDow, COO, joined Iowa Health System Contracting Services in 2000, he worked exclusively in contracting. Through direct negotiations with manufacturers, McDow has helped Iowa Health System reduce supply costs across its 17 hospitals. Today, McDow works with Owens & Minor to manage Iowa Health’s dedicated distribution center; he works with Aramark to manage the health system’s laundry plant; and with Xerox to provide guidance on overall management strategy. His philosophy is simple: There are good companies out there that provide these services and do it well. Iowa Health contracts with them, and they help the IDN manage its fixed costs.

The Journal of Healthcare Contracting: What’s the most challenging project you’ve worked on over the past 12 months?

Dan McDow: We opened our central laundry plant several weeks ago. We are focusing on linen standardization, trying to get seven health systems to agree on products. Implementing our materials management information system (MMIS) program has also been challenging. It was critical for us to adopt a centralized approach, so we could consolidate our vendors through our dedicated distribution center.

JHC: What are you looking forward to implementing or working on in the next 12 months?

Dan McDow:Our central laundry and MMIS are ongoing projects. We hope to arrive at a low-cost solution for central laundry and wrap up the MMIS project next year. In addition, we will focus on pharmacy distribution. Some of the areas we will look at include:

  • Low-unit dose distribution, which will position us for addressing the pedigree issue
  • Equipment depot
  • Biomedical services
  • Document storage and retrieval
  • Digital records
  • Print services

JHC: Name the two or three most important lessons you’ve learned from your past professional experiences. How do they affect the way you approach your job and the industry today?

McDow: I’ve learned how important it is to get clinicians and physicians involved in the contracting process on the front end. If we don’t get it right up front, we will encounter problems later on. I also have learned that we are not aligned with manufacturers and vendors. Our goal is to reduce costs, and theirs is to profit. So, our strategy is to reduce the number of vendors we work with and leverage their margins.

JHC: In your opinion, what’s one major thing that’s right with healthcare (products) contracting today? What can be done to reinforce and improve on it?

McDow: Direct contracting with vendors. Manufacturers say they enjoy working directly with the customer. If the hospital gives them its business, the manufacturer [likely] will give them good prices.

JHC: In your opinion, what’s the major thing that’s wrong with healthcare (products) contracting today? What can be done to change it?

McDow: Some people believe standardization saves money across the board. I think it sometimes can cost us more money. We’re so caught up in the price of a product, we don’t look at what its utilization actually is. The next generation must move beyond what the product is and look at how valuable it really is.

JHC: Name one or two key directions in which healthcare contracting is headed and where you expect that trend to take the industry in five years.

McDow: We know we will see shrinking revenues and a radical shrinking of Medicare. [Our country] has huge deficits. If we don’t position ourselves now, we will encounter problems down the road. Healthcare is a reactionary industry. We wait for a problem to emerge and then deal with it. Instead, we must develop a strategy and a better cost analysis system to get a handle on the situation.

 

Donna Drummond
Vice president of supply chain
North Shore-Long Island Jewish Health System
Great Neck, N.Y.


Donna Drummond hadn’t given much thought to pacemakers before joining North Shore-Long Island Jewish Health System in 2002. But did she know expenses!

For 15 years, Drummond – a certified public accountant – had worked for the financial services firm JPMorgan in a variety of expense-management capacities. As such, she analyzed, tracked and basically kept an eye on how much money was going out. From that perspective, moving to healthcare wasn’t that big a deal. “From an accounting perspective, you account for them the same way, you analyze them the same way. You look at them in terms of metrics – no matter what type of company is spending the money.” And here’s the key: “You want them to be going down, not up.”

North Shore-LIJ was formed 10 years ago, and today comprises 15 hospitals (including three tertiary care facilities) serving Long Island, Queens and Staten Island. It is the largest employer on Long Island and has an operating budget of more than $4 billion.

