Procurement Strategy Empowers Your HTM Program
By Bill Axon and Jeff Niederhausen
Buying an MRI machine – where a top-line model can easily top $1 million – isn’t the same as buying a 12-pack of No. 2 yellow pencils, valued at less than $3.
But in a hospital, the same person is probably doing both things.
That’s a major missed opportunity, not just in terms of financial impact but in making sure the healthcare facility has the right parts in place to keep critical medical technology running effectively. Having a dedicated Healthcare Technology Management procurement team delivers equal gains in meeting quality standards and generating the best financial deals.
As you’d expect, most hospital procurement departments find the daily work is about ensuring the facility is well-stocked with tongue depressors, syringes and hospital gowns – many one-use items that are purchased in significant volumes. Multiple vendors sell those, making it easy to compare apples-to-apples and make the best buying decisions.
Then a biotech walks in and asks the procurement team to order a gradient component for an MRI that just went out of commission. Oh, and it needs to ship today, so that imaging machine can get back into service. A general buyer often doesn’t have the resources to identify quickly what vendor – and sometimes it’s only one or two – would have that part in stock and available for overnight pickup by day’s end.
Today, U.S. hospitals are overspending on their supply chains by $25 billion each year. Transitioning that HTM procurement function to an external partner with volume negotiation opportunities can generate tremendous savings. At TKA, we routinely deliver double-digit percent savings for our hospitals.
The Art and Science of HTM Procurement
Have you ever gone to the hardware store to pick up new filters for your home heating vents, only to come home and find you got the wrong size? That’s not a big deal; you can make a return trip or even click on Amazon to have the right ones delivered to your front door. Imagine the risk that comes if a broken ventilator goes unrepaired, particularly in the high-volume demand of this pandemic. Not only do you jeopardize patient care, but you are diminishing your providers’ satisfaction and ability to do their jobs.
Medical equipment parts buying is a specialty role with a steep learning curve, particularly when you delve into imaging products. For a larger healthcare organization, having a buyer focused specifically on medical technology and working in tandem with the HTM director makes a lot of practical sense. A certain level of annual purchasing volume justifies the salary and related costs for hiring that dedicated HTM buyer.
In other cases, your central procurement department needs to have full trust in the recommendations of the HTM team, who have the clinical engineering expertise to determine the precise part required and – since much of this is life-saving equipment – understand the urgency in getting a repair completed, if needed. Ordering the wrong part can put quality patient care at significant risk. Having a centralized resource also ensures consistent pricing within a hospital, as we have seen the same organization pay a significantly different price in one department that’s just around the corner from another that uses that same part.
We even know hospitals that outsource their entire procurement department, only to find out those buyers aren’t even in the same country. Creating that degree of separation might generate highly attractive savings, but there’s a big risk when you remove the on-site interaction among hospital administrators, buyers and HTM teams.
How an External Partner Delivers Value
There’s one other option for many healthcare organizations: Delegate the HTM procurement to an external partner that already manages preventative and routine maintenance on your medical devices. These are the biomedical technicians who spend day-in and day-out keeping your equipment at the ready, and this team knows your program no better than anyone else.
A partner, such as TKA, can generate greater accuracy in ordering and deeper discounts, as it can leverage its network of hospital partners to submit higher-volume orders. Part of our business is to build relationships with key suppliers, from those who warehouse general medical parts to those who specialize in niche markets (and there are more of those than you might imagine). From our collective decades in this industry, we know where to find the parts, which offers the best discounts, and who can deliver the order when we need it – and not an hour later, because lives are at stake. In some cases, that’s even within a single hospital shift.
TKA’s approach integrates procurement into our CMMS – an operational workhorse that provides an invisible line between our daily work and future needs – and an industry best practice for keeping the process streamlined. Every year, we issue thousands of purchase orders, some for individual hospitals and others for those across our network. Very seldom are we ordering the same thing over and over. We might buy one part six times a year, and that’s it.
Keep in mind that effective HTM procurement isn’t just about having every part in stock, so a repair can be quickly executed. Medical equipment is expensive, and a hospital doesn’t want to pay to have certain items on hand if and when a device breaks down. For example, one imaging tube can cost about $225,000; when we need it, though, we often need it the same day. Through our vendor relationships, we have earned their commitments to keep those high-ticket items in stock in key locations near our hospitals. That means those facilities don’t have to pay for something to sit on a shelf – and potentially even be obsolete before needed. Those proven relationships, which a general buying team would struggle to develop, deliver value back to our hospital partners.
That integrated HTM procurement program also ensures operational efficiency. If you’ve ever bought personal electronics at a big-box store, you’ve probably seen the alerts that a return could come with a restocking fee. The same thing applies to medical technology. We’re often required to return the original part we have replaced. By integrating purchasing with our CMMS, we can ensure that return is handled on time. Missing that deadline can lead to a needless jump of 40 percent on the cost of that part.
Finally, we are constantly surveying the supply-chain landscape to identify potential new vendors. This proactive approach ensures we are developing the right connections with companies that align with our mission. We hold those vendors to the same high service standards, which is necessary for ensuring ongoing regulatory compliance.
What’s important to realize is that you never know what procurement request is going to walk in the door. One day it might be a specific device wire. The next day it’s a tube. With each request comes a deep research dive to identify the exact part or device needed – and it’s a lot more difficult than finding a box of No. 2 pencils. That puts extraordinary pressure on a general buyer team. An external partner with unparalleled industry knowledge, valued vendor relationships and commitment to quality care can make your HTM procurement program a competitive edge for your organization. Cataloging your inventory is a great place to start to understand the parts you need.
At TKA, we do it better, make it easier, and deliver more to maximize your results and give you a competitive edge.
That’s the smarter way. Partner smart with TKA.