We started this blog series with the audacious goal of creating a Better, Faster, Cheaper, Safer Hospital through both proper design and the implementation of A Better Capital Equipment Supply Chain. This particular blog installment addresses the stated goal of “Cheaper.” Just so we’re clear, let me clarify the goal of achieving a “Cheaper” supply chain. When we use the word “cheaper,” we don’t mean to apply the word to the goods themselves, in terms of goods of poorer quality. Rather, we refer to our stated goal of securing higher quality equipment for less money.

This seems like a simple concept, but the challenge is how to know what a good price is in the first place. As simple as it should be to determine, there can be challenges. Prices differ based on the complexities of the equipment’s configuration, geographic market, type of healthcare facility, temporal supplier goals, etc. The good news is that we are here to help you unravel the secrets of strategic sourcing. Even better news, the folks here at Attainia have been talking to professionals in this area, and they know a lot more about the topic than me.

Our preceding blog posting, A Better Group Purchasing Organization, mentioned that the optimal pricing we can achieve is known as the “Best Negotiated Market Pricing.” I think we can all agree that the best is better than all the rest. The challenge we face is knowing how to get the best, or perhaps more realistically, how to get close to the best. I posed the same question to Bruce Rainey, of Scripps Health. In Bruce’s opinion, “Getting the best price is about using the best information to first estimate and next refine your budget, and, then ultimately hone in on the final price with negotiation.” To get there, Bruce uses Attainia PLAN Advanced, the best capital equipment supply chain and construction application on the planet.

Supplier List Pricing Data @ Attainia

Group Contract & Group Buy Pricing @ Attainia

Community Average Pricing (CAP) @ Attainia

First, Supplier List Pricing is an important tool for getting a coarse estimate for a project or replacement budget that has one too many items. Second, as the project and budget matures, Group Contract Pricing helps to fine tune the dollar amount, supporting even greater budget accuracy by closing in on the final price. Third, throughout the process of quote analysis, Community Average Pricing (CAP) helps to assess how pricing compares to variables in the Market. The last step is price negotiation, and this is done by either a Provider or a Strategic Sourcing Firm.

We could spend quite a bit of time talking about how much better price should be than some reference price to make it the best, and even how to get a right reference price in the first place. Or, we could simply follow some sound professional advice. To make life easy, I contacted executives of several Strategic Sourcing Firms:

Equipment Management & Technology Solutions
Littleton, Colorado, United States
Charlie George
+1 720 875 0505 x9922

Skokie, Illinois, United States
Tom Derrick
+1 847 637 5646

Turner Medical & Research Solutions
Brentwood, Tennessee, United States
Russ Alford
+1 615 277 1735

According to the collective wisdom of these professionals, the best pricing that can be negotiated at any particular time is dependent on several factors pertaining to the supplier and their products, including:

Product configuration
Product demand
Product manufacturer
Market economic conditions
Material cost variations
Product phase-out incentives
Salesperson objectives
Supplier strategic objectives
Turnaround time

Strategic Sourcing Firms collectively identify their skills as: knowing the capital supplier’s structure and organization, including its sale’s team and management; both recent and past history of the supplier’s pricing; the difference between capital products; and finally how to create a competitive pricing environment for capital equipment.

Providers who augment their purchasing arsenal with Strategic Sourcing Firms contend that the inclusion of a third party Strategic Sourcing Firm can provide both pricing concession and product upgrades to an equipment purchase. In the case of construction projects, the provider often hires Strategic Sourcing Firms because the additional project purchasing workload overwhelms their staffing for routine capital purchasing. The value proposition seems straightforward, as these firms’ income is typically tied to achieving a savings greater than the quote received by the Provider.

It is my belief that every provider probably could or should avail themselves of such a low-risk cost saving process. I certainly believe that some provider cultures would not welcome an outside firm improving on their own performance, and my guess is that it takes a Provider solely focused on maximizing profit to partner with a Strategic Sourcing Firm.

For information about Strategic Sourcing Firms, please write us at blog@attainia.com

Jeff Kleck

In the United States it’s called a Group Purchasing Organization (GPO); in the United Kingdom it’s called the National Health Service Supply Chain (NHSSC); in many countries it’s a mix of public organizations (i.e. Ministries of Health) and private firms (i.e. Distributors) that collectively provide much of the same service. Namely, all these organizations can be described as aggregators of health provider purchasing power working to leverage better pricing from suppliers. Some of the savings from this “better pricing” is passed along to the providers they serve, and some they use to administer their programs. For this posting we’ll call them all “Groups,” to save us from having to list them all each time we discuss them.

