More than Contracts
One year after its acquisition of Broadlane, MedAssets is continuing to take a look at the big picture
Broadlane and MedAssets were always about more than negotiating contracts. So it’s no surprise that today’s MedAssets – which acquired Broadlane in November 2010 – is about the same task.
“People are in pursuit of best pricing,” says Les Popiolek, senior vice president, strategic sourcing, MedAssets. “But you don’t just negotiate it. You have to support it from an operational standpoint.” Popiolek is charged with helping orchestrate the process.
Popiolek served as director of information services for Premier prior to joining Broadlane in 1999. He served in a variety of positions with Broadlane, including vice president, supplier e-commerce services; vice president, contracting services; senior vice president, procurement services and informatics; and chief technology officer – the position he held at the time of the MedAssets acquisition.
“We’re taking a complete look at this,” says Popiolek, “We don’t only want to negotiate contracts, but we want to make sure our members realize the savings from them.
“You and I can negotiate a contract for pencils. It could be the best contract out there. But the people who buy pencils may not know it exists. Or if we can’t convince those folks who buy pencils to use that contract, what we have negotiated is an opportunity.
“We want to make sure that savings are realized by our clients, and they’re realized in the most expeditious manner.”
Procurement Solutions is one way in which MedAssets attempts to help its member do just that.
When it was created in 2004, Procurement Solutions was billed as “a new set of services that will address one of the most inefficient and costly elements of hospital business office operations – the series of steps required for the sourcing, procurement and ultimate payment for goods and services.” It was designed to address the entire procurement process by applying “industry best-practice business processes and advanced technologies, including Internet-based purchase order transaction processing, workflow management, enterprise application integration, Web services, rules engines, and active data warehousing for real-time analysis.”
Today, Procurement Solutions wrings costs out of the supply chain due to what Popiolek calls its scalability, that is, the ability for MedAssets to provide assistance to many clients at one time and with one set of resources, including the company’s National Procurement Center in Plano, Texas.
The Center “applies our proprietary technology and operational best practices to assist clients with lowering operational costs related to procurement,” says Popiolek. Its staff “are running a lot of day-to-day back-office tasks that you see in a hospital materials management department,” including spot sourcing of off-contract products, purchase order exception management and item master file management. This allows the hospital staff to focus on more strategic long-term projects, he says.
In the last few years, Procurement Solutions has added a number of additional components, says Popiolek. They include an offering for automated payment settlement, powered by Hap-X®; and an e-procurement platform, powered by Pittsburgh, Pa.-based Prodigo Solutions. The program with Hap-X allows providers to settle its accounts with suppliers by sending one payment to Hap-X, which disperses funds to multiple suppliers. It creates efficiencies for providers, and allows them to take advantage of such things as prompt-pay discounts, he says. The e-procurement platform, meanwhile, automates the requisition process and provides real-time information about product availability and pricing. “Together, they refer back to that end-to-end solution, which again focuses on operational improvement related to procurement.”
In 2011, MedAssets launched the eCommerce Exchange. The Exchange automates a number of supply-chain-related documents, including purchase orders, PO acknowledgments, advanced shipment notices, invoices, remittance and product/price catalogs. It also offers an online transaction portal, designed to provide visibility to all electronic orders, so the provider can manage discrepancies and complete daily tasks more efficiently.
“It serves as a bridge connecting our clients’ systems with our integrated supplier network, in a platform that automates manual processing of document flow,” says Popiolek. “It’s an e-commerce solution that offers the efficiency that MedAssets strives to deliver.”
At press time, MedAssets was working on integrating the eCommerce Exchange with the company’s e-catalog. “The eCommerce Exchange represents data that is transactional, while the catalog provides reference data on [products] and contracts,” says Popiolek. “The eCommerce Exchange and the catalog, coupled together, preserve the value that has been negotiated in our contract portfolio.”
These automated solutions, combined with MedAssets’ ability to “embed” its operators in hospitals, “are a pretty compelling formula to drive costs to the lowest level,” he says. MedAssets’ outsourced procurement business managers support more than 120 hospitals.
While MedAssets continues to develop automated offerings – not to mention revenue cycle management services – for its members, it remains committed to group purchasing, including programs for committed-volume purchasing, physician preference items, non-acute-care facilities and capital equipment, says Popiolek.
“Our committed volume program is one of the strategies that shapes our portfolio,” he says. Prior to the integration of Broadlane and MedAssets, Broadlane had a committed program called Strategic Sourcing Solution, while MedAssets offered the SELECT Commitment Program. The two programs were combined following MedAssets’ acquisition of Broadlane.
“It is an opportunity for healthcare systems to pre-commit their dollars to high-demand, high-quality commodity product categories,” explains Popiolek, speaking of the MedAssets program. “We have a different strategy for product categories where providers need flexibility for multiple suppliers.”
Aspen Healthcare Metrics, a MedAssets company, offers assistance with contracting for physician-preference items. “With physician preference, the key is physician engagement,” says Popiolek. “Our consultants engage physicians in a data-driven evaluation of outcomes and costs to come up with a strategy…that leads to the best outcomes in [terms of] cost and from a clinical standpoint.
“Sometimes the client is just looking for the ‘playbook’ on how to [engage physicians], and we provide the staff with the tools, the terminology, the ‘script’ on how to implement and sustain it. Other clients ask us to run their value analysis process. MedAssets can operate within any of these models.”
MedAssets’ capital equipment programs offer a full range of services, says Popiolek. They include contracting, research, strategic planning, financing, service contracts, equipment disposition, budget assessment, equipment needs assessment, capital equipment sourcing, quote review services and equipment planning. “We have an offering that consists of a portfolio of contracts and technology, to help give our clients transparency in what is typically a contractor-procured area of spend.”
Traditionally, providers hire general contractors or subcontractors to manage construction or renovation projects, he points out. Those contractors typically buy materials and equipment from suppliers with whom they have long-standing relationships. “We want to break apart those layers and say to our client, ‘You have options.’ Our core competency is on the sourcing side, and that’s not always a core competency of the contractor.
“Even in this environment, we’re still driving 5 to 12 percent savings on equipment,” he says. “Our clients can take those savings and reallocate funds to other projects. From our standpoint, this is very much an area where we look to establish relationships with our clients, so we can give them a second set of eyes to help identify opportunities for savings or standardization across their facilities.”
MedAssets’ construction and equipment planning staff don hard hats, go to the worksite and make sure things are going according to plan, he says. And they can help their client review sometimes lengthy quotes for equipment, “to help make sure they’re getting the equipment they want, in the right configuration, with the warranties that were negotiated. We want to make sure they’re getting the equipment at the value they expected.”