As a supply chain analyst, Drummond’s first task was to establish a financial reporting and analysis team to guide a proactive procurement strategy of continuous improvement and increased support. “It was quite a learning curve,” she says. Healthcare, she found, was far behind the financial services world in terms of automation. “We had a huge number of things – e.g., check requests – going through manually, so we tried to automate more of it,” she says. “We made a significant effort to increase internal controls around the purchasing process. That was our first true success.”

The Journal of Healthcare Contracting: What’s the most challenging project you’ve worked on over the past 12 months?

Donna Drummond: Between January and May [2007], we fundamentally changed the way North Shore-Long Island Jewish conducts its supply contracting business. We established a clear and consistent set of roles and responsibilities for individuals involved in the contract management process. The new order puts the clinical and business leaders in charge of product selection and cost performance, while the contracting team focuses on the identification of cost-reduction opportunities; sourcing and development of competitive offers and contract management. This approach, which leverages the greatest strength of the various stakeholders, is producing very dramatic cost savings

JHC: What are you looking forward to implementing or working on in the next 12 months?

Drummond: We have big plans for the next 12 months, the most exciting of which are 1) the implementation of contract life cycle management (that is, automated management of our contracts from inception to expiration); 2) establishment of professional career paths for our contract management and fulfillment team members; 3) rationalization of internal logistics; and 4) implementation of asset management systems.

JHC: In your opinion, what’s the major thing that’s right with healthcare (products) contracting today? What can be done to reinforce and improve on it?

Drummond: Three things: 1) The shift of healthcare’s strategic focus from merger and growth toward improved internal efficiency; 2) the availability of inexpensive, reliable contract management software; and 3) the influx of skilled finance and clinical managers into the supply chain discipline.

JHC: In your opinion, what’s the major thing that’s wrong with healthcare (products) contracting today? What can be done to change it?

Drummond: The general lack of point-of-use supply tracking technology limits visibility to supply consumption and perpetuates an inefficient, over-stocked, “push” supply chain.

JHC: Name one or two key directions in which healthcare contracting is headed and where you expect that trend to take the industry in five years.

Drummond: Four things: 1) I expect growing executive awareness that a lean, customer-friendly supply chain can create a competitive business advantage; 2) improved patient and staff safety and clinician/patient contact time will establish supply chain management as a mission-critical process; 3) best-practice healthcare systems will collaborate more closely with key suppliers to reduce the cost of doing business; and 4) bar code and radio-frequency identification technology will make point-of-use data collection a cost-effective reality.

 

Kim Sandstrom
Director of purchasing
University of Wisconsin Hospitals and Clinics
Madison, Wis.


When Kim Sandstrom enrolled at the University of Wisconsin-Green Bay, she had one thing in mind, and it wasn’t supply chain management. It was sports – specifically, basketball. After graduating with a degree in human biology in 1991, she landed a job in Madison as a pharmacy technician. When the company needed a buyer, Sandstrom took it. After eight years she applied for a job as a purchasing agent at the University of Wisconsin Hospitals and Clinics in Madison. She started there in 1999. In May 2007, she was named purchasing director.

UWHC comprises a 471-bed tertiary care center and about 80 clinics in nine locations. It is scheduled to open the American Family Children’s Hospital in August. With more than 800 active medical staff and more than 80 outpatient clinics UWHC offers six intensive care units. In 2006, more than 22,000 patients were admitted, and operating revenues exceeded $746 million.

With strong administration support, Sandstrom and the entire supply chain management team have made inroads into materials acquisition and utilization. The supply chain management committee – which comprises directors and managers of high-expense clinical areas as well as decision support – targets high-profile, high-cost areas, then devises strategies on how to reduce costs. Each year, the members present their stretch goals for savings for the year ahead, then report on their progress throughout the year.

The supply chain team and the decision support staff are developing a scorecard system whereby members can measure their non-labor costs over time and in any number of ways (e.g., supply cost per adjusted patient day). The ultimate goal is for the departments to chart their own progress over time.

The Journal of Healthcare Contracting: What’s the most challenging project you’ve worked on over the past 12 months?

