Presented byJ. David Hesson, Jr.

Vice PresidentAspen Health Care Metrics

A MedAssets Company

Objectives

Define IDNDiscuss IDN’s major focus for the supply

chain departmentDiscuss expectations for IDN/GPODiscuss how a vendor aligns with the IDN

and GPOQuestions and Answers

Discussion PointsIDN’s – What are they and why do they

exist?IDN’s - What keeps them up at night?IDN’s – What are their priorities?Why does an IDN need a GPO?What does an IDN think about vendors?How does the vendor align with the IDN

and GPO and keep the “peace”?IDN Success Story

IDN’s – What are they and why do they exist?IDN – Integrated Delivery NetworkIf you’ve seen one IDN, you’ve only seen one IDNLike all businesses, there is advantage to size

Consolidation of “Back Office Support”Ability to leverage volume in negotiationsAbility to leverage cash positionAbility to specialize services and align physicians. (Current

trend of physician employees will continue to grow)IDN’s represent the majority of the health care

spend in the U.S., their percent of the spend will continue to grow and the number of IDN’s will probably shrink in the future.

IDN Supply Chain Executives What keeps them up at night?Pricing, Pricing, Pricing. Due to scrutiny of their

Administration. Their savings go directly to the bottom line. This is changing with revenue affecting supplies.

Customer Satisfaction. They must keep their clinicians, support departments and physicians happy. They must have the right product at the right place, at the right time, and at the right price every single time.

Proper utilization of limited personnel resources. Due to staffing limitations, strategic long term contracts with good vendor partners will be more productive. Proper utilization of the GPO is critical here.

IDN CEO’s and CFO’s - What keeps them up at night? Revenue and Reimbursement.Health Care ReformACOs – Accountable Care OrganizationsPhysician AlignmentCompetitionLimited Capital ResourcesBond RatingsShort Term and Long Term Debt“Bottom Line” !!!!

One IDN’s Expense AnalysisSupplies and Drugs

Purchased Services

Salaries & Benefits

Total Expenses

$154 M $192 M $362 M $788 M

20 % 24% 46%

Discuss what an IDN expects from it’s GPO.IDN’s choose to use a GPO because the GPO has

demonstrated value.Better pricing than what the IDN can get on it’s ownInformatics that assist with product standardization,

pricing control and benchmarking.Flexibility with regional contracting.

Most IDN’s don’t have the staff to negotiate with thousands of vendors. They will negotiate large spend areas, capital, or minor equipment contracts on their own or in conjunction with their GPO.

Some GPO’s demonstrate value in other areas.

What does an IDN think about vendors?

Vendors are necessary, but aren’t aligned with their customers.

Vendor’s are driven by revenue and their stockholders

Sales representatives are paid for sales, not customer satisfaction

Most new products aren’t worth the additional costs. IMDA members can address revenue affecting products better than most large companies.

Vendors do not understand a partnership

How do IMDA Members align with the IDN, the GPO and keep the peace?Listen, Listen, Listen.

Learn how the IDN operates and what are it’s priorities.Learn how the IDN utilizes the GPO.

Communicate with all stakeholders in the supply chain. Working around purchasing or the value analysis process will alienate the vendor in the long run.

Present jointly with the GPO regarding contract offers.

Bring real value to the deal, not just pricing.Follow-up. Once the deal is done, support the IDN.

How do IMDA Members align with IDN’s?(Revenue affecting products verses price.)

Present independent clinical data to the value analysis and risk management staff. (Some organizations will include revenue cycle staff).

Don’t make claims, make suggestions on how the IDN or hospital can analyze and prove your data for their organization.

Patience – IDN’s and hospitals have multiple processes and stakeholders.

How IMDA Members align with IDN’s?(Revenue affecting products verses price.)

Develop a product evaluation plan with timeframes that the organization sets.

Politically correct follow-up based upon the agreed upon timeframes.

Celebrate and reinforce successes for each step of the process.

Upon acceptance, develop and support a conservative implementation plan.

Do’s and Don’ts when meeting with customers

Be on time and prepared. (Allow extra preparation time in case of equipment issues.)

Present facts and accept challenges in the meeting.

Never argue with a customer.Never act like you know more than anyone in

the meeting.Limit presentation to ½ hour if possible.

Do’s and Don’ts when meeting with customers continued.

Keep the meeting moving. Try to keep discussions brief and related to the topics.

Cologne and perfume to a minimum.Be very careful with jokes.Close by reviewing next steps, especially who

will do what and when it will be done.Lastly, thank everyone for their valuable

time.

A Fall Prevention Success at an IDN (comments from their value analysis manager)

An industry leader in fall prevention met with the Value Analysis Manager.

They developed a product mix of fall prevention products and standard procedures.

They demonstrated high integrity, honesty and great follow-up.

The vendor provided outstanding product education.

They understood the need for patient and staff safety.

They were a great company to work with.

EM’s Rules – Applies to Everything in Work and Life

Everyone wants 3 things in life. They want it good, now and cheap.

You only get 2 out of 3 !!!!Good and Now won’t be Cheap.Good and Cheap won’t be Now.Now and Cheap won’t be Good.