Healthcare Matters

Some of the most sophisticated supply chain organizations in healthcare readily acknowledge that they’ve worked hard to achieve contract compliance rates in the 50% range. Among other things, that means they admit to only capturing about half the savings opportunity they worked so hard to identify; that roughly half of the benefits are pouring right out the door in broad daylight. That’s why addressing such “leakage” must be front and center in any discussion about improving supply chain management practice. Not that any other SCM investment would be putting the cart before the horse, but almost.

There are solutions. And they are most practically implemented at the category or super category level (one chunk of spend at a time). Purpose-built procurement applications provide a framework for driving significantly higher rates of compliance. The best ones are always developed in concert with the required process improvements and the other requisite applications that plug the holes or close the loop so that non-compliance can be easily spotted and managed.

GHX is often a major part of such solutions –not just for providers, but for distributors, GPOs and the manufacturers as well. Just look at its penetration rates in the announcement below (they’re hard to argue with). Hosting an exchange that obliges all the supply chain players to speak the same language –from product codes through the most granular of transaction detail—is an obvious boon for procurement professionals.  It not only “works” for those seeking a foundation for purpose-built procurement applications, but it’s essential for those wise enough to make sure that the future savings they report to Finance are always traceable to the bottom line.

$2 billion in realized savings is quite a accomplishment. Congrats!

LOUISVILLE, Colo. – May 29, 2012 – GHX, in collaboration with its extensive customer portfolio of healthcare providers and suppliers, crossed the $2 billion mark in documented savings across its North American healthcare supply chain. The company has been tracking savings achieved by GHX trading partners since January 2010 as part of its “5-in-5” strategic goal of cutting $5 billion in healthcare costs over five years.

GHX has the largest footprint in the healthcare supply chain with more than 24,600 acute and non-acute care provider organizations and 10,900 medical-surgical supplier divisions in the U.S., Canada and Europe transacting business through GHX. The GHX Global Network accounts for connectivity to hospitals representing more than 80 percent of licensed beds in the United States alone and to supplier organizations that deliver approximately 85 percent of the medical-surgical products sold in North America. GHX also connects providers and suppliers in nine European countries.

“This is an important milestone for the healthcare industry,” said Bruce Johnson, president and CEO of GHX. “Our industry continues to face incredible scrutiny and we need to work together to aggressively cut costs from our healthcare system. GHX is working with members of our GHX Global Network in the U.S. and Canada to provide a catalyst to driving more than $46 billion in electronic dollar volume through the GHX Exchange in 2012. That’s an increase of 53 percent over transactions documented just two years ago, at the end of 2009. It’s also the reason we are ahead of schedule in eliminating $2 billion in industry supply chain expenses.”

GHX recently generated attention from the industry for its entry into the implantable device supply chain market. The GHX solution will capture data from product purchase to product usage at the point of care, creating capture capability while enabling more accurate billing, purchasing and inventory tracking. The implantable devices market is estimated at $40 billion, a segment equal in size to the medical-surgical market in which GHX is well-established as the supply chain technology infrastructure.

“The implantable device market is an area in the healthcare market that has remained largely manual in process, and fraught with significant error and inefficiency,” said Johnson. “Healthcare is losing more than $5 billion every year due to the inadequacy of current solutions in the implantable device supply chain. With the upcoming GHX implantable device supply chain solution, we anticipate accelerating the contribution GHX is making to drive cost savings.”

As a percentage of revenue, GHX funds double-digit reinvestment in its core products as well as development of new products, like the implantable device supply chain, and other software solutions and services. Over the past six months, the company introduced five new or enhanced products and services to improve the process by which healthcare providers search, source, procure, buy and pay for products.

–Tom Finn