To the Point

Accessibility, tech savvy and integrity are just some of the attributes that hospital contracting execs value in their distributors

Hospital contracting executives like their distributors. In fact, theylike them so much, they want to see more of them. Even so, they want to maintain some control over those contacts, and in many cases, that means vendor credentialing.

“We look [to work with] distributors that are accessible,” says Rick Foelsch, director of supply chain services, St. Anthony’s Health Center (Alton, Ill.) “We want to work with one point-person who can take care of our needs quickly. I don’t want to deal with numerous people. That can take months. I need someone whom I can call and who can get things resolved now.” With one hospital, Foelsch acknowledges that distributors may interact with him differently than they would with a large hospital system. But, bottom line, he wants to be taken care of.

And, who doesn’t? At Centegra Health System, an Illinois-based community healthcare system with two acute-care hospitals and 30+ specialty sites, David Tomlinson, vice president of clinical ancillary services, cites the importance of service. “We look for a distributor that focuses on what the organization wants to achieve,” he says. “We want one that can systematically monitor the whole supply chain and maximize the benefit to us, the client.

“We value integrity and honesty, as well as certain soft skills,” he continues. By soft skills, Tomlinson refers to “the ability to communicate and work with various individuals within the health system. It is important that they can work well within the structure of the organization.” In addition, distributors must keep abreast the newest advances in technology, he points out. “It’s great when the distributor can share its knowledge of the latest and greatest products. When we talk about added value, we [refer to] a vendor that can come to us with knowledge of how its products can impact our organization.”

Indeed, a distributor’s product knowledge is especially valued at Lancaster General Hospital (Lancaster, Pa.), a 550-bed hospital that, together with Lancaster Women and Babies Hospital, Lancaster Rehabilitation Hospital and about 25+ specialty sites, comprises the Lancaster General health system. “We value the technology our distributor can provide, as well as its flexibility to meet the individual needs of each of our hospitals,” says Ken Collins, assistant vice president of materials management. That said, distributors should market their tools for making contracting executives’ jobs easier, he says.

High expectation for low unit
Many experts believe that the concept of stockless purchasing and low-unit deliveries is cyclical. If that’s the case, the cycle has yet to run its course. “Low-unit-of-measure is still important today,” says Collins. “It doesn’t make sense for us to duplicate our [Lancaster General] inventory at our Women and Babies Hospital. The same goes for our ambulatory (rehab) campus, where we keep only an emergency inventory. If we can reduce our inventory by $500,000, it makes sense to work with a low-unit-of-measure.”

As a supply chain director at a small hospital, Foelsch is adamant about working with his distributors and a low-unit-of-measure basis. “We can order a case of something and take a year to use it,” he says, adding that he is pleased his distributors have been flexible on this point. “I’d rather pay a little more for the product to get this service than have my cash sit on the shelf for a year.”

For Centegra, working on a low-unit-of-measure basis with Cardinal Health has been a saving grace. Five years ago, the health system was experiencing 35 to 40 stock-outs each day. Since then, the distributor has been providing its pharmaceutical and medical supplies in low-unit-of-measure. “Today, we have reduced our spend and stock outages with hardly any impact on our staff,” says Tomlinson. “And our patients have been getting the products they need at the right time.”

Safety vs. control
For as close a relationship as supply chain executives prefer with their distributors, they still want a system of checks and balances – namely, vendor credentialing. “Vendor credentialing is more a point of security for an organization,” says Collins. “It’s a matter of tracking who is in the hospital and whether or not they are in [an appropriate] area.” Because his organization’s distributor reps work through such programs as VendorMate, Collins believes the credentialing process has become less of an issue for them in recent years.

For others, such as Tomlinson, vendor credentialing is more an issue of monitoring sales reps’ contact with physicians on staff. “Vendor credentialing allows us greater control and enables us to minimize the number of reps coming through our organization,” he says. “We need to [ensure] that the best, most appropriate products come in for our patients.

“Sure, there’s a place for one-on-one rep-physician relationships (e.g., in the physician office),” he says. “But, in a healthcare organization, we need to be able to coordinate the distributor-physician relationships in order to provide the best care for our entire community, using scarce resources.”

Nevertheless, Tomlinson expects to see “better and more” collaboration between hospitals and distributors in the future. Given the weak economy, some larger distributors may become stronger, while some smaller ones may disappear, he points out. “In light of this, we must work with our distributors to achieve our goals. Distributors can only be as successful in a hospital organization as we allow them to be. If we [encourage] a shared accountability of our organization’s success and a lot of collaboration, we can be more successful.

About the Author

Laura Thill
Laura Thill is a contributing editor for The Journal of Healthcare Contracting.