Vendor Management Services (VMS) – What’s in a Name? [pt. 5]

Group Purchasing Organizaitons (GPOs) and Hospital Associations (HAs)

Hundreds of hospitals across the country choose to manage and work with their healthcare  staffing suppliers through a GPO or Hospital Association.  GPOs and HAs have assisted hospitals with a variety of services for a number of years.  In recent years, both have moved into providing healthcare Vendor Management staffing services as well.

Summary of Model:
GPOs purchase supplies and other goods for hospitals in bulk.  Because of their large quantity purchases they receive discounts and pass the savings back to their hospital clients.  GPOs began applying this same model to services they offer their hospital clients and typically set rates and contract policies to which all suppliers servicing the hospital must adhere. 

Every state has a Hospital Association that each hospital within the state can choose to be a member of.  Hospitals pay member fees to their HA and typically, the HA advocates for their member hospitals in regard to legislation and government policies.  HAs provide their hospital members with relevant benefits and information.  Many HAs also provide other products and services either directly or through a related, private extension of their organization.  Starting around 2001, some HAs began delivering Vendor Management Services to their member hospitals.

Some GPOs and HAs have their own healthcare VMS technology solution but typically they resell or market a VMS technology solution, or partner with a company that delivers such a product.  GPOs and HAs typically receive a percentage of the savings they deliver to the hospital or apply a service fee to the volume of business that runs through the program.

Services Offered (Related to Healthcare Vendor Management):

• Rate analysis, setting, negotiation
• Policy and contract standardization
• RFP management
• Internal staffing management
• Compliance oversight for staffing suppliers
• Self-scheduling software application management tool

Strengths:

• Significant reduction of spend on outside labor for member hospitals.
• Improved management and tracking of supplier staffing and budgeting.
• Automated process for hospitals managing their external staff.
• Hospitals receive additional benefits of advocacy, discount pricing and other products, services from joining a GPO or HA.

Weaknesses:

• Some of the GPOs and HAs are not in direct control of the products and services they offer and therefore reliant on the success of these partnerships.
• Often times the people in the hospitals using the products and services everyday from the GPO/HA were not involved in the decision making process.  This top down approach can create some animosity and lack of buy in needed to make the program succesful.
• Some GPOs and HAs attempt to deliver services in the same way they do goods and products.  Staffing services involve people and staff and often times GPOs and HAs apply the same business model here as they do with other products and services.  This can cause issues that adversely affect staffing suppliers servicing their hospital clients, especially when discounted or set pricing is implemented.

Opportunities:

• GPOs and HAs have great opportunities to partner with companies offering additional products and services to sell to their members.
• GPOs and HAs have excellent channels with their hospital clients through which they can constantly sell new products and services. 
• GPOs and HAs have the potential to work with other GPOs and HAs to help them offer similar services.

Threats:

• A lawsuit filed against the Arizona Hospital Association by a local staffing agency changed how HAs operate and deliver their services across the country.  Because HAs and GPOs have such a broad reach it’s imperative that their policies and services not violate anti-trust laws.  Many GPOs and HAs set the rates that staffing suppliers can charge causing rate compression that has proven to adversely impact the staffing suppliers and the hospitals they service.  Staffing suppliers can't do business when their margins are overly compressed and hospitals end up not getting the staff they need because the suppliers send their staff to hospitals with more competitive rates.
• The process implemented by a GPO and HA can be multi-layered and complicated because of all the partnerships and different processes.  In addition, some services can actually create more complications for hospitals by creating dual processes for them if they don’t manage all of their staffing.
• The initial service for many GPOs and HAs focused contract negotiation and rate compression.  These organizations must look to find new ways at proving their value as rate compression has proven to have a negative impact in the market to both hospitals and staffing suppliers.

Conclusion:
Many hospitals find and receive a lot of value by choosing a Vendor Management strategy of working with a GPO or HA.  Members receive benefits for their staffing services as well as discount pricing on goods and legislative advocacy. 

However, sometimes the line between products and services gets a little too blurred and having staffing services managed by a company that focuses on this service specifically can be more beneficial. 

It will be interesting to see how GPOs and HAs grow and change their business over the next few years.  There are many challenges they will face in staying relevant but also, several opportunities that could prove very beneficial for them.

Provider List:

(HAs)
Ohio Hospital Association - OHA Solutions
South Carolina Hospital Association Regional Staffing Program
Arizona Hospital Association Registry Program
Hospital Association of Southern California
Kansas City Registry Program
New Jersey Registry Management Program
Chesapeak Registry Managment Program
New Mexico Nurse Registry Program

Montana Hospital Association

(GPOs)
Broadlane
Premier
MedAssets
VHA

If I missed your company name on this list email me and I’ll add it.

Related Posts:

Vendor management services (VMS) Whats in a name [pt-4]
Vendor management services (VMS) Whats in a name [pt-3]
Vendor management services (VMS) Whats in a name [pt-2]
Vendor management services (VMS) Whats in a name [pt-1]

Comments

[twitter.com/tghealthcare]

Why do VMS/ State hospital Associations work with non Joint Commissioned certified firms?

[Jason Lander]

That's a good question Brad. I think the short answer is that being Joint Commissioned is not a requirement for suppliers so hospitals aren't obligated to limit their suppliers to those that have been certified. For hospitals that have a difficult time securing staff, there can be situations that make sense for them to use non-certified suppliers.