Observation Deck July/August 2008

A little discipline (and willingness to work together) can go a long way

Putting together our annual feature, “Ten People to Watch in Healthcare Contracting,” is like fielding an All Star team. It gives us the opportunity to pick the brains of some very bright people, and that’s always exciting. It comes with some frustration too, though. First, there are a lot of talented people out there; we could have spotlighted many more. In future issues and future years, we will. Second, there’s a lot to write about each person, yet we had to keep it to a page each. That means we had to leave some valuable “footage” on the cutting room floor.

Among that footage was some input from William Mosser, managing director supply chain, Temple University Health System in Philadelphia. One of the interesting things about Mosser is that he spent 17 years in automotive manufacturing, and he brings some of that perspective to his current position. He believes that two characteristics found in the auto industry – discipline and the willingness to work with others – are lacking in healthcare contracting. Yet, if they were to be implemented, this industry could enjoy some success. Here’s some of what he had to say.

“In healthcare, we’re still focused on negotiating prices but are doing so in an ‘uninformed’ and ‘unleveraged’ manner. We still see too much of a ‘we vs. them’ attitude. There is still too much proprietary information without enough evidence-based data to help make fact-based decisions. We still consider products as ‘commodities’ or ‘clinical specialty items.’ The result is that we still have too much emotion in our decision-making process.

“In my previous life, we had engineers and staff from various functional areas who were responsible for determining the specifications for what we bought and used. All stakeholders were represented in the decision-making process, and it was the manufacturing process that drove the supply chain. Once a change or improvement was identified, all the support teams determined what they needed to do to ensure the integrity and quality of the product. In that industry, many of the team members were vendor representatives, who were required to certify that what we expected was actually measurable and able to meet the specifications. Goals and objectives were aligned. Changes drove improvements for both the customer and the supplier.

“We all used a very simple Six Step process for the sourcing and contracting functions. Those steps are:

  1. Define the expectations and requirements.
  2. Research the marketplace to gather supplier intelligence, options and total cost solutions.
  3. Reconcile the requirements with the solutions (value analysis).
  4. Identify the most viable solutions, develop the negotiating strategies, and execute the strategies until win-win solutions are achieved.
  5. Select the solution.
  6. Implement the solution.

“The key difference is that Step 2 included full disclosure of vendor costs using activity-based costing, and it incorporated a collaborative approach to reducing vendor costs as well as our costs.

“It seems to me that we have the same capabilities in healthcare to assess, quantify and determine what is being used in the patient care environment. All we need is the discipline to follow through and work together.”

About the Author

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.