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Managing Spend: What to Expect From Your GPO and Beyond

It’s more than just cost performance — real value proposition is about using purchasing to empower communities and advance public health.

  • Supply Chain

By Erin Cristales, Vizient

Shaleta Dunn, middle, and Molly Zmuda presented their power huddle "What to Expect From Your GPO and Beyond" at the 2023 Vizient Connections Summit. Joel Hennenfent, left, Vizient SVP of Pharmacy Member Services, moderated the discussion.


"I don't know where to start."

It's a concern, Shaleta Dunn told a roomful of providers at this year's Vizient Connections Summit, that she's heard verbalized more than once. She was speaking specifically about providers who aren't quite certain how to launch or grow their supplier diversity programs, but the uncertainty is often just as applicable to other large-scale challenges like supply and price assurance or environmental sustainability.

When your No. 1 mission is patient health, how do you ensure that every decision you make in the sourcing process supports that outcome?

"We've really transformed to show not only the value of a relationship with the GPO, but with Vizient itself," said Dunn, Vizient vice president, supplier diversity and social investment impact. "We are aspiring to be the nation's top healthcare performance improvement company, so we have to deliver in a way that is clear, connected and valued; is long term and effective; and has results and outcomes."

The ways in which Vizient is doing just that — specifically through its key value drivers known as "core tenets" — was the topic of a power huddle titled "Managing Spend: What to Expect From Your GPO and Beyond." Vizient's core tenets are intrinsic benefits for provider and supplier customers and include assurance (supply and price), environmental sustainability, supplier diversity, and insights and intelligence.

These value drivers have taken on increased importance as non-labor expenses, which comprise 40% of a hospital's spend, have increased by 14.1% post-COVID according to Vizient's Operational Data Base (drug expenses have increased by 38.3% and other operating expenses by 27%). Growing expense pressures like these are beyond the scope of traditional GPOs and warrant a partnership-based approach that includes spend visibility, performance improvement initiatives and significant change management.

"This is not only about supporting providers' supply chains," said Molly Zmuda, Vizient vice president, spend management services and delivery, "but ensuring we leverage those supply chains and broader spend management practices to get the most value from every dollar of spend — this includes making the best possible impact to bolster the health of our patients, communities and bottom line."


As far as where to begin, Dunn said, "It all starts with a strategy" — and that's what the core tenets provide.

"It starts with determining where you are, where you want to be and how we can help you get there," Dunn said. "We'll look at next steps and how best to support you by incorporating best practices. We'll also identify areas that are specific and customized to your organization because no provider is the same."

And most importantly, Zmuda added, "We want to take the work off providers' plates while also moving our industry forward in these areas. We are here to meet foundational customer expectations and solve for our greatest collective challenges and opportunities in healthcare."

The core tenets are integrated into every spend management category, and providers can see core tenet information included in quarterly business reviews with key performance indicators and program updates. Additionally, the spend management team, in partnership with Vizient data scientists, are working to leverage supply chain data to eventually predict performance. For instance, Vizient is set to launch an industry-first Assurance Score this fall that will contemplate the backorder status of a product, supplier capacity to fill the product, manufacturer capability to provide the product and functional equivalent viability for a composite risk assessment.

Below, Dunn, Zmuda and Mittal Sutaria, Vizient senior vice president, contract and program services, pharmacy, discuss the importance of integrating the core tenets into a holistic strategy for better patient outcomes and financial sustainability, as well as the resources to support that work.


Assurance

Having the supplies you need, when you need them, at the best possible value.


What is now known as the Vizient assurance team was born out of a comprehensive war room effort convened during COVID-19. Today, the fully dedicated team amplifies the expertise of Vizient employees across spend management to ensure a timely and effective response — no matter how tough the supply chain challenge.

"We have worked to ensure that our continued response activities are as effective and efficient as possible so that when disruptions arise, we are aligning with the way that providers respond to those disruptions within their own organizations," Zmuda said.

Often those disruptions involve drug shortages, Sutaria added, with more than 300 medications in short supply — a new 10-year record high, according to the American Society of Health-System Pharmacists.