So let’s address how Groups aggregate and reduce pricing, and discuss those who do it best. First, keep in mind we’re talking about capital equipment, and not supplies. Supplies are a whole different ball game. Supplies have a continuous flow of commodity priced items, and are different and simpler to address. Alternatively, capital equipment is not a continuous supply chain, it is cyclical and more difficult to predict, thereby making aggregation more challenging.

Groups all have services that differentiate them from one another, but there are common elements in their capital equipment services. Namely, most Groups use the lure of their provider membership to negotiate long-term agreements (typically 3 year “Contracts”) and short-term agreements (typically 3 month “Buys”) with suppliers of capital equipment. These agreements each have some beneficial pricing for those provider members using the service. A course or two in economics and you quickly understand the hierarchy below.

Supplier Published “List” pricing is higher than…

Group Long-term agreement “Contract” pricing, which is higher than…

Group Short-term agreement “Buy” pricing, which is higher than…

Best Negotiated Market pricing, which is the best

In a perfect world everyone would get to the same Best Negotiated Market pricing, but that just doesn’t happen. External Market and Internal Company dynamics dictate the lowest price a supplier is willing to extend, and to whom it is extended at any given time, and even which of the pre-negotiated pricing opportunities (Contracts and Buys) might be available. Namely, no Group covers every capital equipment category with a Long-term Contract, and Short-term Buys cover even fewer categories; Short-term Buys may not even be available at the time you want to buy.

The Progressive Group

I’ve been working in one or another part of the healthcare capital equipment supply chain for some time, and have heard every opinion concerning Groups. And Yes, there is no question that some Groups receive what can be considered an entitlement that is truly a cost to the supply chain. However, there are contributory and forward thinking Groups that are actually decreasing supply chain costs. Attainia works well with these progressive Groups. These are organizations that have discovered that filtering the unproductive costs out of the supply chain is part of their mission and value. Attainia enables these Group’s “Contracts” and “Buys” directly into the supply chain processes that help the provider manage their business.

For information about Groups, please write us at blog@attainia.com

Jeff Kleck

“A Better Equipment Supplier” is the easiest aspect of this series to address. Here at Attainia we have been receiving feedback from both hospitals and equipment planners about their suppliers for more than a decade, and we have compiled all their thoughts and ideas so we can share them here with you.

It all boils down to the simple fact that suppliers providing the best service before the sales take place are the best suppliers to work with both during and after the sales, and will likely remain the best well into the future. In the world of the capital equipment supply chain, it comes down to whether or not the supplier is supporting the information and assistance needed for sourcing; selecting; planning; budgeting; and ultimately, the purchase and utilization of their equipment. In simplest terms, the better suppliers make the entire process easy for their customers.

Here is a good example. STERIS, a manufacturer of operating room and sterilization equipment, has been proactive in delivering details of their equipment specifications to Attainia for years. In fact, they sought us out when our web-based applications were managing only $5 Billion in capital. We provide their specifications; CAD models; room templates; and inexhaustible detail to the largest community of equipment planners and provider planners on the planet. “The logic remains simple,” notes Brian Miller, Director Corporate Accounts. “We want anyone planning our equipment to get it right, and that means getting them the right information early.” Many others are co-inventors and co-developers of Brian’s vision, including:

