Healthcare Systems Integration Standardizing purchasing in a new integration is a billion dollar decision

Industry: Healthcare

Expertise: Acquisition Integration

Schaffer Team: Lorne Blackman

Accelerated Integration of functions after a merger of two large healthcare systems

Schaffer's Rapid Results Approach in Action

Following the merger of two large health care systems, the newly formed organization needed quick decisions on how to integrate their Group Purchasing. Using Schaffer's Rapid Results Approach, they were able to recommend a vendor, get approval, and implement the system in 14 weeks instead of the 52 week norm. Significant financial benefits were realized and the project is still cited as an example of an outstanding decision making process that accelerated the successful integration of the two organizations.

Integrating the supply chain of a merged health care system

After the merger of two large health care systems in the Pacific Northwest, the newly formed organization needed to integrate their group purchasing organizations (GPO) as a first step in integrating the full supply chain function. Until the GPO decision was made, it would be impossible to move to standardized purchasing, which in turn would help facilitate the integration of clinical care practices and the realization of the full benefits from the merger.

Standardizing purchasing in a newly integrated organization

The selection of a GPO is normally a slow moving process that has to balance meeting the needs of multiple stakeholders while making the right technical decision that affects over $1 billion in expenditures. Past GPO decision processes took one year or longer to complete. This case was even more challenging, as the predecessor organizations used different GPOs and had a vested interest in maintaining their existing interests.

However, the implementation of the merger could not be delayed that long. A different solution was required that would generate the right business decision while helping to unify the new, integrated Supply Chain function.

Moving quickly on a billion dollar decision

Schaffer Consulting proposed a Rapid Results approach to the decision process, bringing together a team of Supply Chain leaders representing both predecessor organizations. Working with Schaffer Consulting support, the team was presented with the business challenge and decided to pursue an unrealistic goal of making their recommendation on a new GPO within 14 weeks.

The team worked through the normal team formation dynamics very quickly, as they had not worked together in the past. They then developed a work plan that all agreed was fair for making the needed GPO decision, defining a set of success criteria and a selection process to be used for bidders. Within a matter of weeks they were able to solicit bids from potential vendors, to meet with vendors to review those bids, and to assess the bids against their criteria.

Within the target 14 week period that team had come to agreement on which vendor to recommend. This recommendation was presented to senior leadership; the decision was made and implemented.

Outstanding decision making

The win: Completed assessment and decision on complex $1 billion+ Group Purchase Organization in 14 weeks, instead of the 52 week norm.

Sustainable success

Five years after the GPO decision was made, the Vice President and senior members of the Supply Chain management at the client company continue to cite this as an example of outstanding decision making that accelerated the successful integration of the two predecessor organizations. Significant financial benefits have been realized over the life of the GPO contract, and the two predecessor organizations have integrated into a seamless, high-performing team that consistently delivers high value to the organization as a whole.


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