7 Ways to Build Better Procurement Sustainability Within Your Health System
After over a year of managing shortages and supply-chain disruptions during the COVID-19 pandemic, you’ve learned firsthand the importance of having a more predictable and sustainable procurement model. After all, your health system can encounter any number of problems when it lacks critical supplies—most notably, the inability to maintain the health and safety of patients and staff.
It’s not just the supply of personal protective equipment (PPE) and other materials that have been critical to helping you maintain operations in these times of uncertainty. Having access to reliable services has also been necessary to keep your organization operating during peak demand times. The managed service providers in your procurement ecosystem are essential for navigating the ongoing pandemic, from partners supporting better patient outcomes to background screening providers helping you hire.
Critical Factors for Achieving Supply Chain Sustainability
The quality of your supply chain has a great impact on your organization's ability to operate cost-effectively. When you have a reliable system for accessing the products and services you need, you can maintain optimal day-to-day operations. But without it, you can experience uneven inventory, inefficient use of clinician time, and other problems.
According to Gartner research, the total supply chain cost for a health system averages 37 percent of the total cost of patient care. By boosting your procurement sustainability, you can save costs and potentially derive greater value from your healthcare supply chain.
Be sure to consider the following factors when evaluating your health system’s supply chain strategy.
Risk Management and Regulatory Compliance
When your inventory is stocked with supplies potentially coming from different locations around the globe, it’s critical to make sure the members of your supply chain demonstrate a high standard of compliance with applicable laws. For example, if you purchase medical equipment that doesn’t meet federal product safety standards, you could put patients at risk—not to mention the money you wasted on equipment you can’t use and need to return.
Similarly, if you utilize background screening services that don’t keep pace with key healthcare background check requirements like the Office of the Inspector General (OIG) and Centers for Medicare and Medicaid Services (CMS), you could be exposed to risky hiring practices without even realizing it.
The Candidate Experience
Managed service providers in your supply chain should have the systems and processes in place to help you attract and hire in this highly competitive healthcare talent market. For example, the staffing firms you use to source per diem and traveling nurses should have efficient processes for sourcing, interviewing, and recommending them to your health system. Likewise, your background screening provider should have systems in place to help you keep the hiring process moving and avoid delays, which could cause unnecessary frustration for candidates.
Request for Proposal (RFP) Processes
The quality of your request for proposal (RFP) and vendor selection process can impact your healthcare supply chain for years. By awarding contracts based on price alone or rushing through the process without fully evaluating your options, you can get stuck with a provider that could ultimately subject your health system to shipping delays, quality inconsistencies, and other complications. Conversely, following a well-designed RFP process can help you attract product and service providers that are aligned with your goals for sustainable procurement.
7 Steps to Build Greater Procurement Sustainability
When product and service needs fluctuate greatly, as they have for health systems during the pandemic, your procurement strategy can make all the difference in how quickly you can obtain the resources you need. Consider the following steps to help your organization prepare for the next crisis or surge in demand.
1. Establish clear procurement goals and communicate them to your providers.
You need products and services to meet your standards for quality assurance, and it’s critical to communicate those priorities to the providers in your supply chain. To keep providers aligned to your standards, help them understand your goals through the RFP process and periodic vendor reviews during the year.
You can also boost your procurement capability by using services via a preferred buying group. The buying group gives you access to pre-negotiated pricing and vetted services aligned with your procurement goals.
2. Conduct “what if” contingency planning.
In the past, your health system may have mastered the art of just-in-time procurement. Now, wide swings in healthcare demand created by the pandemic mean you should plan for contingencies and “what if” scenarios before they occur.
You should also expect the members of your supply chain to have some contingency planning capability. In an interview with the Healthcare Financial Management Association (HFMA), healthcare executive Karen Conway described the importance of weaving contingency planning into your vendor relationships. She suggested, “When you’re negotiating with vendors, you want to understand whether they’ve mapped out and created contingency plans for their own supply chain risk.”
3. Evaluate your supply chain ecosystem.
In addition to focusing on transparency and planning with your product and service suppliers, you should also consider opportunities to partner with other healthcare organizations. For example, the partners in your ecosystem may be able to make use of your surplus or obsolete inventory you might otherwise have discarded.
You may also be able to create new supplier relationships with unlikely partners, which happened early in the pandemic when distilleries produced hand sanitizer and clothing retailers manufactured gowns and face masks.
4. Benchmark procurement sustainability best practices.
By understanding what other health systems are doing to create a more sustainable supply chain, you can avoid some common pitfalls and learn about new approaches you haven’t yet tried. In addition to networking with those you know, it may be worthwhile to seek fresh insights and best practices through organizations such as the Society for Healthcare Organization Procurement Professionals (SHOPP) and the Association for Health Care Resource & Materials Management (AHRMM) of the American Hospital Association.
5. Identify and reduce waste.
Wasting time can be as damaging to your health system operations as wasting water or electricity. Therefore, you’ll need to be sure each member of your supply chain supports your goals for efficiency and productivity.
For example, you should work with a background screening partner who prioritizes efficiency when helping you to screen prospective and existing employees. An experienced screening provider can leverage technology and integrations with other platforms your health system human resources team likely already uses, such as an applicant tracking system (ATS), to help you hire talent efficiently.
6. Automate manual processes.
Human error resulting from manual or paper-based processes can lead to a rise in supply chain costs. For example, if you rely on email, spreadsheets, or legacy systems to order products and services, you may be exposing your health system to errors that can cost you time and money. But when you automate those manual processes, you can reduce the potential for human error and thus manage supply chain expenses more efficiently.
7. Use reliable analytics to identify gaps in your supply chain.
When you’re tracking everything from latex gloves and heart monitors to per diem nurses and custodial staff, you need analytics to help you understand all the inputs and outputs of your supply chain.
In a Black Book Market Research survey, 69 percent of healthcare leaders said that their supply chain was the most valuable source of actionable data for their organization. When you use analytics to help you track variables such as inventory, shipping schedules, and employee work schedules, you can build more predictability into your procurement processes and make more data-driven purchasing decisions.
Transform Your Procurement Strategy
Taking a fresh look at your strategy for procurement sustainability offers many new opportunities for improvement. By selecting product and service providers who understand your priorities and using technology and analytics to drive more efficient processes, you can clear bottlenecks and keep your health system running smoothly.
Given the importance of background screening to your talent management and hiring processes, it’s critical to look out for insights and best practices for more efficient hiring. To identify new ideas for dramatically improving your health system’s ability to hire and screen talent, use this checklist to evaluate your background screening RFP process.