Wouldn’t it be nice for a hospital system to reach out to vendors and clarify what is expected of them to do business with that organization? The University of Alabama at Birmingham (UAB) Health System has created a Web site to do just that (http://main.uab.edu/show.asp?durki=5256).
“Take advantage of the information on our procurement Web site,” says Terry Justice, executive director of procurement for UAB. “We post a lot of relevant data for our vendor community, and they can also gain access to the names of our staff, addresses and all the commodities they’re responsible for. [Vendors] should then make contact with the buying staff, as well as the value analysis department and the hospital.”
This is excellent advice in an environment where health systems often regard vendors with wariness, if not outright mistrust. UAB Health System is a strategically integrated (System IV) IDN, closely affiliated with the University of Alabama School of Medicine. Being affiliated with a premier teaching school means UAB Health System is training the best and the brightest and is often on the cutting edge of technology. It has to both be selective about the technology it showcases and uses, and careful about the corresponding impact on its bottom line. UAB does this through GPO involvement and self-contracting.
Purchasing at UAB is coordinated through three divisions: Procurement is responsible for contracting, purchasing and purchase orders and accounts payable; material management handles supply services, materials management and distribution; and values analysis performs analysis on all potential and current contracts.
UAB Health System hospitals contract through Novation, while the system’s clinics contract through Amerinet. Long term, UAB Health System wants to get all of its members on a contracting platform and a common item file.
“This will allow us to broadly evaluate item groupings across the system, to look for disparate pricing, evaluate contract compliance and look at standardization across the system,” Justice explains.
UAB Health System also frequently engages in self-contracting, specifically in physician preference items and capital equipment, as well as other areas where collective buying power and ability to drive compliance can yield savings.
The typical contracting process at UAB Health System is to issue a formal request for proposal to all known providers of a particular product. The proposals are then reviewed by the requesting department and the procurement department, in conjunction with material management and value analysis, whereupon a formal award notice is provided to the winning bidder. The value analysis committee has representation from the other divisions, as well as executive leadership and clinical participation. This involvement allows for the possibility of choosing a product on a clinical basis, rather than just a pricing basis.
Here’s another bit of vendor advice. “Be flexible and look at the best way to deliver products,” says Dennis Sanchez, director of material management. “We’re doing JIT and stockless inventory, so that’s the way we expect vendors to deliver to us.”
“From the procurement standpoint,” says Justice, “we really don’t try to statistically measure contract compliance. We do have a department that works closely with the value analysis department to look at all the cost-savings initiatives we’ve put forward, and they evaluate each one to make sure we’re hitting our targets. If we get complaints from the vendors that we are not meeting our obligations, then, between materials management, procurement and value analysis, we generate reports to look at contract and non-contract purchases of like items, and we measure performance in that scenario.”
Sanchez estimates that UAB Hospital accesses roughly 26 percent of Novation’s capital equipment contracts, 41 percent of its medical-surgical contracts and 66 percent of its pharmaceutical contracts. “On a fairly regular basis we run reports on ‘special items,’ aka those not under contract, and we make contact with folks not using contracted items,” he says.
With a total supply spend of over $135 million, top academic and automation credentials, and a mix of GPO and self-contracting, UAB Health System should be on the top of every vendor list. Do your research, approach the system through proper channels and treat the whole process with respect. As Justice advises, “Take advantage of the information . . .” And good luck.