AGFA Healthcare
Amico Corporation
Armstrong Medical Industries
Baker Company
Barton Medical
BERCHTOLD Corporation
Boehringer Laboratories
Bovie Medical Corp
Bowman Manufacturing
BuiltRite Solutions
Cardon Rehabilitation Products
Carestream Health
Carroll Hospital Group
CCI Group
CDW Healthcare
CENTiCARE Corporation
Clinton Industries
Champion Manufacturing
Custom Comfort Medtek
Doran Scales
Dornoch Medical Systems
Draeger Medical
Dwyer Products
Eagle MHC
Enthermics Medical Systems
EZ Way
FIRST Healthcare Products
Follett Corporation
Future Health Conceptes
GE Healthcare – Imaging
GE Healthcare – Maternal & Infant
GE Healthcare – Respiratory
Getinge Infection Control
GN Otometrics
Harloff Company
Hausted Patient Handling
Herman Miller Healthcare
Hoshizaki America
Hospital Systems/HSI
Hupfer USA
Imperial Surgical
Intensa Medical/Laboratory
InterMetro Industries
Just Manufacturing
Karl Storz Endoscopy
La-Z-Boy Furniture
Lakeside Healthcare
Linet Americas
MAC Medical
Mediwatch USA
Medline Industries
Medtronic Navigation
Megadyne Medical Products
Midmark Corporation
Mindray Medical
Modular Services
MTI Medical Equipment
National Business Furniture
Neusoft Medical Systems
Pedigo Products
Peter Pepper Products
PG Lifelink
Provita Medical
Richard Wolf Medical Instruments
Scotsman Ice Systems
Seca Corporation
Seiler Precision Microscopes
Shimadzu Medical
Siemens Building Technologies
Southwest Solutions Group
Spacelabs Healthcare
Spacesaver Corporation
SR Instruments
St. Jude Medical
Stanley Innerspace
Stryker Corporation
Summit Doppler Systems
Tandus Flooring
T.H.E. Medical
The Sky Factory
Toshiba America Medical Systems
TB & A Hospital TV
Telehealth Services
TransMotion Medical
Tri W-G
Welch Allyn
Whitehall Manufacturing
ZOLL Medical
Zonare Medical Systems

These are only a handful of the most progressive of over 2,000 suppliers comprising over 30,000 items in the largest digital capital equipment catalog in healthcare.

Today, many more suppliers have adapted this service-before-the-sale approach, and Attainia now supports over $40 Billion in capital equipment that is currently being planned with our applications in over 2000 projects worldwide. Firms both big and small, both well known and brand-new, are part of this fastest growing supplier initiative in the healthcare capital equipment supply chain. These firms are highly regarded in the planning community for the assistance they give their customers, so it is hard to believe that a supplier would do anything different, right? Sadly enough, that isn’t the case. If what we have discussed is the provider-assistance approach, there is also the supplier-centric approach.

Some suppliers actually hold back the information the provider needs to efficiently and effectively manage capital equipment planning. Namely, some suppliers have a void of readily accessible information, but require the equipment planner and provider to come to the supplier every time they need specific information to plan for their equipment. The motivation behind this behavior seems to be the desire to use customer contact as a means of increasing the sales interaction and information gathering opportunities regarding prospective sales. So if the customer ultimately gets the information, is there any real harm in supporting this approach? It all comes down to a lack of understanding about the planning process and caring about the plight of the provider. Namely, capital projects have hundreds to thousands of diverse items that must be planned, and while the equipment planner and provider need to have interaction with the supplier, this interaction needs to be efficient and finite. It doesn’t take a rocket scientist to see why an abundance of suppliers with this approach will actually prolong the project time and cost the provider a king’s ransom. Moreover, it stands to reason that the all too costly change orders have a greater chance of being associated with these suppliers’ products. If you don’t have the critical information you need at the right time and right place then you have to make assumptions, and that could well mean costly changes later.

So what are we doing about this at Attainia? The program that started many years ago to support suppliers proactively contributing information critical to the planning process is alive and well. The suppliers’ portfolio of information is loaded into our Planning System, then maintained on a regular basis, making it easy to add early into a project. In every one of our applications (i.e. BUDGET, PLAN, WATCH) we ensure these proactive suppliers and their products are readily accessible.

Jeff Kleck

I’ll bet that some of you thought “A Better Equipment Planner” would be the toughest link in the supply chain to figure out. But you’d be wrong, it’s not that difficult!

“The equipment planner plays a vital role in the success of projects and construction. An attention to detail; strong organizational and communication skills; a solid understanding of the equipment and of the interactions with Architects, Engineers, and Clinical Staff are essential. Assessing a planner’s abilities is best accomplished through interviewing Providers that have experienced, first hand, the planner’s services,” observes Michael Rush of Carolinas Health System, a United States Provider.

According to Awni Kopty of Universal Hospital Services (UHS), an International Equipment Planner, “A quality Equipment Planner works in close conjunction with the Provider; the Equipment Manufacturer and Supplier; the Construction Firm; and, the Architect. Early, timely, and productive interaction between all these people and the equipment planner can mean the difference between opening a facility on-time and under-budget, and the exact opposite.” In fact, even a good equipment planner might not be able to make it all work if these folks aren’t working well together. So that brings us to a common characteristic of many progressive and productive equipment planners… they have a transparent process that is visible to their team members and constituents. With the advent of Web based technologies, the equipment planner can work and share project information directly with the other People and Links in the Capital Equipment Supply Chain. If done right, this collaborative working environment should prevent surprises and the change orders that all too often result from late communication. Below is a list of some of the service firms that work in such a transparent environment. More equipment firms, and increasingly providers, use PLAN and PLAN Advanced to enable their planning. Equipment planning firms are located all over the World; and many of them are able to do so because our technology supports them.

