Using commitment to achieve a whole new supply chain

In today’s complex health care environment, hospital and health system perspectives on the function of supply chain are evolving from a focus on simply reducing supply prices to a more holistic approach. Supply chain leaders are increasingly focusing on optimizing overall supply operations by enabling clinicians to make the best decisions about the products, services and pharmaceuticals they use. This requires collaboration across disciplines to balance quality and cost and automate tasks to maximize resources. 

Nonetheless, savings is still a top measure of success. So how do supply chain leaders push to pursue clinical-supply integration and drive operational efficiency, while striving to deliver new savings year over year?

One way is through committed purchasing. Participation in a committed program offers value beyond price savings and standardization and allows teams to shift their focus to higher-value initiatives. 

At Minnesota-based Essentia Health, system director of category management Tiffany Ehresmann says her organization has benefited in multiple ways in the year since choosing to partner with Vizient through its Achieve Committed Program. Because of the program, Ehresmann says the team now spends less time on requests for proposal (RFPs) and local contract negotiation, and more time looking for ways to promote committed behavior among affected departments. “If your team is focused on managing contracts, it can’t activate the bigger-picture opportunities,” she explains. 

Having tried other approaches to commitment in the past, Ehresmann and her team took some time to find the right program for Essentia. They looked not only at the price savings and value in exchange for commitment, but also determined whether the health system was aligned to the program’s portfolio. “Over 75% of our contracts were a match; that made it an easy decision,” she says. 

Two other factors were also important to Essentia: flexibility and formality. “With one previous program, our PPI doctors felt they didn’t have enough voice in product decisions,” according to Ehresmann. “Now, we have latitude in deciding the order and process for implementing category-level commitments.” Additionally, she says, the formality inherent in choosing an external, structured program has provided a path to compliance. “Because our internal committed efforts had no real penalty for noncompliance, we couldn’t enforce the requirements as stringently. By participating in a formal program, clinical stakeholders and staff adhere more effectively to the commitment levels,” she adds. 

A key consideration in implementing any committed program is whether clinicians consider its products to be an acceptable match. Ehresmann says having a clinically vetted product portfolio has given the category specialists at Essentia peace of mind in recommending conversions. She explains, “For certain categories that required more clinical input, trials or value analysis, we were able to take more time to evaluate and complete. But in general, conversions we’ve done have caused minimal interruption.” The benefit: Giving supply chain specialists more time to engage clinicians and physicians in this process elevates supply chain’s role in advancing clinical-supply integration and improved patient outcomes.

Several factors have contributed to Essentia’s success in implementing their program. Ehresmann cites the development of standard operating procedures and a process to prioritize opportunities based on savings, clinical complexity and current contract end dates as key. “The direct-match products, along with the attrition that was occurring naturally through expiring contracts, became the low-hanging fruit for us to realize early success,” she says.

Vizient regional client executive Tim Effinger agrees. “Based on the savings from the hospital’s purchase data analysis, direct-match product conversion is a no-brainer. The math doesn’t lie.”

In addition, centralized, transparent analytics and tracking and reporting tools allow cross-functional teams to track their progress in standardizing to the committed portfolio of contracts. The supply chain team manages the program, sharing dashboards and analytics to show where they’ve committed, where there’s movement away from that commitment and what needs to be done to get compliant. Ehresmann and her vice president present those dashboards to Essentia leaders to drive compliance. “We also share these dashboards with clinical stakeholders so they can have the operational discussions around the need to convert their categories,” she adds. “Having these engagements with them and getting the buy-in and support is what has made commitment successful.” 

Effinger says health care organizations also benefit from having a dedicated resource to drive and manage a committed program. “For systems that can, having a person who can set aside dedicated time to implement savings opportunities and integrate the program into their standard processes yields greater speed to value,” he explains. 

Essentia’s focus on standardization and the shift from working on negotiating contracts to working with clinicians to manage commitment has allowed them to create better visibility and efficiency across the entire system, not to mention realizing savings well into six figures. Now, supply chain staff can focus on higher-value, higher-return activities like reducing variation and supporting clinical-supply integration. 

Learn more about the Achieve Committed Program on vizientinc.com.