Kim Sandstrom: Our conversion to a different pulse-oximetry supplier. Our clinical staff was convinced that one company’s technology was far superior to that of the other. So both vendors came in and presented their products. As far as the contract goes, it has many things included in it, including the equipment and guaranteed reduction of supply usage. (UWHC has a resource utilization group to look at utilization issues.)

JHC: What are you looking forward to implementing or working on in the next 12 months?

Sandstrom: We’re working on a new trauma supply contract – primarily, implants for the ER and OR. Depending on how successful we are with the physicians, it looks like we can save quite a bit of money. Another area is rehab and orthotic supplies. That service line is having difficulty standardizing and wants to know how we can help.

JHC: In your opinion, what’s the major thing that’s right with healthcare (products) contracting today? What can be done to reinforce and improve on it?

Sandstrom: Our profession is moving in the right direction. People are beginning to respect us, and we don’t gain that respect without earning it. Here, our administration is supportive of what we do; they get us involved and recognize the importance of supply cost and utilization. People across the industry are coming up with key indicators, dashboards, efficiencies, clinician involvement. Things are moving forward.

JHC: In your opinion, what’s the major thing that’s wrong with healthcare (products) contracting today? What can be done to change it?

Sandstrom: Getting our arms around what we spend, on what and where. Even with our centralized purchasing system, we still have a hard time getting the information we need. It’s not like pharmaceuticals, where you have the [National Drug Code].

JHC: Name one or two key directions in which healthcare contracting is headed and where you expect that trend to take the industry in five years.

Sandstrom: First, I’d like to see better spend analytics and contract administration. Second, I see healthcare continuing to be benchmarked against other industries. Some of that is good, but some doesn’t work, and you have to recognize that; what’s good for Wal-Mart isn’t necessarily good for us. Third, I think that purchasing and contracting professionals need to understand the reimbursement side of healthcare. I don’t think you can get along without that understanding any longer.

 

Larry Fogarty
Vice president of supply chain management
Methodist LeBonheur Healthcare
Memphis, Tenn.


Larry Fogarty joined Methodist LeBonheur Healthcare, Memphis Tenn., in 1996 as an administrative resident. A certified public accountant, he was looking to transition to a career in healthcare. Today, Fogarty is vice president of supply chain management for the seven-hospital IDN and has a range of responsibilities, including contracting, new technology management and clinical and pharmacy management.

The Journal of Healthcare Contracting: What’s the most challenging project you’ve worked on over the past 12 months?

Larry Fogarty: Our biggest challenge has been to implement a reimbursement-based pricing structure for orthopedic and cardiology implants that isn’t contingent on traditional price points and contracting strategies. The plan begins by determining procedural reimbursement, identifying the fixed and variable costs associated with a procedure, and concluding the amount available for purchasing the implant.

JHC: What are you looking forward to implementing or working on in the next 12 months?

Fogarty: We will continue to focus on managing the introduction of new technology in a disciplined way. While we have an effective infrastructure around the introduction of a product, we must develop our post-adoption follow-up and outcome measurement. We also recently adopted a revised vendor-relations policy that establishes strict guidelines around vendors not providing – and our clinicians and staff not receiving – gifts or meals. The policy also controls vendor access to the organization. Finally, we will continue to focus on leveraging competitive friction in the marketplace to ensure that the products and services we contract for are high quality.

JHC: Name the two or three most important lessons you’ve learned from your past professional experiences. How do they affect the way you approach your job and the industry today?

Fogarty: Our team works every day under three guiding principles: Everything we do matters; activity does not equal results; it’s not about you or me, it’s about the patient. These principles reflect our commitment to creating an outstanding experience for our patients and then for our customers.

JHC: In your opinion, what’s the major thing that’s right with healthcare (products) contracting today? What can be done to reinforce and improve on it?

Fogarty: I think the major thing that is right is the competitive landscape that exists for virtually every product category. There are many exceptional companies providing outstanding products and services. We believe our role as supply chain leaders is to work with our clinical, administrative and physician leaders to exploit that competitive environment in a positive way.

JHC: In your opinion, what’s the major thing that’s wrong with healthcare (products) contracting today? What can be done to reinforce and improve on it?