It’s helpful to paint a picture in your head that enables you to imagine the power of a transparent and universally accessible capital supply chain. It is not uncommon to have United States based Equipment Planning firm planning a new hospital in the Middle East, designed by a North American Architect with a European Construction firm. While it’s easy to think that this is an extreme, the reality is that it no longer matters whether the talented people you are working with are down the street or across the planet. In order to make things work efficiently everyone needs to be in immediate contact with one another, and technology now makes it possible to engage quality teams irrespective of location. This is important, as being able to access services around the globe allows the Provider the most possible choices, and thus a greater chance of yielding a better, faster, cheaper, and safer hospital.

So, a better equipment planner uses a transparent process to create a collaborative work environment that helps yield a better, faster, cheaper, and safer hospital.

AECom / Ellerbe Beckett
Minneapolis, Minnesota, United States
Donald Woodhall
+1 612 376 1842

Building Directions
Hudson, Ohio, United States
Phil Miller
+1 330 655 0778

Anchorage, Alaska, United States
Terry Molnar
+1 719 387 7450 extension 125

CB Richard Ellis
Seattle, Washington, United States
Tracy Wilson
+1 206 280 2567

Clarity Place
Dallas, Texas, United States
Dan D’Amico
+1 214 695 6273

Clinical Engineering Solutions
Yorktown Heights, New York, United States
Michael Mirsky
+1 914 610 0943

Commercial Office Interiors
Seattle, Washington, United States
Lacey Androsko
+1 206 577 2793

Cornerstone Equipment Planning
Flourtown, Pennsylvania, United States
Doug Lieberman
+1 215 836 1191

CRG Solutions
Chagrin Falls, Ohio, United States
Phil Lindner
+1 724 942 3464

Criterion Systems
Applegate, California, United States
Tony Freitas
+1 530 878 6689

Cripe Architects
Indianapolis, Indiana, United States
Dale Vogel
+1 317 506 5385

Davis Partnership Architects
Denver, Colorado, United States
Gary Adams
+1 303 888 2750

EL + A Equipment Planning
Glendale, Arizona, United States
Elaine Linderman
+1 602 300 4737

Envision Planning
Greeley, Colorado, United States
Kristy Pals
+1 970 330 1767

The Estopinal Group
Jeffersonville, Indiana, United States
Kevin Russell
+1 812 282 3700

Facilities Development (FDI)
Phoenix, Arizona, United States
Lori Reed
+1 602 382 7000

Francis Cauffman Architects
Philidelphia, Pennsylvania, United States
Gloria Cascarino
+1 215 568 8250

Freeman White Architects
Charlotte, North Carolina, United States
Abdjul Burrell
+1 704 586 2424

Freeman Planning
Etiwanda, California, United States
Jim Freeman
+1 909 899 7526

GE Medical Systems SCS
Buc, Cedex, France
Christian Benza
+33 1 30 70 91 27

Genesis Planning
Houston, Texas, United States
Robert Nimon
+1 713 297 7500

German Medical Services (GMS)
Dubai, United Arab Emirates
Ziad El Kadi
+971 4 433 28 93

Goodhue Planning Services
Lincolnton, North Carolina, United States
Ric Goodhue
+1 704 240 0197

Graham Construction
Des Moines, Iowa, United States
Kari Boyens
+1 515 699 7172

Harley Ellis Devereaux
Southfield, Michigan, United States
Daniel R. Beney
+1 248 233 0127

Healthcare Building Solutions
Langhorne, Pennsylvania, United States
Jay Hornung
+1 215 702 1766

Heery International
Seattle, Washington, United States
Andrea McLean
+1 206 254 7968

HELP Equipment Planning
Plano, Texas, United States
Cheryl Stoddard
+1 314 770 7248

