Materials Management Director Discovers New Approach to Vendor Negotiations: An HCE Original Report (Part 2 of 2)

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healthcareix-itunes-artworkOn May 11, we began our look at the way in which Tim Ingram, director of materials management at Longmont United Hospital in Longmont, Colo., improved his approach to negotiations with vendors.

Ingram was primarily looking for a solution that would give him transparency, a fair advantage, speed of value, efficiency, and higher-quality data before he ever sat down at the table with a vendor.

According to Ingram, he found all of this and more in a new piece of technology called aptitude.

On its website, aptitude describes its product “as the industry’s first online direct contracting market.” It promises to drive “innovation in the healthcare supply chain environment to create a more logical and empowered market. Simply put, aptitude bridges the relationship between hospitals and suppliers to provide the best value and to greatly improve the entire contracting process for all.”

According to Justin Hibbs, senior director of marketing and research for aptitude, “We’re introducing just a new way of doing this. We like to say we’re challenging the status quo. The way hospitals and suppliers have been purchasing from each other has remained relatively unchanged for maybe 30, 40 years.”

Hibbs described the current way in which hospitals handle most vendor contracts as “a very manual approach. It’s often time-consuming and sometimes repetitive. That process can take anywhere from six to seven to eight months. What we’ve been able to do, utilizing technology [and] some automation data, is reduce that time to about 30 days.”

He said hospitals that use aptitude are now seeing savings anywhere from 10 to 15 percent on contracts.

“They’re able to do it much quicker and then they’re also getting the sliceability they’re seeking in doing contracts in a way that benefits their organization,” Hibbs explained.

Furthermore, he added, organizations are able to gain a performance perspective by comparing themselves to other hospitals around the country, especially with regards to contracts and pricing.

Finding speed of value and better data

Ingram said he considers himself progressive when it comes to technology. Adopting a product like aptitude into his vendor negotiations was a “no-brainer” to him, especially since it delivers on speed to value.

“I think what it really does is it reestablishes that lost relationship between the customer and the vendor,” he said, adding that even trial periods for clinicians move faster.

Not surprisingly, vendors are interested in the product, too, and have contacted him, asking him if they should adopt it as well.

“…I tell them, ‘Listen, aptitude is doing the genesis of their development… [W]hat I would recommend to you is get on that ship now before everybody else starts figuring out that they need to jump onboard, too.’”

Ingram has also found a solution to his limited-data woes.

“When I start seeing stuff come up, the data has already been mined,” he said. “It’s already been investigated. It’s already been cleansed. The vendor knows exactly what we use and we see what they’re willing to bid on.”

As another benefit, he uses the data to ensure transparency in the process and to verify the price being offered. Above all, the data is current, which is an advantage for him and his limited staff of 12.

“I’m trying to beat efficiency into my processes and still bring value to my organization and asking them to spend money on a software product like this, I have to demonstrate a return far and above just the cost of the software,” he said.

Focusing on investigated data

Ingram feels that his industry colleagues would benefit from exploring technology that deals with investigated data, similar to the solution he has found with aptitude. He said this technology creates an environment in which the negotiation process suddenly becomes mutual, one in which no party has the upper hand.

Furthermore, it eliminates the legal jargon that permeates contracts.

“…I don’t have that kind of legal expertise in contact law,” he said.

In the last four or so years, Ingram believes technology has been entering the marketplace that practically places “market data into your lap with a little more intelligent information in order to negotiate better prices. Now that I have these tools, you can almost tell if they’re upfront giving you an honest, competitive price on whatever it is you’re negotiating. And I think that’s where the trust is coming from.”

-by Pete Fernbaugh

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