Healthcare Leaders Find Success with Strategic Procurement Partnership

The art and science of servicing non-acute-care sites

Achieving supply chain success in the non-acute­ care market really boils down to having the right people, the right relationships, and driv­ing the same end game for everyone involved. If we can do that and drive savings to the bottom line, then we will continue to grow.

LBMC’s client partnership with Premise Health

As more IDNs acquire physician practices, acute-care­ based supply chain executives are discovering the art and science of servicing non-acute-care sites.

LBMC provides business pro­cess outsourcing solutions – including accounting, technology, human resources and payroll, and pro­curement – to clients around the coun­try. One of our largest procurement clients is Premise Health, which operates approximately 500 worksite health and wellness cen­ters for self-insured employers across the country. The company was formed in June 2014 through the merger of CHS Health Services and Take Care Employer Solutions LLC and has been a client of ours since its formation.

Contracting on behalf of the Premise Health locations is a strategic process. We have 82% of the workplace facilities’ spend under some form of contract, either through direct negotiations or through Alpharetta, Ga.-based Me­dAssets. We oversee tactical and strategic procurement for the Premise Health facilities, though much of that process is auto­mated and handled at the facility level.

What separates LBMC Procurement Solutions from other procurement providers?

We are often asked what separates us from other procurement professionals and the easy answer is we “Simplify and Standardize” processes.  By creating the efficiency on the front end with items and negotiated goods/services – it is then possible to drive the business toward favorable financial results.

What does it mean to Simplify and Standardize?

Simplify: For the categories we provide strategic suppliers in; we have done the market research and analysis to align ourselves with best-in-class suppliers. It is far more than just pricing – it is a total cost, quality and delivery requirement. National coverage that is scalable and continuously improving is a key characteristic of our supplier partners.

Standardize: By reducing the number of items through expense analytics and rationalization within key categories, we can go to our suppliers and aggregate spend on the then-rationalized items and drive substantial savings. We can create formularies and an ordering process which drives control and scale. While standardization is a key characteristic in a best-in-class organization, it is understood that each client has specific needs and our team flexes to those specific expectations.

Our differentiation is the team that we have and our experience in the categories and processes that are traditional in the Procurement industry. The ability to stretch our suppliers to meet the needs of our clients and to align our vertical with similar goods and services is extremely impactful to any client we have. Managing risk (through controls and standards) associated with an organization’s spend is much bigger than just pricing, it is the entire value proposition. S&S Assessment is a key to Procurement Solution’s success.

Why is a Strategic Supplier Relationship so important?

I came from the automotive industry where strategic supplier relationships are in place and have been leveraged for years in that industry. Transferring that concept to the healthcare industry has been a key procurement strategy for me. We are an extension of our clients’ organizations, and can make procurement decisions on their behalf. Because of that capability, we can roll up millions of dollars of spend­ing leverage for the benefit of our clients and contracted vendors as an aggregated procurement partner.

Making changes to the supply chain – including aggregating volume – calls for buy-in from finance executives and physicians. The former need little convincing, as the ROI for participation in LBMC’s procure­ment program is easily demonstrated. But physicians may need some nudging. As long as I can talk to them as it relates to [medical products and equipment] of the same quality or better quality than what they’re used to, we will get buy-in. Suppliers help me support the case.

We pursued a strategic relationship with our primary dis­tributor, Henry Schein, taking volume with the company from less than $1 million to $14 million in two years. Working on that ba­sis allows me to work with Henry Schein to create the best pos­sible value proposition for my clients. That only happens when you have strong, strategic relationships with suppliers. And it is a paradigm shift.

Would outsourced procurement services save me money?

We currently have strategic relation­ships with key categories of spend – medical/ surgical, office supplies, construction/ fa­cilities/ architecture, small parcel, medical waste management, travel and IT. We align our entire book of busi­ness spend with a best-in-class organiza­tion that offers technology and continuous improvement deliverables that allow our business to grow with scale and, more im­portantly, drive efficiencies across the vari­ous clients that we work with. We look for flexible, nimble and diverse suppliers that echo our strategy and culture around ac­countability to all of the above.

If you answer “yes” to any of these questions you may benefit from procurement solutions:

• Is there a large cost category that might lack spend controls?
• Is there a large cost category that might lack accountability?
• Is there a large cost category in which vendor relationships could be improved?
• Are you a company that buy from vendors?
• Are you a company that is too small to have dedicated procurement professionals?
• Are you a company that is willing to standardize?

How our Supplier Partnerships drive efficiencies.

I anticipate that we will continue working directly with medical equipment manu­facturers and Henry Schein so we can do things better and faster, and drive efficien­cies in the market. We will get more specifically involved with OEM suppliers at the table with Henry Schein as we develop larger pieces of busi­ness within a specific OEM segment. We would sit down and leverage our strategic relationship with Henry Schein to bring parties together with us at the table, as well to talk through the end result we are looking to achieve. Henry Schein is the bridge, be­cause they ultimately have a deeper relationship with the manufacturer, and we are the end user. It will be a paradigm shift for the distributor.

What’s more, we intend to build on LBMC’s already strong capabilities around dashboarding and reporting. We create dash­boards in categories of supplier relationships and spend, and review them quarterly with our clients. Doing so allows LBMC to build credibility, confidence and knowledge among them. We have a robust capability to pull together finance and procurement, and then report back to our client base about how their money is being managed. From a dashboarding perspective, we have gained traction.

Longer term, LBMC will be engaged in helping Premise Health in­corporate telemedicine and other in­novative technologies into its facilities’ protocols. Premise Health is building a robust technology platform for the de­livery of care to be more current to the population we provide care for. The team working on that at Premise Health is the ‘Products and Innovation’ team, led by a cross-functional team including clinical, operations and technology leaders. I have been working with our CIO and our technology innovation partner to connect with Henry Schein on this.

Summary

As IDNs acquire physician practices and other non-acute-care sites, supply chain executives brought up in the hospital environ­ment face a steep learning curve. They will be called on to exhibit flexibility and an entrepreneurial spirit to thrive in a new healthcare world. And, no doubt, they will be challenged to form strategic relationships similar to those that are allowing LBMC and Premise Health to thrive.

About the Author

Debbie Long joined LBMC Procurement Solutions in 2017 with acquirement of W Squared. She joined W Squared in 2012 with more than 20 years of experience in procurement services. She began her career with General Motors, then worked for Newell/Rubbermaid, Murray Inc., Asurion and Grove International. She taught a pur­chasing certification program at the college level; and received her Certified Purchasing Manager (CPM) and Certified in Production and Inventory Management (CPIM) credentials from the Institute of Supply Chain Management.

If you are interested in how LBMC’s outsourced procurement services can benefit your organization, contact Ashley Patterson at ashley.patterson@lbmc.com or use the contact us form below.