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Curbside Consult with Dr. Jayne 11/19/12

November 19, 2012 Dr. Jayne 3 Comments


Penny Wise and Pound Foolish

Working for a large health system, I’m no stranger to procurement policies whose complexity rivals the best Rube Goldberg machines. This has been made worse by consolidation among hospitals and their various service lines when administrators demand a tightly-controlled list of preferred vendors.

On its face, a preferred vendor list sounds like a good idea – make sure vendors are well-vetted, reputable, and have the all-important Business Associate Agreement squarely in place. It can also be helpful to ensure vendors reps play by the rules and behave themselves in the hospital. Vendors on the preferred list may also have a better grasp of the needs of large health organizations and can ensure contractual pricing is delivered to all parties that should receive it, whether they are part of the mother ship or merely affiliates.

This makes sense when dealing with items that are truly commodities – linens, transcription service, uniforms, furniture, medical supplies, and technology hardware. It makes less sense when dealing with emerging interoperability needs, especially when third-party interventions are needed to improve workflow or make clinicians’ lives better.

A little over a year ago, my group (which is owned by the hospital) decided to shutter the moderate complexity lab that we had hosted in our office for years. Although convenient for patients, it was a declining source of revenue and an increasing source of aggravation due to unreliable equipment and staff. When the hospital offered to place a draw station in our practice (complete with staff that we didn’t have to pay for) it was an easy decision to shutter the lab.

What we didn’t anticipate were workflow issues caused by the lab interface the hospital provided. When we owned our lab, results were printed out and scanned. We reviewed these in our EHR work basket and acted on pages of labs with a single message to staff.

Once we went live with the hospital lab interface, result flowed real-time into our work basket. This sounded like a good idea, but as primary care physicians ,this was inefficient and annoying. Rather than having all labs back together, they returned piecemeal, which meant we might have to touch a patient’s chart three or four times trying to figure out if all the labs were back and ready for us to act.

I explained this to one of my CMIO pals, who immediately recommended some middleware that he had used to solve the same problem. Even better, the solution was cheap in IT terms (barely the cost of an off-the-shelf interface project) and readily available.

The hospital agreed to pursue the solution for us since competing local labs already had a solution in place and would have been happy to have our business. We were initially enthusiastic, but work quickly ground to a halt since the vendor was not on the hospital’s preferred vendor list.

Instead of pushing to have them on the list, we have had to watch the hospital slog through its vendor identification, request for proposal, and endless review process. Ultimately they chose a vendor from the preferred list who said they could build the same type of solution, but unfortunately had not built this particular flavor before. Having my colleague’s experience to draw from, I wanted to make sure we addressed several key areas of functionality in the contract. This caused the contract to be “nonstandard,” which is apparently a euphemism for “something which will never be signed in your lifetime.”

We were in negotiations with the vendor for nearly four months. The slowness was mostly on our side, which was easy to figure out based on the many painful conference calls I attended. Once the contract was in place, the vendor began building the solution and we had to beta test it for them in their environment. Then we had to deploy it to our full-blown test environment, followed by more configuration and a couple of enhancements. After several more months, we’re finally ready to take it live.

Our physicians and staff have aged in dog years during this process. Staff has created a new process to try to reconcile what has returned with what was ordered so that providers don’t try to address a patient’s results before they’re all back. When we added up how much money this has cost (both in lost productivity and in incentives/bribery to keep the process working), we could have purchased the upstart vendor’s solution five or six times over.

For those of you who have recently joined the ranks of employed physicians or are contemplating a hospital’s purchase offer, get ready. You get to share the joys of the ubiquitous preferred vendor list.


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Currently there are "3 comments" on this Article:

  1. Sounds like the problem is not necessarily with the ‘preferred vendor list’but with an overly encombered behemoth that cannot react to change. And we wonder why healthcare costs are going up??

  2. Excellent post, and we have all seen large organizations who can’t get out of their own way for any number of reasons.

    I am curious … Do you really think that the provision of transcription services is a commodity? Good MTs often bring decades of experience to the medical documentation process. I’ve spent nearly 25 years in the transcription industry, and all the professionals I know – from practicing MTs to the executives of large transcription companies – resist the commodity label.

    It is undeniably true that the healthcare sector TREATS transcription as a commodity, and there are some contracting and due diligence benefits to having MT companies go through the exercise of becoming a preferred vendor. However, it seems to me that a skill that takes years to learn, decades to perfect, and is the foundation of a hospital’s revenue cycle does not belong in a list of commodities that includes linen, uniforms, furniture, and hardware!

    For better or worse, in our current healthcare environment, doctors do not create revenue – documents do. I believe healthcare organizations treat transcription as a commodity to their financial disadvantage.

  3. Unfortunately, transcription has become a commodity. Speaking of other skills that take years to learn and decades to perfect, physicians in certain areas have also been commoditized. Our health system’s Emergency Department, ICU, Cardiothoracic Surgery, and Hospitalist physicians are all provided by third party staffing companies, just like transcription, legal, and some nursing services. There’s very little sense of permanence or collegiality because of a rotating cast of characters.

    And looking at the real source of our revenue – patients have long been commodities as well. In many respects ACOs are just another way of eroding professional relationships and turning patients into widgets.

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