Client Characteristics: Group Procurement Organization (GPO) – Healthcare Supply Aggregation
The Referenced Client envisioned as platform (or multisided market) business model that creates value by facilitating exchanges between manufacturers / distributors and hospitals / healthcare providers. The underlying vision of the client was to deliver optimized costs and drive operational and clinical excellence for Hospitals and Healthcare Providers. While the USA healthcare sector leverages a GPO, routing over 95% of all its needs and delivers saving in the range of 10%-30%, this is a novel feature in developing markets. It is further complicated by a highly defragmented outbound supply chain, specifically for the non-clinical items and generics.The Reference Client’s strategy was to deliver impact through the 3 dimensions of,
- Consumption Optimization – focused on upstream process improvements and improving predictability of demand by integrating clinical procedural inputs with the derived Bill of Material indented
- Process Excellence – focused on process alignment from a Supply Chain Optimization perspective and address issues of Cycle Time, Obsolescence and optimizing storage costs
- Commercial Improvements – focused on cost optimization through application of intelligence for identification of alternatives and aggregation of demand volumes
The Referenced Client working with the various ecosystem partners aims to achieve the overall vision for,
- Hospital / Provider Administrators – ability to forecast supply chain needs based on the annual operating plans, directly aligned with the Clinician / Physician preferred items
- Clinicians / Doctors – to get the inputs for a coordinated supply chain based on the preferred items aligned to the Procedure being executed, preferably driven by a controlled protocol aligned to the procedural codes
- Supply Chain Managers – to negotiate and arrive at the most competitive prices for the various classes of products that directly attribute to over 30% of the operational budgets of the Healthcare Providers. This aims to optimize procurement planning based on the consumption trends
Industry Sector: Healthcare Provider Supply Chain & Procurement
Business Driver
With the vision laid out as a starting point, it was imperative that the information and insights for decision making, to address the 3 dimensions becomes the core differentiator. We worked with the Leadership Team and the Business Information Management Group to develop the requirements for an integrated Platform that provides insights while creating a seamless “Plug and Play” model for Integrating with a large disparate Hospital Information Systems / Hospital ERPs / Procurement system.
The information flowing through the Client’s Platform (INTEGER®) relates to the spends of a hospital across the categories of, (a) Pharmaceuticals, (b) Implants, (c) Medical Consumables, (d) Medical Equipment, (e) Consumables, and (f) Non-Medical Items.
When aggregated, and used for decision support, this information addresses the key decision points across the following spectrum of players,
- For Hospitals / Providers (and thus, for Client’s Sales teams, for acquiring a customer and for Service Delivery in achieving the promised outcomes)
- Focus on Consumption Optimization, through realignment of procurement practices, replacement, reduction in inventory hold, and minimizing carrying & obsolescence costs
- Focus on internal process optimization by providing insights optimize upstream demands, enable better demand planning, and continuously optimize reorder levels / inventory turns.
- Focus on Cost Optimization, through aggregation of demand across providers and delivering better pricing from Manufacturers
- For Manufacturers / Vendors (and thus, for Client’s Vendor Management teams to negotiate best Rate Contracts on behalf of the Hospitals / Providers)
- Predictable demands based on the aggregated views across Providers enabling Manufacturers / Vendors to manage Category planning and optimization
- Profit optimization by minimizing returns and obsolescence
- Marketing costs optimization
Our Approach to enabling the Business Drivers
Leveraging the APQC’s Process Classification Framework for Supply Chain in Healthcare, in conjunction with the Business Analysis Core Concept ModelTM (BACCMTM), drawn from BABOK we conducted a detailed requirement analysis covering,
- Aggregation and establishment of reference master data – This requirement was to create the most unique and comprehensive data of all items under the 5 categories referenced above. Today the Client’s Platform has over 0.5 million items codifies following the CIMS Integrated guidelines for codification – one of its kind and the largest repository in India
- Functional Integration to derive the key insights for decision support – This requirement was to integrate Metadata Update and Transactional Information across,
- Manufacturers / Vendors / Distributors – for Metadata related to new items introduction, price update, batch and expiry management and rate contact negotiationfor keeping the Reference Master Data current
- Hospitals / Healthcare Providers – for transactional data including integration with the OT and OP / Billing Systems for indent to consumption tracking, and with the Procurement / Supply Chain / Inventory Systems for Reorder Level Alerts, Compliance to cost improvements / replacements and rate contracts
- Hospital Onboarding acceleration leveraging an AI/NLP driven Matching algorithm – standardizing Hospital Masters with the Client’s Reference Masters – delivered over 90% reduction for onboarding cycle time
Some sample Enterprise Architecture deliverables are enlisted as illustrative Figures.
Outcome delivered
Today, this approach has enabled our reference client to become India’s first GPO addressing over 60,000 beds under management across 50+ hospitals with a total procurement throughput of US$100 Million / annum.
The Platform is designed to aggregate over 1Million Beds across as a part of its vision in the next 5 years.
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