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Dear Colleagues,
In February 2015, the Johns Hopkins Health System (JHHS) announced the launch of a supply chain joint venture with Allegheny Health Network (AHN). This agreement formed a new group purchasing organization (GPO) to oversee sourcing solutions across both health systems.
Today, we're pleased to report that the GPO is operational and entering into vendor contracts for nonlabor-spend categories. The first contract, with Siemens for imaging products and services, has been signed, effective March 2015.
The legal name of the GPO is Healthcare Supply Chain Innovations LLC (HSCI). While you may notice HSCI being used initially, the trade name that will distinguish the company in the marketplace will be announced in the next few months.
The GPO is taking supply chain sourcing to a new level. As part of the launch effort, we want to ensure that you understand the key benefit of working with a GPO (like Premier, which JHHS currently utilizes), how HSCI is unique from "traditional" GPOs and what you can do to contribute to its success.
What is the key benefit of working with a GPO?
- Greater buying power: GPOs aggregate purchasing volumes from across their member organizations. Similar to the concept of "buying in bulk," this approach allows GPOs to negotiate lower pricing with vendors.
How is HSCI unique from traditional GPOs?
- Improved product and service quality for patient care: While some GPOs consider clinical factors in part, HSCI fully integrates clinicians into the process of sourcing clinical products and services to help assess utilization practices and share critical patient care insights. This alliance with leading clinicians allows HSCI to contract for products and services that meet the quality standards of its member organizations so that quality can be maintained—or improved upon—as prices are reduced.
- More collaborative approach: Understanding that cooperative involvement is essential under a GPO, the new company has an elevated focus on collaboration. More direct feedback will be obtained from member organizations and utilized in the vendor and product selection processes.
- Sourcing beyond purchase price: HSCI considers not only the initial purchase price of products and services, but also the costs of operation. This total cost of ownership approach increases transparency into the true cost of all purchases and leads to better-informed purchase decisions.
- Inclusive RFP process: Extensive collaboration directly translates to the request for proposal (RFP) process, where greater teamwork is utilized to achieve the most favorable results for everyone. To ensure optimal sourcing of products and services, subject matter experts' feedback is integral to the analysis of vendors' offerings.
- Expanded breadth of goods and services: In addition to national supplier contracts, HSCI supports regional contracting. Consequently, member organizations will have access to a broader selection of goods and services, particularly in spend categories that are better served by regional vendors.
- Augmentation of existing GPO relationship: Although the GPO will begin executing contracts in certain spend categories, JHHS will still utilize contracts executed by Premier. Pricing will be maximized to the extent possible through Premier contracts, while HSCI will focus on contracting in spend categories that will provide its member organizations with even greater savings impact.
What can you do to contribute to the new model's success?
- Partnership and participation: Widespread commitment from all levels of member organizations to collaborate and share insights is critical to securing optimum pricing, and it ensures that we are caring for our patients with the best possible products. When you are contacted for participation in the RFP process for a potential contract, we ask that you please respond promptly and participate actively.
We are in the data-gathering stage of RFPs for various product categories and will be reaching out to those responsible for managing these products in the near future. Whether you're engaged in a current RFP or forthcoming RFPs, we look forward to working with you to ensure that we have the best supplies for the best value to give our patients the best possible care.
Sincerely,
Jeffrey Martin
Executive Director
Healthcare Supply Chain Innovations |