Dallas, Texas, United States
Mike Lynch
+1 214 969 3116

Emeryville, California, United States
Bernie Kamps
+1 510 601 6501

Glendale, Arizona, United States
Jerry Clubb
+1 623 780 2901

The Innova Group
Tucson, Arizona, United States
Bob Wier
+1 520 886 8650

LGB Consulting
Louisville, Kentucky, United States
Greg Benner
+1 502 475 4860

KJWW Engineering
Naperville, Illinois, United States
Suraj Soudagar
+1 630 753 8562

LifeStructures Technology Planning
Indianapolis, Indiana, United States
Wayne Hibbs
+1 317 819 2242

Med Equip Consultants
Bedford, Kentucky, United States
Corrie Carey
+1 502 817 0209

Medequip International
Blue Bell, PA, United States
John Mohan
+1 215 641 0800

Medical Equip Solutions International (MEqSI)
San Antonio, Texas, United States
Deb Long
+1 830 438 2250

Partners Healthcare Group
Brentwood, Tennessee, United States
Michelle Adams
+1 615 620 2953

Phase Two
Riverdale, Georgia, United States
Vernon Lyons
+1 404 202 3120

Pulse Design Group
Lenexa, Kansas, United States
Christy Smith
+1 913 438 9095

S2 Enterprises
Bayport, Minnesota, United States
Amy Staudinger
+1 651 342 0962

The Rachtman Group, LLC
Corrales, New Mexico, United States
Susan Rachtman
+1 505 508 5427

TTG Corp
Pasadena, California, United States
Andrea Rufe
+1 310 367 9541

Emeryville, California, United States
Terrie Kurrasch
+1 510 899 6425

Toronto, Ontario, Canada
Jason Walker
+1 416 503 2908

Roloff International Equipment Planning
Temecula, California, United States
Don Roloff
+1 951 303 0408

RTKL Healthcare Technologies
Dallas, Texas, United States
Debbie Cameron
+1 214 468 7902

Shen, Milsom, & Wilke
New York, New York, United States
Jay Pulaski
+1 212 725 6800

Louisville, Kentucky, United States
Ted Himburg
+1 812 944 9605

Strategic Initial Outfitting Transition Solutions (SIOTS)
Charleston, South Carolina, United States
Grant Bonser
+1 847 278 2151

Coral Gables, Florida, United States
Thomas Hawkins
+1 305 442 8755

Turner | Medical & Research Solutions
Nashville, Tennessee, United States
Debra Hinton
+1 615 277 1718

Moscow, Russia
Maria Barabanova
+7 495 7883055

Universal Hospital Services (UHS)
Amman, Jordan
Ramez Kopty
+962 6 465 2390

Jeff Kleck

Creating a Better, Faster, Cheaper, Safer Hospital involves so many elements that your head can hurt just trying to catalog and partition each one in your cranial filing cabinet. So let’s bite off a piece we can handle…

A Better Capital Equipment Supply Chain

The Capital Equipment Supply Chain includes the sourcing, selecting, budgeting, planning, purchasing, tracking, and redistributing of a significant portion of a hospital’s assets. Let’s assume that the hospital has its act together; and is using Attainia applications to connect these supply chain processes. Once the processes are connected, a more efficient and continuous digital supply chain exists. That’s good news for anyone using Attainia applications. If you aren’t using all of the Attainia applications, get yourself together and contact us so we can help you. Assuming you are suitably vested in Attainia, what is the next step to improvement?

We have all heard the saying “A chain is only as strong as its weakest link.” That’s true here too. So it would follow that we need simply to strengthen each link to strengthen the supply chain. The links are the respective supply chain processes and the professionals that manage them. With the digital supply chain in place, we now need:

A Better Equipment Planner
A Better Equipment Supplier
A Better Group Purchasing Organization
A Better Provider
A Better Architecture Firm
A Better Construction Firm
A Better Strategic Sourcing Firm
A Better Logistics Firm
A Better Financing Firm

This should keep us busy for the next few weeks. We’ll tackle each one of the links in the chain. Send me any stories or ideas on what makes a better “equipment planner” to blog@attainia.com, and we’ll gather your thoughts and distill some wisdom to share in the next blog posting… “A Better Equipment Planner.”

Jeff Kleck

New Year, New Blog

Welcome to 2011! With the start of a new year, we kick off our new blog. I am excited to launch this resource for the Attainia community.

On this blog we will post articles that we hope will be helpful, written by the folks at Attainia, our partners, and members of our community. We always welcome comments to the articles on our blog, as well as suggestions for future topics.

Stay tuned for new content coming soon.

Here’s to a great 2011!


Jeff Kleck


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