Presented by
J. David Hesson, Jr.
Vice President
Aspen Health Care Metrics
A MedAssets Company
Objectives
 Define IDN
 Discuss IDN’s major focus for the supply chain
department
 Discuss expectations for IDN/GPO
 Discuss how a vendor aligns with the IDN and
GPO
 Questions and Answers
Discussion Points
 IDN’s – What are they and why do they exist?
 IDN’s - What keeps them up at night?
 IDN’s – What are their priorities?
 Why does an IDN need a GPO?
 What does an IDN think about vendors?
 How does the vendor align with the IDN and GPO
and keep the “peace”?
 IDN Success Story
IDN’s – What are they and why do they
exist?
 IDN – Integrated Delivery Network
 If you’ve seen one IDN, you’ve only seen one IDN
 Like all businesses, there is advantage to size
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Consolidation of “Back Office Support”
Ability to leverage volume in negotiations
Ability to leverage cash position
Ability to specialize services and align physicians. (Current trend of
physician employees will continue to grow)
 IDN’s represent the majority of the health care spend in the
U.S., their percent of the spend will continue to grow and
the number of IDN’s will probably shrink in the future.
IDN Supply Chain Executives
What keeps them up at night?
 Pricing, Pricing, Pricing. Due to scrutiny of their
Administration. Their savings go directly to the bottom
line. This is changing with revenue affecting supplies.
 Customer Satisfaction. They must keep their clinicians,
support departments and physicians happy. They must
have the right product at the right place, at the right time,
and at the right price every single time.
 Proper utilization of limited personnel resources. Due to
staffing limitations, strategic long term contracts with
good vendor partners will be more productive. Proper
utilization of the GPO is critical here.
IDN CEO’s and CFO’s - What keeps them up
at night?
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Revenue and Reimbursement.
Health Care Reform
ACOs – Accountable Care Organizations
Physician Alignment
Competition
Limited Capital Resources
Bond Ratings
Short Term and Long Term Debt
“Bottom Line” !!!!
One IDN’s Expense Analysis
Supplies
and Drugs
Purchased
Services
Salaries & Total
Benefits
Expenses
$154 M
$192 M
$362 M
20 %
24%
46%
$788 M
Discuss what an IDN expects from it’s GPO.
 IDN’s choose to use a GPO because the GPO has
demonstrated value.
 Better pricing than what the IDN can get on it’s own
 Informatics that assist with product standardization, pricing
control and benchmarking.
 Flexibility with regional contracting.
 Most IDN’s don’t have the staff to negotiate with thousands
of vendors. They will negotiate large spend areas, capital,
or minor equipment contracts on their own or in
conjunction with their GPO.
 Some GPO’s demonstrate value in other areas.
What does an IDN think about vendors?
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Vendors are necessary, but aren’t aligned with
their customers.
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Vendor’s are driven by revenue and their stockholders
Sales representatives are paid for sales, not customer
satisfaction
Most new products aren’t worth the additional costs.
IMDA members can address revenue affecting
products better than most large companies.
Vendors do not understand a partnership
How do IMDA Members align with the
IDN, the GPO and keep the peace?
 Listen, Listen, Listen.
 Learn how the IDN operates and what are it’s priorities.
 Learn how the IDN utilizes the GPO.
 Communicate with all stakeholders in the supply chain.
Working around purchasing or the value analysis process
will alienate the vendor in the long run.
 Present jointly with the GPO regarding contract offers.
 Bring real value to the deal, not just pricing.
 Follow-up. Once the deal is done, support the IDN.
How do IMDA Members align with IDN’s?
(Revenue affecting products verses price.)
 Present independent clinical data to the value analysis
and risk management staff. (Some organizations will
include revenue cycle staff ).
 Don’t make claims, make suggestions on how the IDN
or hospital can analyze and prove your data for their
organization.
 Patience – IDN’s and hospitals have multiple processes
and stakeholders.
How IMDA Members align with IDN’s?
(Revenue affecting products verses price.)
 Develop a product evaluation plan with timeframes
that the organization sets.
 Politically correct follow-up based upon the agreed
upon timeframes.
 Celebrate and reinforce successes for each step of the
process.
 Upon acceptance, develop and support a conservative
implementation plan.
Do’s and Don’ts when meeting with
customers
 Be on time and prepared. (Allow extra preparation time
in case of equipment issues.)
 Present facts and accept challenges in the meeting.
 Never argue with a customer.
 Never act like you know more than anyone in the
meeting.
 Limit presentation to ½ hour if possible.
Do’s and Don’ts when meeting with
customers continued.
 Keep the meeting moving. Try to keep discussions
brief and related to the topics.
 Cologne and perfume to a minimum.
 Be very careful with jokes.
 Close by reviewing next steps, especially who will do
what and when it will be done.
 Lastly, thank everyone for their valuable time.
A Fall Prevention Success at an IDN
(comments from their value analysis manager)
 An industry leader in fall prevention met with the
Value Analysis Manager.
 They developed a product mix of fall prevention
products and standard procedures.
 They demonstrated high integrity, honesty and great
follow-up.
 The vendor provided outstanding product education.
 They understood the need for patient and staff safety.
 They were a great company to work with.
EM’s Rules – Applies to Everything in Work
and Life
 Everyone wants 3 things in life.
 They want it good, now and cheap.
 You only get 2 out of 3 !!!!
 Good and Now won’t be Cheap.
 Good and Cheap won’t be Now.
 Now and Cheap won’t be Good.
Questions and Answers.