Observation Deck: The Vendor Credentialing Tug-of-War

Seems like the vendor credentialing issue becomes more of a tug-of-war every day. As providers demand more, vendors push back harder. While providers make their case for the need for credentialing, vendors wish the whole thing would go away. Isn’t there any middle ground, any win-win? One group trying to find it is the Healthcare Industry Supply Chain Institute.

HISCI is the sister organization of the Health Industry Group Purchasing Association; it is comprised of suppliers and GPOs, and its chief mission is supply chain education. It was created in January 2007 after the group purchasing industry decided its lobbying organization should comprise only GPOs, not suppliers.

Not long after it was created, some of HISCI’s members urged that it get involved in vendor credentialing. One was Marty Miller, director, health systems integration, Terumo Medical Corp. Already, in 2007, Miller could see that as hospitals’ demands of their vendors grew, so too would the costs incurred by vendors. At some point, he reasoned, vendors would rebel. Hence, the potential for litigation. Roughly a year later, Miller accepted a request to chair a HISCI committee on vendor credentialing.

One of the committee’s first tasks was to try to quantify the costs associated with vendor credentialing. It has engaged an outside consultant to conduct such a study, which is ongoing. It seems a good place to start, though, as Miller points out, no matter what numbers that consultant arrives at, they probably will be disputed by providers. Even so, perhaps having some raw numbers on the table might help both sides begin a more serious, solution-oriented discussion about vendor credentialing.

Miller has some other sensible ideas about credentialing. He believes that providers and suppliers can come together on the issue by applying some of the same principles that form the basis of successful manufacturer/GPO relationships – agreed-upon standards of performance, some kind of safeguards (insurance) to guarantee that performance, and the ability to audit performance.

Of the three, setting standards may be the most far-reaching. And in that regard, suppliers and providers are on the same side of the fence when it comes to vendor credentialing, says Miller. For example, both can agree that the safety of the patient is paramount, and that such things as vaccinations and criminal background checks aren’t unreasonable. What’s more, both can agree that sales reps shouldn’t be training physicians on their devices and equipment unless they themselves have a high level of education specific to those products.

Auditability is important too, Miller points out. GPOs are in a good position to make sure, for example, that manufacturers are, indeed, training their sales reps on the equipment that they sell.

Despite the common ground, the supply side and sell side have some huge differences to iron out. The problem is, if the industry doesn’t come to any agreement, all sides will end up paying. As Miller says, “Anyone who has taken one high school economics class learned that the cost of making a product and selling it add up to product price.”

“This is a case where leadership needs to occur,” says Miller. Maybe HISCI can provide it. If they can’t, who will?

Mark Thill About Mark Thill

Mark Thill is the Editor of The Journal of Healthcare Contracting and has been reporting on healthcare supply chain issues since 1985. He is a graduate of Dominican University in River Forest, Ill., and he received a master's degree in journalism from Northwestern University in Evanston, Ill.

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