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A Bigger Bang for the Buck: Leverage Supply Chain and Sourcing Best Practices to Maximize Facilities and Construction Spend

05/14/19

By:

Theresa Brigden, LEED AP, Associate Principal, Facilities, Capital and Construction Advisory Solutions

The ever-advancing world of health care delivery is both amazing and costly. Every day new technology is introduced to the marketplace giving providers the ability to treat conditions that just 10 years ago would not have been possible. Investment in the latest medical capital equipment is required to provide optimal patient care, but it comes with a substantial price tag.

Because of those investments, the most crucial piece of ‘capital equipment’ in a health system may very well be the facility that houses this technology and the care it gets from the personnel who use it. It won’t matter if your facility has the most advanced MRI technology if the roof leaks on top of it. Nor will it matter that you invested in a da Vinci® robot for your hybrid operating room if the generator fails.

In other words, be wary when purchasing for facilities – a penny saved may not be a penny earned in the long run. In fact, it could wind up costing your health care system more money than planned.

So how can health systems enhance operations and maximize their facilities-and-construction spend to ensure optimal performance? There are three key areas to consider and leaders from each should be involved: Group purchasing organization (GPO) utilization, coordination with facilities and design, and product/design standardization.

Use your group purchasing organization

GPOs negotiate discounted pricing at a national level with market leaders in many categories outside of medical supplies, devices and equipment. They also offer contracts that deliver savings on paint, drywall, flooring, mechanical and electrical equipment.

In addition to pricing, there are other terms of a purchase agreement to consider. GPO agreements may contain value additions such as service components, additional warranties, etc. Attention should be paid to tiers and required commitments. Understanding these commitments and then aggregating multiple initiatives may enable you to move into a better pricing tier.

Recently an organization negotiated through its GPO a purchase for thousands of gallons of paint for a billion-dollar campus build. That same price point is now also available for 5-gallon cans to touch up patient rooms. If the maintenance department had not coordinated with the organization’s GPO, it would have resulted in one costly missed opportunity.

Coordinate with facilities and design/construction departments

Depending on your organization’s structure, facilities and design/construction departments may be combined or separate. Best practice is to involve leaders from these areas, as well as supply chain and materials management in early discussions regarding construction initiatives, big and small.

The individuals who are responsible for the ongoing 'care and feeding' of your facility have valuable insight in the process of selecting materials and equipment. A light fixture that’s seen as the latest trend by the architect or has a good price point could turn out to be a maintenance nightmare. The nickels saved at time of the construction project could cost dollars to maintain over the next 10 to 20 years.

Look for opportunities to standardize products and design

Key stakeholders within the organization (supply chain, facilities, design/construction, etc.) should all participate in the development and implementation of any standard in the facilities-and-construction space, which should include price, functionality, maintenance and operational requirements, warranties, service agreements and life cycles.

Standards can be as broad or specific as needed. For instance, a facility can have one standard of carpet for the back office and one for areas the public traffics. Larger organizations often develop multiple options within a standard (good, better, best) to allow for flexibility around location, region, branding and other considerations.

Once established, standards should have key performance indicators and metrics to measure pricing, response time and downtime on equipment and training. They should be reviewed on a regular basis to ensure that selections remain relevant and price creep is avoided.

By giving consideration to these components, probably the largest capital investment – our buildings and facilities – can provide years and years of service to your community.

For more information about how leveraging Vizient solutions can support both your existing and future operations while also managing costs, contact us today.

About the author. With a passion for the industry spanning more than 30 years, Theresa Brigden’s areas of expertise and professional skills include construction, program and project management, as well as team leadership. She was integral to the creation and development of the Vizient facilities, capital and construction solutions, possessing a keen understanding of capital equipment, design and construction best practices, metrics, and technology. Brigden has served on local National Association of Women in Construction (NAWIC) and Associated General Contractors (AGC) chapters, the national board of directors for Architectural, Capital Equipment and Engineering (ACE), and is an active member of the American Society for Healthcare Engineering (ASHE). 

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