In late April, I was encouraged to see more than 140 contracting and
chargebacks professionals gather at HIDA’s 2017 Contract Administration
Conference to hear case studies and discuss best practices for improving
pricing accuracy across the healthcare supply chain. The meeting
provided great ideas to help trading partners improve contract
communications. But what really stood out to me was the growing evidence
that those who are taking steps to own various components of their
contracts and chargebacks processes are already starting to reap the
benefits.
David Forbes of Mercy Health Services (Baltimore, MD) explained how
he helped align Mercy’s contracting program and corporate strategy by
defining, and subsequently standardizing, its contract process. It was a
difficult task, requiring stakeholder buy-in from both within and
outside the IDN. As a result of these efforts, Forbes now has
surveillance and control over Mercy’s contracts and can prevent supply
pricing discrepancies before they occur.
Forbes emphasized his process is designed specific to Mercy’s needs
while also sharing an insight he’s gathered from his mission to own his
pricing. Often, our industry asks, “Who is the source of truth?” when
trying to determine the cause or prevention of pricing errors. According
to Forbes, the contract and/or agreed upon GPO price tier
in place between the provider and supplier is the only source of truth,
and each industry stakeholder connected to that contract is responsible
for ensuring its compliance. However, a breakdown in process – often
caused by the provider’s lack of ownership – results in pricing
discrepancies between providers, distributors, and manufacturers. Others
added that manufacturer-distributor differences of opinion or
interpretation of contract terms also cause errors.
Brian Zuck from Essentia Health (Duluth, MN) highlighted a different
aspect of pricing accuracy in which providers can take ownership:
location identification. Zuck’s colleague at Essentia, Allen Klingsporn,
manages their Global Location Number (GLN) data, which is approaching
nearly 125 identifiers across its various locations. The health system
took ownership of enumerating its locations and currently transacts with
44 vendors using GLNs for purchase orders. Overall, it’s been a
positive endeavor for Essentia since the system was able to clean up its
location data and get its GLNs to the point where Zuck and Klingsporn
would like to explore future projects to incorporate GLN use.
Proof of Concept
This message was particularly appropriate for the conference audience
since Beth Gibson, GS1 US, presented the day prior to Zuck on a Proof
of Concept exercise conducted between manufacturers, distributors, and a
GPO to determine the validity of using a standard identifier to
synchronize contract communications. “By incorporating the GLN as an
attribute in distributor and manufacturer chargeback claims processes,”
Gibson said “trading partners can improve line matches by up to 66%.”
Typically, these meetings focus on the areas where distributors,
manufacturers, and GPOs can make improvements to simplify medical
product transactions and their associated pricing complexities. As a
provider, there are still a number of questions you can ask internally
to determine your organization’s level of commitment toward improving
your pricing accuracy:
- Are we managing our GLNs? How are you ensuring your location data provided to and used by trading partners is accurate and up-to-date?
- Do we follow any contract timing standards? Does
your organization sign up for GPO price tiers on a timely basis? Do you
request to load better prices sooner than approved or delay higher price
changes until the last minute?
- Are we proactively working with trading partners to get ahead of price changes? Are you in regular communication with your distributor, manufacturer, and GPO partners on new or expiring contracts?
Improving Pricing Accuracy Initiative
I encourage you to visit www.HIDA.org/ContractAdmin to access our updated Improving Pricing Accuracywhite
paper, which offers best-practice recommendations around three major
categories: automation, standards, and timeliness. While the publication
primarily focuses on ways distributors, manufacturers, and GPOs can
enhance contract performance and streamline overall stakeholder
communications, you can benefit from learning more about what our
industry is doing to solve this challenging problem.
There are multiple paths to achieving pricing accuracy, and each are
becoming clearer for individual stakeholders. With a higher level of
engagement from providers and GPO partners, you can help ensure our
industry’s keys to success get put into action and bring real progress
to this initiative.
Published in: http://www.jhconline.com/prime-vendor-getting-the-most-from-your-most-important-supplier-3.html