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Clarity and transparency — a clear need in the capital process

February 24, 2021
Business Affairs
From the January/February 2021 issue of HealthCare Business News magazine

By Tom Watson

Healthcare capital workflow has evolved from simplistic clinical requests to a strategic decision-making process involving value analysis.
There are many steps in transitioning to this process, but the constant of a vendor-issued quotation offering a solution with a proposed price to acquire the technology or system of interest remains core to the process.

A key factor in optimizing both your capital funds and utilization of your valuable human capital in supply chain is to focus on the quoting and offering process that takes place before agreeing to a price and issuing a purchase order. A seemingly simple, straightforward step in consummating the deal is often either a win for the vendor or a win for the healthcare organization. Proper communication and guidelines by the healthcare organization with all stakeholders adhering to these best-practice requirements can result in a win-win for both vendor and client. Pricing and quoting trends significantly impact how purchase decisions are made. Current trends make the process longer and more expensive for both sides, a situation that is less than optimal.

As health systems centralize their sourcing and purchasing decisions, buying is shifting from the department to centralized value analysis and supply chain processes.

• Consolidation of provider organizations and healthcare suppliers is driving change.
• Organizations are challenged to stay current with the unprecedented rate of new technologies and products.
• Clinical, operational, and financial considerations require multiple decision-makers.

Opportunities to use analytics and metrics, for organizations with access to extensive historical data are emerging. Data provide significant insight and transparency to suppliers and buyers alike. Data-driven, analytic insight is actionable, resulting in expedited purchase decisions.

Quote transparency (QT)
QT reflects the format, data, and clarity offered to the client for a vendor’s formal quoted offer. A weighted average of seven parameters offers an overall quote transparency rating on a scale of 1 to 5, with 5 being the most transparent: 20% list price, 20% component level price, 20% unique part numbers, 15% discounting or pricing justification (reason), 10% quoted date/expiration date, 10% unique quote number, 5% warranty is stated.

Actual data from a 12-month review of seven major vendors offering CT imaging systems shows the disparity in quoting format trends. Data metrics reveal a market average of only 3.3; the top score is 4.6, followed by 3.7, 3.4, two at 3.3, and two well below the average at 2.9 and 2.6. This reflects an average well below an ideal threshold, with only one consistently coming close to a transparent standard quoting process. A lack of quote transparency places a healthcare organization at a significant disadvantage at the outset of the capital purchasing process.

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