5 Criteria for Ensuring Peak Performance

The current state of the healthcare market for many providers is on the upswing. Volumes are steady, reimbursements are flowing and good cost discipline is paying off. Many hospital organizations have benefited from increases in neurology, orthopedic and oncology utilization, as well as better reimbursement in these areas. Still, questions remain.

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First, how does an organization best maximize its opportunities for cost reduction in direct spend? Second, what gains can be made in indirect spend like purchased services? Core direct supply spend management will never go away, and its value is renewed with every contracting cycle. However, some managers may be surprised by the extent of savings available from a purchased services cost reduction initiative. These projects can have longer-term cost impacts and can deliver increasing returns for the organization.

Unfortunately, for supply chain managers, the default process for selection of purchased services providers often involves contracting with more than one supplier and hoping for the best. Quality, reliability and consistency of services are difficult to determine when considering several prospects, and equally difficult to monitor and change after a contract implementation. However, a few organizations have gone beyond diligent contract management to achieve the benefits of a strategic partnership. To enable better decision-making and add some strategic insight, look for the following attributes when screening and selecting a purchased and business services partner:

1 Expertise. A strategic resource in purchased or business services has some intellectual property and know-how that supports its clients’ market performance. This know-how includes models, processes and methodologies developed over time and refined through practice. Brand-name consulting organizations employ many tenured professionals with expertise in important domains of healthcare enterprise. However, pure-play consulting organizations sometimes fall short in their ability to provide a turnkey solution. Furthermore, high-cost consultant expertise should be focused on atypical problems like market positioning and population health program development, instead of solely improving revenue-cycle operations or managing general services operations. Providers of business services solutions often have consulting divisions that can illuminate challenges and specify coherent implementations. When backed by a business services solution provider, their recommendations are not only more economical, but also more effective.

2 Experience. New models for care delivery are being created all the time. The novelty and promise of a new solution should be promoted, but considerations must go deeper in the selection of a strategic partner. Best practices suggest that supply chain managers consider the relevant experience of the partner in similar—as well as different—hospitals and health systems. Demand evidence that the aspiring partner organization has executed successfully in multiple segments of the healthcare marketplace. Experience in scaling a solution is also a frequently missed selection criterion.

3 Well-developed business processes. Many providers are reluctant to change processes because such a change adds risk to the contract. The enlightened supply chain manager is encouraged to break this perception if adequate expertise and experience are evident in the prospective partner organization. There are often very good reasons for a provider organization to reorient or redesign its processes to take advantage of the performance improvement that can result. On the other hand, some purchased services and business process suppliers appear rigid in their demands for the adoption of their processes, and this should not be a stand-alone disqualification criterion. Instead, a supplier’s demands for adherence to a process that works should be seen as a strength.

Finding a partner for business and purchased services can help ensure quality, reliability and consistency of service, as well as enable better decision-making and add some strategic insight.

4 Profitability. One of the first criteria in supplier selection is the stability of the contractor. If the supplier organization is too new, too small and, most important, lacks financial stability, it can be safely ruled out. Although the cost of a solution to the customer organization is more important than the margin a supplier partner can maintain, it is in the best interests of providers to choose financially viable suppliers.

5 Controlled growth. Finally, a good strategic partner considers the costs, not just the benefits, of rapid growth. The ability to execute must be considered in the context of competing interests, such as funding growth. The ability to support clients requires massive investment on the front end. Therefore, good partners have solid infrastructure and add resources and capabilities in a measured fashion.

HealthTrust and Parallon are prime examples of business services partners that meet and exceed the criteria described above. Many consulting resources, business process and clinical practice improvement assets are included in solutions provided by both organizations.

Successful supply chain managers are encouraged to drive their organizations further by considering business services partnership and development. Those who do will ensure career growth as well as their organization’s future.

HealthTrust: Your Partner for Total Cost Management Solutions

HealthTrust offers savings initiatives and consulting engagements that cover all areas of supply spend and supply chain optimization and business process expertise, including:

SourceTrust: medical device consulting and custom contracting; ServiceTrust: purchased services custom sourcing; SolutionsTrust: optimizing operational performance; AdvantageTrust: GPO for non-acute healthcare providers; Parallon: revenue cycle and business process expertise, workforce and technology solutions.

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Author Information

Gunter Wessels, PhD

Gunter Wessels, PhD

Wessels is a partner at Total Innovation Group Inc., a consulting firm specializing in healthcare. Clients of his firm include policy makers, payers, providers, group purchasing organizations and supplier companies, both in the United States and internationally. More Articles by This Author »