Fogarty: Non-evidence based decision-making. There still is a lot of emotion and intentional bias in product preference today. I think we need to harness all of that energy around product preference into a disciplined, fact-based and timely product decision process. Although we see more of this today, we have to get it right in the near future or we will be at a disadvantage.

JHC: Name one or two key directions in which healthcare contracting is headed and where you expect that trend to take the industry in five years.

Fogarty: Healthcare contracting must position itself as a critically important and value-added service to the organization. This will require the use of effective technology and the staffing of contract management functions with qualified and service-oriented teams and team leaders. The sheer volume and complexity of agreements for products and services, whether GPO or locally originated, require the use of electronic management of the contract cycle. And, excellent, forward-thinking contracting professionals will be required to advance the sophistication and leverage necessary for optimizing healthcare contracting today.

 

Nancy LeMaster
Vice president, supply chain operations
BJC Healthcare
St. Louis, Mo.


In 1989, Nancy LeMaster joined Barnes-Jewish Inc.’s strategic planning team. Within three years, Barnes-Jewish merged with Christian Health Services, forming BJC Healthcare. Since 2000, LeMaster has served as vice president, supply chain operations for the St. Louis-based health system, which includes 13 hospitals (from pediatric teaching to long-term care) and multiple community health facilities. She is responsible for BJC’s entire supply chain continuum, including overseeing best practice exchange teams and contracting.

The Journal of Healthcare Contracting: What’s the most challenging project you’ve worked on over the past 12 months?

Nancy LeMaster: We are in the process of creating a supply chain data warehouse to give our frontline managers timely access to product data. This first year has been about focusing on electronic connectivity to bring in data sources and make sure it is clean, with consistent descriptions and standards. As we look at these processes, we become aware of inconsistencies in contracting. So, this has been an opportunity to iron these things out.

JHC: What are you looking forward to implementing or working on in the next 12 months?

LeMaster: In the next year, we want to help our operations people use this data on a day-to-day basis, so that they can see trends in supply expense. This will provide us with alerts regarding standardization and guide us as to what products we’re using on a real-time basis. We can become aware before someone uses an off-contract product and spends too much. Our old system was too manual and didn’t provide enough visibility so that we could address this sort of thing.

JHC: Name the two or three most important lessons you’ve learned from your past experiences. How do they affect the way you approach your job and the industry today?

LeMaster: One of the most important lessons I’ve learned is that it’s about the team, not me. It’s about having a strong team and developing our staff. Everyone brings value to the process, and it’s important to understand different perspectives. Another lesson I’ve learned is that it all comes down to integrity and trust. We want vendors to trust that it’s a fair process, even if they didn’t get the contract. It is a small industry, and we value our reputation. Finally, I have learned that you can never communicate with others enough.

JHC: In your opinion, what’s the major thing that’s right with healthcare (products) contracting today? What can be done to reinforce and improve on it?

LeMaster: Healthcare is moving toward encompassing more than just price. We’re looking at how we can make our relationships with manufacturers more effective (e.g. by addressing customer service issues, implementation and conversions, electronic connectivity, etc.).

JHC: In your opinion, what’s the major thing that’s wrong with healthcare (products) contracting today? What can be done to change it?

LeMaster: We still see that old-school thought and behavior among providers and manufacturers. We need to confront people and work to change this pattern. We should move more business to the manufacturer, who can then offer better service.

JHC: Name one or two key directions in which healthcare contracting is headed and where you expect that trend to take the industry in five years.

LeMaster: I expect to see a push toward transparency, although this will be controversial. But, especially in the device industry, I expect to see more benchmarking and transparency. The question will be, what prices can you benchmark? I also expect to see providers and suppliers working more closely together to improve the supply chain, We will have to move beyond price issues and focus more on the service offered, using more standards to benefit both parties.

 

Pam Scagliarini
System Director, Supply Chain Management
Yale New Haven Health System
New Haven, Conn.


