Supply chain leaders have responsibility for delivering a variety of results to their organization, but the primary expectation is clear: cost savings. Recent research by Vizient found that 80 percent of members have a savings goal, and for 45 percent, it is between $1 million and $5 million. To help achieve their goals, leaders are looking for programs offering reliable savings that also enable them to move staff to initiatives that require a high level of physician engagement to realize results.
Vizient has responded to this universal business challenge by creating the Achieve Committed Program. In exchange for purchase commitment on select commodity and clinical preference items, participants receive substantial savings, which averages 8.7 percent and may run as high as 19 to 20 percent.
“All members need to find savings just like they all need fundamental products, such as gauze pads, exam gloves and disinfectant wipes,” said David Gillan, senior vice president, sourcing operations for Vizient. “Achieve allows them to substantially streamline their spend on these essential items by leveraging analytics, conversion support and clinical insight to get pricing that would otherwise be unavailable. It also allows them to reallocate sourcing staff to work on those higher complexity, higher cost areas where significant opportunity for improvement often exists.”
What makes the Achieve program unique is that the entire portfolio has been vetted via a value analysis process that included 300 member hospitals, all of which are purchasing the products from suppliers in the program. The portfolio includes approximately 10,000 products on 80 contracts – not entirely sole-source, in some categories there are two or three suppliers – and covers roughly 45 percent of a hospital’s med/surg spend, including clinical preference products.
“Mayo Clinic has been engaged in aggregation contracting for over 10 years; as have many other providers,” said Bruce Mairose, vice chair, supply chain operations, Mayo Clinic. “We have found that the greatest value can be achieved through ensuring follow through on the commitments and being mindful that suppliers are also seeking additional value in exchange for price concessions. This program enables the key levers, bringing commitment and value to all parties”.
“The products in the Achieve portfolio are the least controversial supplies in your system. Your physicians and clinicians aren’t going to get upset because they’re going to be using a commensurate product,” said Gillan. “In fact, many times there’s a high degree of compatibility with supplies currently being purchased so there’s very little conversion that’s required, but there will be some. The key benefits are best total acquisition cost, unmatched transparency and increased efficiency.”
Expanding the array of committed offerings for members
The Achieve Committed Program expands the array of highly successful committed offerings available to Vizient members. These include the Impact Standardization Program, which to date, has returned to its participants more than $1.8 billion, and the Vizient Pharmacy Program, which grew to $53 billion in committed spend, more than double that of its nearest competitor.
“The one question we’ve gotten frequently from members is, ‘Who is a good candidate for this program?’ We describe the best potential participants as those who are ready to commit their commodity and clinical preference spend, possess the cultural fortitude to change their purchasing behaviors to meet the commitment level and are not actively participating in an aggregation group,” said Gillan.
The Achieve program was designed so that it doesn’t compete with other Vizient committed programs, such as Impact Standardization or Novaplus®, although there is overlap between program categories. “As an example, if your organization is participating in the Impact Standardization Program and you move your commodity and clinical preference purchases to Achieve, we offer support to ensure the same financial value flows through to participants,” said Gillan.
As the true value of the Achieve program structure has become more widely known, there has been a push in the marketplace to launch programs similar to Achieve.
“Others trying to build this type of program from scratch are significantly challenged due to the market-building dilemma: suppliers want to know what volume of spend they’re pricing against, while members want to know which suppliers they’d be converting to. It’s the chicken-and-egg scenario, and it’s one we’ve solved for. Our program is based on a portfolio of member-vetted products and leverages committed volume already in place and the response from members has surpassed our expectations,” Gillan said.
“We have learned from more than two decades of experience in this area what works well,” Gillan said. “It’s rare to find an opportunity that delivers significant cost savings while freeing up sourcing staff to meet the growing demands of their organizations – Achieve meets this need for members and we’re excited about its future.”
To learn more about the Achieve Committed Program and register to attend a webinar, click here.