Enhancing Your Contracting Strategy

Enhancing Your Contracting Strategy

“In the evolving healthcare landscape, incorporating clinical product utilization into the contracting strategy can uncover significant savings.”

The contract cycle is a familiar space for most healthcare organizations. It may look like the following scenario. A GPO vets manufacturers’ pricing and products. The healthcare organization selects the manufacturer that works for their specific needs, selects tiers, and conversions occur. Three years later, this process begins again. Every month, different contracts cycle and new product requests filter through to the contracting team. It is a constant state of evaluation and, at times, change. While this describes a standard approach to contracting, how can organizations enhance this strategy for maximum savings? The answer is not with custom contracting or bundling contracts (think endomechanical). The answer lies with clinical product utilization.

At its core, clinical product utilization includes elements such as standardization, evidence-based decision-making, education and training, and continuous improvement. The overarching goal is to ensure supplies are used efficiently and effectively to provide high-quality patient care while minimizing waste and unnecessary costs. To uncover these opportunities, teams can employ a few tactics.

One tactic is to empower cross-functional teams (contracting, value analysis, supply chain) to ask questions. These inquiries mustn’t be punitive to the questioner nor received negatively. They are intended to serve as a foundation for greater understanding. It can support cross-collaboration and teamwork. Consider asking some of the following questions: How are clinicians using the products purchased? How should they use these products? Are there factors creating opportunities for misuse or overuse? Is there clinical evidence supporting the use of these products on the patient population served? Are there clinical features of the product that increase the cost but do not add value to the patient’s care?

Asking the right questions can lead to significant savings. I worked with a facility that stocked a higher cost but contracted central-line dressing tray that was used systemwide. One department stood out in its utilization rates. Initial discussions with the Director revealed that this department cared for most patients with central lines and thus the increased usage. However, the numbers did not add up when compared to actual patient volume. Further discussions with an end-user revealed that staff often needed tweezers for various tasks, and this particular tray included tweezers, which were unavailable a la carte. This simple fix of adding a separate, low-cost tweezer showed that greater understanding on both sides can uncover greater opportunities.

A second tactic is to collaborate with your contracted supplier. This is where the rubber meets the road. Is the supplier in it for the short game and views the relationship as merely transactional? They want the volume, and volume equals dollars. Or is the supplier committed to the long game and wants to work collaboratively to optimize the organization’s clinical supply needs? This may result in decreased sales in the short term but foster a stronger partnership for the future. These are supplier partners.

Supplier partners can benefit the organization by assisting in identifying clinical product utilization savings. Their product expertise is unparalleled, encompassing education, clinical criteria application, best practice identification, knowledge and protocol sharing between institutions, and identifying instances where the product should not be used. A good supplier partner will align with the organization’s goals and support the team’s contracting strategy.

In the evolving healthcare landscape, incorporating clinical product utilization into the contracting strategy can uncover significant savings. Empowering cross-functional teams and identifying supplier partners are just a few tactics to use with current contracting strategies. Together, this approach will support the delivery of high-quality, cost-efficient patient care.

Anne Marie Orlando, RN, MBA, RCIS, CVAHP, Senior Director, Clinical Programs at Blue.Point Supply Chain Solutions; Treasurer, Association of Healthcare Value Analysis Professionals

Anne Marie has been a critical care nurse for over 19 years with a leadership foundation in the Interventional Cardiology and Interventional Radiology space. During her supply chain tenure, Anne Marie held a dual role of Supply Chain and Clinical Resource Director where she operationalized many clinical initiatives while maintaining fiscal accountability. At the GPO level, Anne Marie served as the Director of Clinical Services for Yankee Alliance supporting member value analysis teams and their work with clinical utilization. Anne Marie is currently the Senior Director, Clinical Programs for Blue.Point Supply Chain Solutions supporting value analysis teams in the use of the Blue.Point platform focusing on aligning product utilization and standardization with evidence-based practice.

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