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Readers Write: Why Healthcare Organizations Take So Long to Make Buying Decisions and How We Can Fix It (Part 3 of 4)

November 1, 2017 Readers Write 3 Comments

Why Healthcare Organizations Take So Long to Make Buying Decisions and How We Can Fix It (Part 3 of 4)
By Bruce Brandes

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Bruce Brandes is founder and CEO of Lucro of Nashville, TN.

In Part 2 of this series, we discussed the importance of first clearly defining and aligning regarding the problem a buyer seeks to solve before evaluating products. The next key element is to invite trusted colleagues to contribute insights and experience in the context of that problem and possible solutions.

Below we will share more about the type of buying decisions most impacted by a lack of trust and explore how healthcare buyers can gain more confidence in the choices they must make.

There are three buckets of non-labor spend in health systems:

  1. Supply chain — traditionally influenced by group purchasing organizations (GPOs.
  2. Pharma — traditionally influenced by pharmacy benefit management companies (PBMs).
  3. “Everything else,” which falls into a category known as purchased services (traditionally managed less centrally).

Purchased services represent 20-30 percent of a hospital’s expenses and include a wide array of vendors ranging from health IT and digital health to outsourced professional and ancillary support services. Many health systems are seeking to drive standardization, minimize duplication, and realize greater value related to purchased services.

Vendor selections for purchased services are generally complex, collaborative processes. With input required from so many key stakeholders for a purchase commitment of a significant amount, how do risk-averse health systems ever make a buying decision? The challenge is exacerbated by an array of third-party sources of market insight, including consultants, industry associations, purchasing groups, etc., all with their own opinion about the “best” vendor for that area of focus.

If you are responsible for this buying decision, who do you trust? How can you efficiently synthesize so many disparate data points of opinion about the best product in the market to put them all into context to make the right decision for your organization?

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Healthcare buyers take many of these outside opinions with a grain of salt, skeptical of the motivations of some. Vendors may compensate the “non-partisan” organizations to endorse their products. Unsolicited information received from cold calls or spam emails can rarely be trusted.

When you are making a strategic hire to your team, do you ever expect the personal and professional references given you by the candidate to say anything too negative? More commonly, even before an interview, it is wise to do a quick check of LinkedIn to seek common connections that you know will give you more clear and honest insight (this works in both directions for the candidate and organization).

Similarly, buyers want an efficient, private way to tap into trusted colleagues across their professional network,  those who have experience in tackling this same problem in an organization like theirs.

The time and cost associated with deciphering vendor claims, vs. hype, vs. reality are untenable for the entire industry. With today’s time and financial pressures, physical site visits and reference calls are (finally) antiquated. Thus, it is critical to gain necessary insights from those you trust to reduce the risk associated with strategic vendor selections.

The value of a trusted network is compounded when this collaboration is contextualized with the problem and potential solutions under consideration. As trusted communities come together, the entire industry can benefit.

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Currently there are "3 comments" on this Article:

  1. Is the point to this series to show that healthcare is not unique to other industries?

    You could repost the same problems to virtually any industry forum that buys technology(people become enamored with solutions not problems, sales cannot get to decision makers, too many players have input, reliable reviews/endorsements, etc…).

    • Your observation that these challenges are not unique to healthcare is very true. What does add to the complexity in decision-making in healthcare is that there are additional dimensions that go beyond the bottom line business analysis that is standard in most other industries.

      – consideration of clinical, ethical (i.e. life and death) dimensions of some decisions
      – the inherent uncertainty of today’s revenue model for hospitals
      – historical lack of competitive market dynamics minimized need for change
      – the need to serve many “masters” – patients, physicians, payers, employers, etc…

      All these dimensions contribute to healthcare being significantly more difficult for both buyers and sellers to be efficient and cost effective in their decision-making.

      • I’m also wondering to what degree do various regulations and mandates – particularly federal and state level – impact the product and services purchasing cycle in healthcare. I realize all industries are subject to new and often burdensome, expensive and challenging to implement regulations but it seems healthcare is loaded with them: 5010, ICD-10, Meaningful Use, MACRA, etc. etc. etc.

        So often healthcare is must comply with regulations that are half-baked, subject to wide interpretation, not consistently incentivized, penalized or enforced…and then the Emily Littela-like regulators often say “Never mind” – or backpedal and grant waivers and exceptions. Are other industries impacted similarly?







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