Pam Scagliarini, System Director, Supply Chain Management, Yale New Haven Health System, New Haven, Conn., has worked with the health system since 1994. She originally joined the IDN’s contracting group. Today, Scagliarini oversees the entire supply chain process, including corporate contracting for Yale’s four hospitals and various health centers, including a long-term care center, a laser center and a women’s center.

The Journal of Healthcare Contracting: What’s the most challenging project you’ve worked on over the past 12 months?

Pam Scagliarini: We have been capitalizing on health system leverage associated with capital purchases. We are attempting to be more systematic regarding our purchases and the vendors we select, and leverage this to put together a more competitive contract. For example, we have looked at our capital budgets and noticed we have been buying multiple pieces of CT equipment, which cost several million dollars. Trying to get everyone to consolidate and standardize around capital equipment is much more challenging compared with gauze, gowns and daily consumables; And, it’s difficult to get all of our hospitals to focus on capital standardization issues at the same time, when one is looking to purchase equipment in one year, and the others are looking to make a purchase in three years; particularly, when considering potential technology changes.

JHC: What are you looking forward to implementing or working on in the next 12 months?

Scagliarini: In the last year, we have mobilized our supply chain analytics group. This group is focused on Supply Chain dashboards, accurate and complete transaction data, contract price loading, price benchmarking and maximization of electronic transactions. All of this work is the foundation that will allow us to pursue most other initiatives; particularly those focused on contracting activities.

JHC: Name the two or three most important lessons you’ve learned from your past professional experiences. How do they affect the way you approach your job and the industry today?

Scagliarini: I’ve learned that the management of people and processes is as important as supply chain expertise. I’ve learned that people often look to change one another, and management often looks to mold its employees. We really need to look inward first and focus on changing how our own actions affect the way others interact with us.

JHC: In your opinion, what’s the major thing that’s right with healthcare (products) contracting today? What can be done to reinforce and improve on it?

Scagliarini: We have a close partnership with our clinicians. We can make viable purchasing decisions but also ensure that physicians have the best tools to care for patients. In order to continue in this direction, we need to maintain a multidisciplinary approach to contracting. We need to base product selection on a lot of information; both clinical and financial

JHC: In your opinion, what’s the major thing that’s wrong with healthcare (products) contracting today? What can be done to change it?

Scagliarini: There is a lack of standards relative to product classification. Classification is a much more efficient model for both the supplier and provider, as proven with regard to pharmaceuticals. We need to take an active role individually or as a part of other groups to support this initiative.

JHC: Name one or two key directions in which healthcare contracting is headed and where you expect that trend to take the industry in five years.

Scagliarini: I think healthcare contracting and the price we pay for products will be more closely tied to reimbursement. Supply chain analytics and transparency will tie into this. Providers and suppliers will have to work more closely toward balancing the price of products with the actual reimbursement to the hospital.

 

Rosaline Parson, R.N.
Corporate Director of Contracting
Healthcare Purchasing Alliance
Orlando, Fla.


The “R.N.” after Rosaline Parson’s name, along with her title (“corporate director of contracting”) sum up her unique position in healthcare contracting. Parson is certified in critical care nursing, trauma care, perioperative nursing and executive leadership. “I’m a nurse by trade,” she says. She is also an experienced supply chain executive, serving as corporate director of contracting for Orlando Regional Healthcare ‘s new regional group purchasing organization – Healthcare Purchasing Alliance, or HPA.

The Journal of Healthcare Contracting: What’s the most challenging project you’ve worked on over the past 12 months?

Rosaline Parson: As always, it is dealing with contracts for physician-preferred items and wireless equipment projects. We have been focusing on evidence-based clinical outcomes, patient safety, and meeting or exceeding new regulatory standards.

JHC: What are you looking forward to implementing or working on in the next 12 months?

Parson: Our membership has a diverse patient population – everything from neonates to Level 1 trauma to med/surg floors – and we’re continuing to update our entire radiology system from digital mammography to Pet scanners. One of the last radiology projects on the table is mammography, and we’re trying to answer the question, “Should we go digital, or should we stay conventional?”

Implants – including hip, knee and spinal devices – are on the radar for the upcoming months, and this will be a multidisciplinary project with significant clinical and financial impact.

