Kansas hospitals say they've got supply chain covered

Group purchasing saves Kansas Hospital Association members up to 50 percent on natural gas contracts, 11 percent on air gas renewal, over 50 percent in radiology procedure supplies and realized a 5 to 12 percent reduction in the cost of facilities and construction.

While rural hospitals face significant challenges, for one region at least, supply chain isn't one of them.

Kansas Hospital Association's buying power comes through its supply chain subsidiary, Associated Purchasing Services.

APS acts on behalf of 128 hospitals in the Kansas Hospital Association and about 150 hospitals in the Missouri Hospital Association, putting anything that can be bought into a contract. APS returns a portion of its earnings to its dues paying members.

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In 2014, it returned $1.4 million through its shareback program, according to Dennis George, CEO of APS.

"Everybody's doing group purchasing," George said. "However when we look at pinching pennies, it's becoming more important."

In minute detail, best practices are followed, including discussion of the importance of tracking oxygen tanks.

"The biggest challenges we're seeing are ownership changes," George said. "We started off serving independent hospitals that have merged."

It's created a more complex world of multiple group purchasing organizations.

APS also partners with MedAssets, a supply chain vendor.

Locally, APS has saved up to 50 percent on natural gas contracts, 11 percent on air gas renewal, over 50 percent in radiology procedure supplies and realized a 5 to 12 percent reduction in the cost of facilities and construction.

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"Wherever contracts can be made, they're done," George said.

APS has contracts with Officemax for supplies and other contracts for staffing and waste disposal, maintenance, elevator maintenance, filter contracts for air filtration and electrical bulbs.

Group purchasing is nothing new in Kansas.

"We've been doing group purchasing since the 1970s, we've always done regional collaborations," he said.

But now they're now looking at improving it.

"We're looking at contracts for facilities, contracts with paint companies, electrical fixtures, making sure every penny negotiated is through volume or discount."

This is a change from the early 1980s when staff bought supplies from a catalogue that offered free gifts, he said.

"We're really professionalizing the small supply chain, just-in-time inventories," he said. He recommends pushing the clout of group purchasing power by picking up the telephone.

"My biggest issue, if you're participating in a group purchasing organization, sometimes the executive staff doesn't know that, to pick up the phone and call," he said. "There are times you can ask, 'Can you do any better?'"

Twitter: @SusanMorseHFN