Building Relationships Through Contracts
Something seemingly simple can actually make all the difference

Save money. Of all the things we can be sure we need to accomplish in our chosen profession, of this we can be sure. We are tasked with saving money. You could say that a seasoned professional would find little that would be surprising about this notion although it has brought me more clarity in how consultants are positioned to make a real difference in the provision of healthcare, in a way that I think is somewhat diminished in the “daily business”.

As we have discussed, contracting and adherence to those contracts can be passively lucrative. Developing habits that combine your distribution and Group Purchasing Organization (GPO) and being mindful of that relationship is one way to assure you keep a firm eye on the bottom line.

In tandem to the points we examined around distribution, the GPO contract itself and value adds the relationship offers is something every hospital/health system should be acutely aware of.

Are you with the right GPO? Do the blend of offerings and financial incentives mesh well with your practice and plans for the future?

There are likely contracts in place that either need to be maximized or re-negotiated. Start with the GPO and build upon the terms and conditions they have already negotiated with the companies they have vetted. This cuts out a lot of background work in that the GPO has done the hard part already.

There are often areas to operationalize group purchasing possibilities to realize shareback (the monies refunded to the I/H/C for performance stop gates) and/or contract compliance thresholds. Have you combined opportunities wherever you can? Have you shifted your clinical activities to reflect a formulary that is therapeutically sound as well as contractually beneficial? This brings more money into the health system, simply by making essential contractual points a reality in practice. This approach takes back the money that many organizations leave on the table simply by how the I/H/C interacts with the GPO.

GPO’s offer quarterly reviews. This may seem like a time suck, one in which you will learn little to effectively change any approach although this review can be invaluable if you operationalize elements of it as it pertains to your individual practice. If you are a large IDN then you have economies of scale to explore, increasing your shareback. This approach also creates a relationship with the GPO such that when it comes time for a contract roll, your representatives know what you are looking for and what you plan to explore moving forward.

The online resources of GPO's can offer an additional lever of opportunity. They can tell you how close to contract compliance you are, where you could shift activity and what that means in the aggregate. What possibilities are you not taking advantage of and how your efforts may combine with Supply Chain to maximize opportunity. Each GPO approaches this a little differently, but the general idea is the same. If you use their analytics with your own, it is possible to create a unique pharmacy program for your operation that speaks exactly to the clinical pathways you wish to explore and/or change.

We have so many obstacles in our way, fire drills every day and constant change to keep up with. Our approach to the distribution and GPO channels can lighten that load so we can turn our attention to creating programming that aligns with prudent financial moves instead of working against us as we attempt to make the most out of our vendor relationships. Bring them in close instead of putting them on the back burner to simmer.