Direct Online Healthcare Contracting Challenges GPOs? | Justin Hibbs | RxEconsult

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Aptitude Brings Innovation and Transparency to Healthcare Direct Contracting Category: Healthcare Administration by - April 18, 2014 | Views: 26850 | Likes: 0 | Comment: 0  

Direct Online Healthcare Contracting

While government agencies and technology startups have been working to innovate healthcare for consumers, the business-to-business side — which includes some of the largest expenditures in healthcare — has been left largely untouched. In 2013, the healthcare industry spent more than $200 billion on medical products and supplies including everything from crutches, surgical gloves, gowns and protective masks to CAT scanners, ultrasound machines, pacemakers and MRI scanners.

In fact, after personnel and labor costs, procurement is the largest expense in the healthcare industry. That’s what makes it so alarming to find out that this large segment of the industry is at least a decade behind the times when it comes to utilizing technology to reduce costs.

For decades, hospitals have been utilizing large group purchasing organizations (GPOs) to negotiate bulk-rate discounts on their behalf. Hospitals had a list of GPO suppliers they could purchase from, or they could forgo their GPO and try to make their own deals.

But trying to close a “local” or “self” contracting deal with a supplier was a long, tedious process; such negotiations could take as long as a year to complete. This type of contracting tended to drain time and resources, and was just another example of something that needed to be reviewed in the healthcare industry.

Thankfully, technology has caught up to healthcare’s supply chain industry in the name of aptitude, the industry’s first-ever online contracting market.

Launched in April of 2013, aptitude provides an online platform for buying and selling healthcare supplies for any hospital or supplier, analogous to a consumer market. By bringing the direct contracting process online, aptitude provides a streamlined system for buyers and sellers to engage, saving time and money. Direct deals that once took months are now closed on in 38 days on average. Direct deals represent about a third of hospitals’ spend on supplies and products, an estimated $55 billion segment of the industry. Since aptitude’s online portal saves buyers an average of 10-15 percent for each contract, this simple innovation can result in a tremendous savings industry wide.

We designed aptitude to simplify the process and to decrease cost and time spent negotiating contracts. Through the availability of relevant data for buyers and sellers displayed on an easy-to-use interface, users are able to manage orders quickly and easily from a single location.

For hospitals, aptitude creates the ability to award contracts based on the needs of their organization. Hospitals are able to view the competitiveness of their contracts, review spend by supplier and product, submit bids, automatically review offers and their competitiveness and monitor the contract’s performance. 

In one example, a hospital in the Midwest saved 33 percent, or $60,000, on a $180,000 order of elastic bandages just by contracting with a supplier via the aptitude online market. Savings like these illustrate the role aptitude can play in helping rein in healthcare costs simply by improving the contracting process.

On the supplier side, aptitude enables users to grow and manage market share in an online environment, while monitoring their contract’s performance throughout its lifecycle. Suppliers are also seeing financial value as a result of implementing an easier process and reducing the amount of competitive work and time to contract. This level of efficiency didn’t exist prior to the online market. 

aptitude is also helping to eradicate the industry-wide cost discrepancies that have become a topic of great discussion as of late. Because of the lack of transparency in the healthcare supply chain industry, the prices some hospitals pay for the same medical equipment can vary sometimes by tens of thousands of dollars. There is a consumer benefit if these prices can become more aligned by a logical, transparent market.

It is clear aptitude can innovate this market to everyone’s benefit. In fact, how great the benefit will only be limited by how widespread this technology is utilized by the healthcare industry.

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