With things at Next Level Purchasing getting busier than ever, it feels like I am trying to become a self-trained speed reader. It seems like I plow through the trade pubs and newspapers at an ever increasing pace and I probably miss some important things here and there.
But I couldn’t help but notice an article in the current Pittsburgh Business Times that covers the story of Excela Health and Heritage Valley Health System combining their purchasing departments to theoretically “double their buying power.” I find this story interesting for a number of reasons.
1. I’ve found that healthcare organizations are a little lazy when it comes to their healthcare purchasing. Many of them say, “We’ve just joined a GPO, we don’t need strategic sourcing.” But this combination of smaller healthcare players I think sends a different message. A Healthcare GPO touts the ability to give one hospital the buying power of hospitals hundreds of times the size. But do they really? If they did, this combination would not make sense. After all, what is doubling your buying power when you could increase it by many times over through a GPO? This may be a message that some healthcare GPO’s don’t live up to the promise and that healthcare organizations can get better deals by doing it themselves (which I personally believe).
2. I hope that Excela and Heritage Valley have a comprehensive plan for truly leveraging this combination. Simply teaming up isn’t enough. To maximize the benefit, they will have to implement sourcing principles and purchasing best practices. To simplify, their strategy will have to include a thorough combined spend analysis, opportunity identification, sourcing cycle, masterful negotiations, supplier management, and more.
3. The article says that “no staffing changes are planned.” I don’t know what kind of teams that they have, but I hope that they don’t expect people who have made their living for years doing tactical purchasing to execute everything described in #2 above without any purchasing training or influx of new talent.
4. Both organizations’ CEO’s were quoted in the article. It’s nice to see a purchasing program get C-level attention.