Purchasing, Supply and Professional Growth

October 1, 2002

Purchasing, Supply and Professional Growth

Purchasing, Supply and Professional Growth

By Etta Bushong, ACSP, CRCST, CSPDT

Like so many central service (CS) professionals before me, earlier this yearI found myself "re-engineered." In an era of shrinking budgets andhiring freezes, I was moved from the central supply (CS) department into thematerials management or purchasing department. While my new position brought newchallenges, it also provided opportunity for professional growth. The experiencewas a bit like going back to school, homework and all.

Having been in CS for nine years, I was familiar with purchasing minor itemsfor distribution from this department. However, nothing prepared me for whitespace, evergreen clauses, LOCs and my personal favorite, "slow fatrabbits," a commonly used local phrase for items that are easily convertedto contract.

First on my agenda was to systemically convert all products to our grouppurchasing organization (GPO). A system was set up to allow for the conversionof easy (those slow fat rabbit) products first, then incrementally introducemore complicated products over to the GPO portfolio. Categories were establishedto facilitate the process: OR, IV fluids, soaps and lotions, general wound care,etc. Using this approach, thousands of items were transferred into the portfolioand every contract was tracked to determine cost information.

The conversion process was a success due in part to the fact all thecontracts were with nationally recognized brand names. Doctors and nurses didnot feel any substandard products were brought into the hospital.

There are different ways to successfully organize purchasing processes, butthere are two rules of thumb I adhere to regarding purchasing for CS: always doyour homework and make the vendor your partner.

Always Do Your Homework

Research is the key to making a decision that will positively impact thehospital. Research can be reduced to a four-step process. When you receive arequest to look into a new product:

1. Go to the GPO Web site and explore the contract file to see if there is anexisting agreement.

2. Visit the Web site where the product is highlighted to do some basicexploratory investigation.

3. Set up a meeting with the vendor.

4. Meet with vendors of similar products.

I request that vendors either send or bring me information on their product.I specifically ask each representative to explain what makes his or her productdifferent from the competition's.

If the product is a cleaning solution, disinfectant or sterilization product,I always request the company's scientific studies be mailed to me prior to themeeting. Although they are laborious to read, I can determine if the product wastested in their own lab or through an outside company. The report also indicateswhat germs were used, which reveals the product's efficacy at killing tougherorganisms. (Vendors with whom I have previously transacted business nowautomatically send me the information.)

After research comes sorting out "the players." Send an e-mail tothe main department heads in your facility asking which vendors they currentlyuse for the specified product, what other department may be using this product,and lastly (if applicable) which doctors may be impacted by a change in product.A lot of surprises can occur with this simple e-mail. Sometimes I discovervendors no one has heard of, departments that are purchasing off contract anddoctors who are using a product that will have to be converted.

Once all of the "players" have been identified, call each one torequest an annual sales report sorted by hospital name. This itemized listshould include the volumes they generate, the individual price, annual sales andthe overall total of sales dollars spent per hospital. Compare the data; themain vendor becomes clear based on dollar amounts -- not so with niche orspecialty items. Money is not always the reason to select a vendor; however,better pricing can usually be achieved by the dollars that your hospital spends-- the greater the dollars the better the tier pricing.

Research takes time, and time is precious to each of us. However, mistakesmade in haste reflect poorly on you and your department, and that's a hard imageto live down. Undoing mistakes is costly and an inefficient use of staff time;it's better to put time in up front.

Make the Vendor Your Partner

Every task is easier when shared and by partnering with vendors you canaccomplish more. Following is a recent example from my own experience. Ireceived a request for specialty surgical instruments by a doctor who specifieda particular brand name. The quoted price for the set was $3,925. The GPO Website provided data for instrument companies with similar products; the sameinstruments were priced at $3,006, a savings of $919 for the hospital. Now, howto persuade the doctor to convert to the less expensive product?

I contacted the vendor with the lowest price. Together we decided to try theinstruments and, contingent upon the doctor's approval, we would proceed with apurchase. The vendor had now become my partner and had more to lose than I did.The instruments must be proved superior to the higher-priced competition. Thevendor had to sell the doctor as well as the instruments.

Another way to partner with the vendor is to ask questions. Ask what makestheir product different and note your own questions to ask. Usually, myquestions focus on what I perceive to be product weaknesses. If I know thevendor well, I e-mail him or her the questions; if not, I wait to discuss themat our meeting. Sometimes vendors do not know the answers and a follow-upappointment must take place.

A third way to partner is to use your contacts. If another hospital is usinga product your group is considering, ask for their feedback. I have capturedvaluable information through these calls, including examples of deliveryproblems, communication problems and poor sales force representation, forexample. Use this information to partner with vendors.

In most hospitals, changing products requires the approval of variouscommittees. This is the final step in the process. I usually appear with myentire folder, just in case there is a question I haven't explored. I have beenout of school for a while now, but I find I still learn something new every day,even when I've done my homework.

Etta Bushong is materials manager for Bon Secours Healthcare System of NewJersey, and the Region 2 director for the American Society for HealthcareCentral Service Professionals (ASHCSP).