Reverse Auctions in Healthcare Procurement October 23, 2015 Competition. Transparency. Savings. Our Values Trust Passion Leadership Agenda Why Reverse Auctions are relevant in healthcare today What is a reverse auction? What about my GPO relationships? Case Study Results Demo Video Developed in the 90s by the private sector businesses to harness the competitive nature of vendors still used today by best in class companies The process has evolved to meet healthcare procurement requirements while integrating seamlessly with your GPO relationships As healthcare transitions from a fee-for-service to a value-based reimbursement model, there is increased pressure to control costs. How do you cut costs without cutting services? What is an Auction? What is a Reverse Auction? Bidder compete, on the internet, through an electronic sealed bidding platform by submitting multiple lowering bids in a timed event Reverse Auctions: Over time the price Decreases Many Vendors One Buyer Bid vs. Bids - Provide vendors multiple opportunities to gain your business Products or services are sold to the HIGHEST bidder Typical Auctions: Over time the price Increases Many Buyers - One Vendor One Vendor Multiple Buyers Multiple Vendors One Buyer 1.Time remaining for the event 2.Each participating supplier and their current ranking 3.Each suppliers current bid 4.Each suppliers previous bid 5.Real-time bid statistics What will the Buyer see? What will the Suppliers see? 2 1 Suppliers do not see data from competing suppliers. 1.Time remaining for the event 2.Suppliers bid amount and rank Traditional Paper BidElectronic Auction Prepare Specs Release Bid Questions & Answers Receive ResponsesReceive Responses Without Pricing Buyer Response Review / Approval Vendor Training Bid OpeningLive Online Auction Event Bid Evaluation Bid Award How are they different from paper bids? What about my GPO relationships? GPOs have helped hospitals control costs But what about all that volume? Adequate Volume + Transparent Competition = SAVINGS GPOs have helped hospitals with value-added consulting GPOs have created barriers to entry GPOs are vendors too Auction Description Budget Low Bid Savings $Savings %# of Bids# of Suppliers Elevator Maintenance $ 471,693 $ 360,000 $ 111,69324%1415 Biomed Contract $ 1,255,344 $ 1,055,344 $ 200,00016%2555 Hospital Grade LCD TVs $ 513,846 $ 355,200 $ 158,64631%19611 Ink and Toner $ 7,500,000 $ 6,514,951 $ 985,04913%718 Instrument Sharpening Repair $ 170,000 $ 118,788 $ 51,21230%1457 Janitorial Products $ 534,360 $ 429,655 $ 104,70520%3066 Custodial Services $ 1,042,200 $ 725,570 $ 316,63030%1,09912 Landscaping Maintenance Services $ 1,458,000 $ 1,095,444 $ 362,55625%132 Laundry and Linen $ 1,800,000 $ 1,294,651 $ 505,34928%1408 Copy Paper $ 3,209,880 $ 2,552,496 $ 657,23520%695 Furniture / Beds $ 1,481,390 $ 1,278,255 $ 203,13514%1673 Personal Protection Consumables $ 569,898 $ 342,158 $ 227,74040%26411 Chemicals $ 10,000,000 $ 8,711,905 $ 1,288,09513%17520 Radiology Equipment $ 1,135,000 $ 704,547 $ 430,45338%525 Uniforms $ 1,833,638 $ 1,370,114 $ 463,52325%214 Security Guard Services $ 350,000 $ 253,761 $ 96,23927%1,33823 Surgical Center Renovation $ 14,000,000 $ 13,000,000 $ 1,000,0007%4389 Temporary Employment Services $ 2,100,000 $ 1,804,000 $ 296,00014%1877 Trash Bags $ 594,832 $ 435,323 $ 159,50826%31211 Waste Collection $ 500,000 $ 280,850 $ 219,15044%1627 Healthcare Purchasing Examples What are my options? Manage Internally Invest in eSourcing Software Assign or hire staff to this time-intensive process Develop expertise through trial and error eBridge No direct cost to your hospital or IDN Low-effort initiative for you and your staff 13 years of eSourcing expertise Purchased Services Janitorial Services Waste Management Temporary Staffing Security Guards Landscaping Pest Control Elevator Maintenance Window Cleaning Uniform Rental Instrument Sharpening & Repair Biomed Equipment Maintenance Medical Records Management Office Supplies & Equipment Computer Equipment Flat Screen TVs Printers Copiers Copy Paper Ink & Toner Janitorial Paper Lamps & Ballasts Can Liners Office Furniture Medical Supplies Personal Protection Consumables Purchased Linens Radiology Equipment Our first eBridge event saved three times the amount we budgeted, but the best part was that their team truly did the lions share of the work! - Cindy Gueltzow, Corporate Director of Procurement Services Baptist Health Kentucky Our first eBridge event saved three times the amount we budgeted, but the best part was that their team truly did the lions share of the work! - Cindy Gueltzow, Corporate Director of Procurement Services Baptist Health Kentucky Top 25 Healthcare Reverse Auctions THANK YOU!!! David Starbuck, PhD