Knowledge Center

The purpose of this paper is to share lessons learned and successes in contract management. Five years ago, Contract Management consisted of signing a few Letters of Commitment through our Group Purchasing Organization and trying to keep track of them in a three ring notebook.

This paper will present health care procurement strategies of four countries - the United States, Botswana, the United Kingdom, and China - as a means to evaluate volume aggregation under different health care delivery models.  

This paper examines the journey that an organization travels to arrive at an outsource decision and the challenges that it should be alert to post contract. The Literature Review section provides a context for the recommendations offered in the case study illustration. The recommendations deliberately focus on providing proper governance and oversight during the operational phase after the contract has been awarded and is up and running.

A well-conceived strategic sourcing program starts with an analysis of the total spend or operating expenses of the organization utilizing an “ABC” analysis and category/spend segmentation matrix. This analysis allows for the prioritization of the “sourceable” or “manageable” spend as distinct from other expenses such as taxes, depreciation and interest for which different strategies should be effectively applied.

Purchasing in healthcare is largely based on a hierarchical management style. In an experimental case started in 2004, at Floyd Medical Center in Rome, Georgia, this standard was altered. The introduction of a team concept combined with lean manufacturing practices to this traditional purchasing setting was unique. The results of this radical change over the past eight years have been exceptional. The paper describes the steps taken to change the culture, the actions taken to implement lean tools, and the wins achieved by the team.

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