Purchased Services: A Rumble Becoming a Roar
For the last few years I have been talking to Supply Chain Leaders more and more about how they are aggregating the services they procure for their hospitals and health systems. As many as 12-15 years ago I started to hear rumblings about how this was a huge a savings opportunity, but in the next few subsequent years they had bigger fish to fry with physician preference items, capital equipment and the never-ending commoditization of supplies.
The impending financial crisis in the late 2000s kept them busy with anything that could help reduce costs just to keep their institutions solvent. Supply Chain Leaders went from an important component of the hospital and IDN leadership team to a strategic component of the executive team.
After the battlefield promotion due to the financial crisis, our nation’s Supply Chain Leaders got to stare down mandated savings, thanks to the implementation of healthcare reform and reimbursement being predicated on cost, quality and patient experience.
After this crazy decade and a half of chasing savings, you’d hope we would be at whatever the new normal is for Supply Chain Leaders and their departments. In many ways, stability has crept into the procurement of products. It appears the tenants of strategic sourcing permeates much of the transactions that progressive hospitals and IDNs conduct today.
But how they source services is about to go through a huge revolution. If you want to see some exciting changes, keep an eye on how hospitals and IDNs put the procurement of services through strategic sourcing protocols the next few years. I think you will see long-standing service contracts being challenged, utilization of services monitored like never before and contracts professionally negotiotiated – many for the first time ever.
If you like watching change happen, monitoring how services are procured in our hospitals the next few years should be interesting to watch. Keep an eye on The Journal of Healthcare Contracting as will be in the front row bringing you the story!
Thanks for reading this issue of The Journal of Healthcare Contracting.
John Pritchard