"One of the first steps we took was to identify a list of essential medications for our enhanced sourcing strategies so we can eliminate barriers and find ways to improve access to those products," she said. "Essential medications are those that have no alternative option that can be used, or the medication is utilized so frequently that without it, daily operations would certainly be very challenging."

KEY ASSURANCE RESOURCES AND INSIGHTS
Visit and log in to the Assurance webpage and Pharmacy webpage to learn more.

  • Supply Assurance Weekly Digest
  • Disruption briefs, critical supply profiles and monthly supply updates
  • Assurance webinar series
  • Vizient Domestic Sourcing
  • Essential medications and supplies list
  • Novaplus, Novaplus Enhanced Supply and NES reserve
  • Pharmacy Market Outlook
  • Pharmacy aggregation
  • RxCommit
  • Vizient Oncology Network
  • Event monitoring and supplier risk management through Vizient's partnership with Supply Risk Solutions
  • Supply Assurance Score
  • Alternative manufacturing strategies and investments


Supplier Diversity

Helping to increase diverse supplier utilization and positively impact economic development.


Dunn knows that supplier diversity is a journey — and it's critically important to understand where exactly you're starting from. There are a few key questions providers should ask themselves to set a baseline:

  • Who are you purchasing with?
  • What does that organization look like?
  • Where are your opportunities to grow?
  • Where are your opportunities to bring your supplier partners along with you?
  • What are the barriers?

As part of the Supplier Diversity program, Vizient enables opportunities for providers to network and attend expert panels and virtual diversity expos where they can introduce their category managers to Vizient-contracted suppliers. Additionally, the ever-expanding Community Contracting program engages all hospitals in a region to contract with local, diverse suppliers to create a socially and economically sustainable ecosystem that leads to healthier populations.

"We also provide information on what tier 1 and tier 2 spend really means — that way, providers aren't overwhelmed, and they know they have a supportive partner who is on this journey with them for the long haul," Dunn said. "We also recognize that data and analytics are ultimately going to power their program. Data is going to showcase where they are so they can continue to power up to where they need to go."

Visit and log in to the Supplier Diversity webpage to learn more.


Environmental Sustainability

Employing solutions and insights to reduce negative human and environmental health impacts.


In healthcare, roughly 80% of emissions come from the supply chain. That's why it's imperative for stakeholders to measure, and shrink, their environmental footprint — with a sense of urgency, Zmuda said. (Learn more from the Summit panel "The New Healthcare Imperative.")

"We are doing a lot to enable providers to understand their progress and performance as it relates to the sustainability and climate impact of their spend management, clinical and operational practices," she said.

Zmuda pointed to the Environmentally Preferred Purchasing Dashboard as a way to gain a baseline perspective on environmentally preferred procurement — "and, in this inflationary environment, we are evolving based on our providers' needs to understand where they can advance sustainability with a cost benefit to their organization in doing so," she said.

Enter Environmental Sustainability Optimized Insights, which launched earlier this year and showcases conversion scenarios to EP products. The tool also provides partner-led insights for product spend categories that have top opportunities and highlights line-item level detail.

Later this year, providers will have access to an Environmental Sustainability Roadmap that will provide transparent scope 3 carbon calculations, identify peer performance for benchmarking, and will give ideal low-carbon recommendations for performance improvement.

Also, a new Sustainability Score will identify a product's chemical, waste management and Vizient-adopted attributes.

"We are launching net-new performance insights to the industry," Zmuda said. "Behind all of these metrics are portfolios, experts and opportunities that help to move the needle on performance. This is our total value focus in spend management at Vizient."

Visit and log in to the Environmental Sustainability webpage to learn more.


Insights and Intelligence

Providing metrics and insights to support improvement.


"Insights and intelligence are inherent to everything else that we're doing," Zmuda said. "Our category managed services emphasizes data, technology and expertise. We want to advance more informed decision-making to optimize non-labor operating expense."

And there's a hearty list of insights to explore, ranging from analytics tools to semi-annual publications that help providers plan for the challenges ahead.

INSIGHTS AND INTELLIGENCE RESOURCES

"Our core tenets are shared foundational expectations that we should all have as patients, employees and partners. We are all vested in improving public health," Zmuda told the crowd as the session drew to a close. "We should think about how we collaborate most fully to take this to the next level. We are on our way."