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Solution Highlight | Strategic Sourcing

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March 04, 2019 by The Resource Group

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In honor of our 10-year anniversary, we are sharing our story and the “why” behind the revolutionary approach we’ve taken to healthcare resource and supply management.

Ten years ago, we were an informal group of people across the country, working separately to solve the same problem: lowering the cost of healthcare while maintaining or improving caregiver and patient satisfaction.  Today we offer a comprehensive set of solutions to healthcare organizations, supported by coordinated and specialized communities. While the goal remains the same - lowering the cost of healthcare - the strategies and tactics we employ to accomplish this goal have not.  Last week we introduced our User-Directed Integrated Solutions, the way in which we organize and describe the services we offer and the communities supporting those services.

Today, we feature a segment of our User-Directed Integrated Solutions: Strategic Sourcing or the Four Pillars of Strategic Sourcing. The Four Pillars of Strategic Sourcing are part of a discipline-based model that works together to deliver savings and end-user satisfaction.

Healthcare group purchasing organizations and hospital supply chain teams traditionally organize their people by clinical area, such as orthopedics or cardiovascular.  These people are expected to have a diverse set of skills, including the ability to engage end-users on product attributes and design a contract, to negotiate with suppliers who often have greater power in the market, to implement product or contract changes to ensure adoption of the new agreement and savings realization, to measure and audit implementation, and to analyze savings.  Finding a group of people who each possessed all of these skills proved to be impossible. Instead, The Resource Group organized by discipline, hiring people who were excellent at one skill in the process and bringing each person together as a group.  For example, one group supporting orthopedics contains several people, each of whom are skilled in one of the following areas: caregiver engagement and contract design, sourcing/negotiation, implementation and project management, measurement, and analytics.

Healthcare group purchasing organizations and hospital supply chain teams often provide a wide breadth of contracts with multiple suppliers to choose from for supplies and services.  While choice can be appropriate in certain situations, in other cases it can lead to unnecessary variation and suboptimal pricing due to low volume. Instead of contracting for resources and supplies end-users may or may not want to use, The Resource Group decided to take a different approach and focus contracting for on the supplies and services that met the criteria determined by caregivers. This resulted in the Four Pillars of Strategic Sourcing. 

This approach, motivated by the ideals of hospitality, starts in the Contract Design community.  Our associates engage physicians, clinicians, and other end-users through Affinity Groups and Decision Teams to highlight the attributes that are required in the supplies and services they use every day.  This approach avoids brand preference and instead focuses on the attributes and criteria present in a product or service.

Once our end-users have determined which suppliers provide acceptable products or services, our Sourcing community works with suppliers to negotiate contracts for these supplies and services.  By aggregating both our volume and our compliance - our ability to honor our commitments, we earn best-in-industry pricing. 

After years of observation and experience in healthcare resource and supply management, The Resource Group also recognized that sub-optimal realization of value was often a result of not having dedicated implementation and measurement communities that provided education, communication, auditing, and project management. The Implementation and Measurement/Finance communities were created to support a smooth transition to new contracts.  Lastly, the Four Pillars of Strategic Sourcing are supported by Analytics to deliver accurate measurements, predict future opportunities, and provide key resources in maintaining the integrity of this Solution. 

Since the inception of the Four Pillar of Strategic Sourcing, The Resource Group has delivered over $1.2 billion in annual savings to our Participants, with savings of 8-18% compared to traditional GPO pricing and hospital self-contracting. The five communities, Contract Design, Sourcing, Implementation, Finance, and Analytics, continue to support a contract portfolio that covers 90% of our Participants’ supply, IT, construction, capital, and purchased service needs.  Over the next few weeks, The Resource Group will be featuring these Communities and invite you to follow our media pages  to learn more.