Right now, we’re collecting data on these projects, trying to get all the key players in place, obtaining their opinions and reviewing benchmarking data. Analyzing data remains the most difficult challenge we face in contracting. Every company we deal with – and every hospital – has a different system; there is no universal categorization of products. It is a challenge to analyze the clinical, reimbursement and financial impact that some of our contracting decisions will have.

JHC: Name the two or three most important lessons you’ve learned from your past professional experiences. How do they affect the way you approach your job and the industry today?

Parson: The No. 1 thing for me is the ability to be objective, fair and consistent. You have to function with the utmost integrity; this is what drives successful relationships. Critical thinking skills are also important. The skills I learned in my ICU days – looking at the whole picture – have helped me to look at contracts as if lives depend on it. And they do.

JHC: In your opinion, what’s the major thing that’s right with healthcare (products) contracting today? What can be done to reinforce and improve on it?

Parson: Hospital executives, physician groups and clinical administrators are realizing the value that effective contracting and materials management involvement can bring them, not only in our ability to contain costs, but to provide the due diligence related to new technology introduction and physician-preferred item requests.

Take a radiology department. In the old days, they would meet with the vendor and say to their administrative group, “I want this CAT scan.” Now they know if it goes through our process, we’ll provide the required benchmarking data, service record history and price points. We’ll also do regulatory checks. They see the value in these things, so it’s not “them against us” or “We do not understand their needs.”

Hospitals are also realizing that through regional GPOs, like HPA, they can function as a resource, be involved in the change process from the start, and provide valued input. Involvement with their technology, medical economic or value analysis committees will make the contracting process and fulfillment of compliance requirements successful.

JHC: In your opinion, what’s the major thing that’s wrong with healthcare (products) contracting today? What can be done to change it?

Parson: Our biggest challenge remains the relationships between physicians and vendors. There are positives and negatives associated with this, but unless your physician group is willing to look at the whole picture, be objective and part of the change process, it can be difficult. Vendors are valuable resources to our physician groups, but they can also provide undue influence.

 

Tomi Ryba
COO
UCSF Medical Center
San Francisco, Calif.


Tomi Ryba has served as chief operating officer of UCSF Medical Center, San Francisco, Calif., since 2002, when she joined the hospital system. Her responsibilities include overseeing the ambulatory area (which attends to 750,000 visits each year), clinical support services, human resources and all service lines. She also is accountable for the health system’s budget process and expansion programs. UCSF Medical Center is comprised of an adult hospital, a children’s hospital, a 60-bed medical center and a designated comprehensive cancer center. The IDN boasts a strong focus on neuro-surgical science, transplants, heart and vascular disease and spine programs.

The Journal of Healthcare Contracting: What’s the most challenging project you’ve worked on over the past 12 months?

Tomi Ryba: One of our greatest challenges has been working with pressing capacity constraints. But, the development of a new hospital will address this. Currently, we are in the design stage of the $1.5 billion facility. Over the last two years, we also have focused on utilization and standardization of supplies as they relate to clinical and patient safety issues. We have identified a number of initiatives, including pricing strategies, inventory control and distribution, lab and pharmacy utilization, contracting and the perioperative environment.

JHC: What are you looking forward to implementing or working on in the next 12 months?

Ryba: We are working on a strategic plan, which will direct our business in the future. Our current projects and initiatives (e.g. pricing strategies, inventory control and distribution, perioperative, lab, pharmacy and contracting) will shift to product standardization and utilization. Our physicians now are invited to lead meetings [on these initiatives], particularly in the areas of spine and heart and vascular. We are reconstituting our steering committees to include more physicians.

JHC: Name the two or three most important lessons you’ve learned from your past professional experiences. How do they affect the way you approach your job and the industry today?

Ryba:I have learned the importance of several things:

  • Ensure that people appreciate the need to bring objective data to the table that will help drive change and improvement
  • Ensure that we always, always keep the patient first and foremost in our mind, and constantly focus on the importance of system solutions to improve patient safety and the quality of the patient’s experience
  • Engage people who work at the patient’s bedside in the decision making process. They see what goes on and often have the best ideas.

