By Julius Heil, President and CEO, Intalere
Strategic sourcing applies advanced sourcing techniques and drives simplification and standardization of sourced products and services. This strategy should focus on elimination of redundancies, refinement of business processes, ideas for continuous improvement and formalized savings tracking systems.
A strong strategic sourcing function offers numerous benefits around lower costs, higher quality and greater customer service, while also leading to more predictable and positive patient outcomes. In healthcare, both group purchasing organizations (GPOs) and hospital systems do strategic sourcing.
Often healthcare organizations don’t have the resources to do strategic sourcing for all of the needed categories, products and services, hence they rely on a GPO. Strategic sourcing for commodities and basic med-surg products are best done by GPOs because they are less complex and can be aggregated for the benefit of many customers.
Let’s take a look at the five major areas of the sourcing process.
- Organize – It is critical to pull together a cross functional team of all involved stakeholders to make sure all aspects of the engagement are covered.
- Analyze – In this area there must be a detailed category spend analysis and current state contract review that identifies all cost elements and drivers.
- Strategy – Review each category’s complexity, attributes and importance in evaluating the sourcing, contract and negotiation tactics you will undertake.
- Source – Begin the process of going to market, engaging with suppliers, negotiating and awarding the business.
- Implement – This encompasses the “back end” work of loading the contracts into the information system, developing implementation plans and communicating its availability.
Each of these areas has several steps, identified as Must Have’s (MH) or Could Have’s (CH) depending on the importance or complexity of the category. There are also several checkpoints and “gates” that require team or leadership engagement before moving forward.