- Shop Products
- Services & Tools
- Business Resources
- Clinical Resources
- Our Story
Medical professionals, medical facility employees, individuals paying with Medicaid or private insurance
Billing & Invoice Inquiries
Individuals can download a W9 and upload a tax certificate by clicking here.
Managing the contracting for a health system is very complex. Health systems should maintain an optimal contracting portfolio to take advantage of cost-savings options, including GPO, locally-negotiated manufacturer contracts, and distributor contracts. Health systems also need to think beyond their medical-surgical contract compliance. Creating a strategy to manage cost sourcing should encompass laboratory products and services, pharmaceuticals, equipment and maintenance contracts, and manufacturer-direct spend.
The complexity multiplies when you layer on the specific contracting needs of the non-acute. Each non-acute specialty – from physician offices, ambulatory surgery centers to home health and long-term care facilities – purchase different products and may have unique contracting of their own. Add on new mergers and acquisitions and a health system’s cost sourcing could end up out of control. Facilities could be rostered incorrectly. HIN and DEA information can be missing, which creates purchasing issues. Purchasing tiers may not be achieved, potential bulk buys could be sitting on the table and not taken advantage of, and savings opportunities are not realized.
Having the right cost sourcing strategy increases contract compliance, maximizes spend to hit higher contract tiers across the continuum, and can reduce hidden fees, such as inbound freight.
According to Bethann Maynard, Director of Customer Management for McKesson, cost source strategies vary by system – it depends on what is most important to each system at that time. Is it GPO contract compliance? Reducing supply chain spend and seeking savings opportunities? Enforcing formulary management across the non-acute continuum?
The health system selects priorities that are in line with their key initiatives, such as GPO penetration, popularity (most commonly used product), lowest price, supplier penetration and/or latex-free/safety.
“McKesson offers supply chain solutions based on each health system’s preferences,” Maynard explains. McKesson has tools that health systems can use to build a strong cost sourcing program:
The formulary management allows systems to see how they can streamline sourcing and simplify contracting, which can be particularly complicated with multiple non-acute and post-acute care settings. McKesson evaluates the system’s GPO and all the channels of utilization, confirms all channels and facilities are rostered, all licenses are up to date, and that they comply with federal regulations such as DEA, and GPO requirements (HIN) for access to uniform cost. Then, once all pertinent compliance factors are verified, McKesson utilizes analytics tools to confirm that the health system is maximizing all services, tiers, and opportunities for savings.
With the McKesson Business Analytics platform (MBA), health systems can maximize cost sourcing by leveraging those high-volume products and target items for savings in other areas. MBA provides health systems with direct access and visibility to its spend by manufacturer and by cost source. Standardization and formulary management help to utilize each manufacturer agreement optimally, so the health system benefits from the most advantageous tier and greatest savings.
Having a model that’s comprehensive in its offering and tailored to the needs of your organization can minimize practice disruptions, streamline ordering, and provide better controls over operating expenses and product costs.
In addition to negotiating great costs from your suppliers, it’s important to assess the impact the operational model may have on clinic staff. Having a model that’s comprehensive in its offering and tailored to the needs of your organization can minimize practice disruptions, streamline ordering, and provide better controls over operating expenses and product costs. Consolidating a facility’s spend to a single source for medical-surgical products, pharmaceuticals, and lab supplies can help provide this control.
“Having one distributor provides all the product needs of a single location and provides greater visibility and transparency to the system’s spend and ordering patterns,” Maynard says. “This aggregated view can help determine whether you are on the right tier and with the right manufacturer, which ensures greater savings and helps meet compliance goals and the added benefit of reducing clinical variation.”
It costs health systems more time and money to manage multiple POs with different vendors. “Many health systems look to us to pull everything together: aggregated purchasing, to monitor the entire spend and provide consistency in price, delivery, and support through a single distribution channel,” Maynard explains.
Financially, McKesson can help systems ensure pricing parity as well. “McKesson is an advocate for the health system, working together with the manufacturer, GPO, and the system’s network of facilities to ensure the roster is up to date, LOCs are signed and licensing is current,” Maynard adds. “We help the customer set themselves up for success – making sure all their current and correct info is provided to manufacturers, making sure we are all on the same page, and closing any gaps or discrepancies.”
Great cost source management starts with having a strategy – determining what’s important to your organization. Is your primary objective to drive GPO compliance or access the lowest cost? Do you have commitments in manufacturer agreements that also require compliance? After determining that strategy, you will need technology, analytics and resources that can help plan, implement, track and realize that vision. McKesson can help you achieve that level of control.
Chapter 5 in this series covers details on why establishing visibility across the fragmented non-acute facilities of a health systems is the critical first step to driving both operational and clinical initiatives, resulting in better financial performance.
How does visibility into your system’s non-acute settings drive overall business goals? Learn how visibility into data can help drive standardization and reduce clinical variation to reduce costs and improve patient outcomes.