Model of the Future
By Graham Garrison
Collaboration between supply chain and IT helped one health system streamline its contracting following a merger
Implementing standardization across an organization following a merger of two entities can be challenging. Jordan Scott, supply chain – IT program manager at HonorHealth, has another term for it – natural turbulence. HonorHealth was formed by the merger of John C. Lincoln Health Network and Scottsdale Healthcare in 2015.
“As expected, there was natural turbulence during the forming and storming phases of our organizational development,” he said.
However, through an extensive integration process, IT and supply chain identified duplicate software, hardware and service contracts at different price points that were in place pre-merger across the organization.
“This ultimately led to the renegotiation and termination of 50-plus contracts across our network, which allowed for a standardization of vendors, and the opportunity to obtain excellent pricing,” Scott said.
It also led to supply chain and IT meeting HonorHealth’s stretch savings goal for 2018. But in order to meet those goals, changes were needed in the way the organization’s departments worked together.
“Historically, our IT contracting was decentralized within functional silos where ensuring all contracts received proper review and scrutiny presented a challenge,” Scott said.
Category versus contract management
At HonorHealth, Supply Chain Strategic Sourcing & Engagement (SS&E) manages the day-to-day supplies and services contracting for the organization. The collaboration between the supply chain and IT departments initially surfaced as a request for assistance with IT contracts. Through standardization of the process, strategic sourcing proposed creating an IT value analysis team (VAT) to align supply chain sourcing opportunities with the technology forecast. An early success with print management that improved price points and service levels gained inertia for establishing a presence for IT category management within supply chain, Scott said.
The organization soon realized it could foster better outcomes by taking this tactical approach to a strategic one. In order to better steward its resources, HonorHealth’s supply chain shared services department adopted the methodology of category management versus contract management, which meant evaluating contract categories from a holistic approach versus individual point-in-time reviews.
“This shifted our department’s focus from attempting to review 3,000-plus contracts annually, to 300 categories, where we can better identify key strategic opportunities,” said Scott.
Scott was in a unique position to help with the collaboration. In his previous role at HonorHealth, he worked in IT as an operations coordinator where he managed the budget, tracked termination dates and developed project plans. The IT operations coordinator role provided insight into HonorHealth’s organizational technology plan, application schedule and value of formal customer requirements gathering, Scott said. “This experience and perspective translated well into a category management role within supply chain shared services where I needed to engage stakeholders, anticipate strategic questions and map a complete implementation plan.”
Traditionally, IT led their own initiatives, built the vendor relationships and negotiated pricing. Once their action items were completed, the contracts were passed on to supply chain to manage and advance through the legal review process, Scott said. Through the new collaboration, supply chain was now part of the whole initiative from inception of the project through the implementation. “The value received from this collaboration includes alignment of organizational strategies, refined processes and controlling costs more effectively.”
Three key items were needed to make the collaboration work, Scott said:
- Alignment of goals
- Senior leadership support from both IT and supply chain.
“Bringing together a new team required the collaboration and solution-focused approach to ensure the alignment of goals were unified, without sacrificing organizational excellence,” he said. “Searching for cost saving opportunities required close communication between the end users, stakeholders and the category administrators. We were also patient with the process and allowed for organic integration, which was more collaborative than the top down mandate.”
As IT integration became more of a focus throughout the organization, Scott said he has seen increased satisfaction with supply chain shared services by the clinical departments. “A big part of this is due to supply chain being able to proactively identify contracts with IT implications and proactively collaborating in the early stages of the process,” he said. “This has allowed for a more streamlined process, increased leadership visibility, reduction of time executing and implementing critical projects.”
On the horizon
HonorHealth will be opening its sixth hospital, Sonoran Crossing Medical Center, in September 2020. Scott said supply chain has partnered with the organization’s enterprise project management office to ensure current contracts include the new location and that services are fully functional on opening day.
“Working with various departments throughout this process has provided new insights on the challenges and resources required for successful hospital operations,” he said. “Striving to be a future leader in healthcare, this project has allowed me the opportunity to learn new strategies and gain a more thorough understanding of all service lines throughout the hospital and dependency required from IT to thrive.”