JHC: In your opinion, what’s the major thing right with healthcare (products) contracting today? What can be done to reinforce and improve on it?

Ryba: Today, we work around strategic sourcing. This [concept] never appeared in strategic plans in the past. Now, we think about what vendor relationships we should explore and how this will impact future decisions.

JHC: In your opinion, what’s the major thing that’s wrong with healthcare (products) contracting today? What can be done to change it?

Ryba: It can be difficult and challenging to negotiate and leverage spend when working with the large vendors. Larger vendors [are comprised of] so many divisions, and we must negotiate within each division. This makes it harder to leverage our spend.

JHC: Name one or two key directions in which healthcare contracting is headed and where you expect that trend to take the industry in five years.

Ryba: I hope to see more transparency of data (regarding utilization, consumption and pricing). I hope this will help the buying decision in the future. Once providers and suppliers [establish] a baseline that everyone agrees on, we can better strategize on pricing and product selection.

 

Valery Ramsey
Director, value analysis program
Grady Health System
Atlanta, Ga.


Valery Ramsey joined Grady Health System, Atlanta, Ga., in 1992. Her role there has evolved from senior procurement specialist to materials management resource manager, interim vice president/chief purchasing officer and finally, director, value analysis program. Currently, Ramsey leads the product standardization, utilization and selection process for the entire IDN. Reportedly the largest public hospital system in the Southeast, Grady Health is comprised of two hospitals, a rehab and nursing facility and a number of health centers, including oncology, imaging, prenatal and infectious disease.

The Journal of Healthcare Contracting: What’s the most challenging project you’ve worked on over the past 12 months?

Valerie Ramsey: Last April, the manager of procurement retired and I took his place. Since then, I have been working at bringing together the buying staff and the value analysis staff. We are trying to ensure that contract pricing and standardization are being communicated to the buying staff. We do this through bi-weekly staff meetings and education/training. Communication has been key and collaboration is our goal.

JHC: What are you looking forward to implementing or working on in the next 12 months?

Ramsey: Our organization is financially distressed at this point. My challenge is to ensure that supply chain management is doing its part. But, it is only one cog in the wheel. Over the next 12 months, we will have to stay very focused on obtaining savings for the organization, specifically through physician preference items.

JHC: Name the two or three most important lessons you’ve learned from your past professional experiences. How do they affect the way you approach your job and the industry today?

Ramsey: I have learned several things. First, we don’t make decisions in a vacuum. We need to involve all of our stakeholders, especially our physicians. Second, if it’s possible, we should obtain a clinical champion who can be of assistance. Finally, when there isn’t good buy-in from the majority of stakeholders, we have to look beyond savings. Recently, we had a big conversion in drapes and gowns. Our staff was resistant to this, so we finally had to revert to the old product.

JHC: In your opinion, what’s the major thing that’s right with healthcare (products) contracting today? What can be done to reinforce and improve on it?

Ramsey: Today, we see a lot of networking and affiliation among various organizations, and this should continue. One hospital’s experiences may be very different from those of another hospital. Associations, such as AHRMM, and GPOs, all provide very good links among hospital members.

JHC: In your opinion, what’s the major thing that’s wrong with healthcare (products) contracting today? What can be done to change it?

Ramsey: My experience has been that procurement and contracting are the last in line to take advantage of information technology (IT). Yes, we need IT to deliver excellent patient care. But, supply chain management is responsible for so much money, it should be among the top five departments in the hospital to receive IT resources.

JHC: Name one or two key directions in which healthcare contracting is headed and where you expect that trend to take the industry in five years.

Ramsey: I expect to see more organizations initiating partnerships with vendors. (This doesn’t mean hospitals will work less with GPOs, but we will see more of both types of relationships.) I also expect to see better use of IT resources and new technology for the entire hospital, including patient care and supply chain management. I’m referring to such things as commodity items in the Pyxis (point of use) units and radiofrequency identification (RFID). This would help drive costs down and change the way healthcare is delivered.

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