Hospital procurement is a process of purchasing services or goods at a large scale that are cost-effective and give quality results for hospitals. This process helps the medical sales cycle to navigate with significantly less friction. The process additionally determines if the sales representative promotes a product or if the product exists as extra stock.
For a proper hospital procurement, a transparent process along with commissioning guidelines is vital. For this, the medical sales reps often communicate with the Value Analysis Teams (VAT) or Value Analysis Committees (VAC). These teams are made up of various stakeholders within the hospital. The hospital procurement process is rather vital and expanding, especially if you take the example of other countries such as Canada and England.
The term hospital procurement is often considered synonymous with supply chain or strategic resourcing. The sales representatives play an important role in this process. They are required to effectively sell the product and work in a way that the demands for the product increase. A professional and highly skilled medical sales rep has worked through this sales cycle that has occurred in the healthcare or the hospital procurement scenario over the years.
Responsibility of a Sales Representative in Hospital Procurement
The increase in the popularity of procurement has led to doctors having a say in the purchase of products. Although they do not enjoy as much authority in this department, they can surely pitch their views regarding a certain supply or their preferences. As a skilled medical sales representative, you must first know how hospital procurement works. Then, you must establish a connection with the valuable individual, be it clinical or financial. Incorporating the value according to the source with knowledge will help in better sales.
The Process of Hospital Procurement
The procurement process involves a well-executed strategy. As a medical sales representative, one must proceed with the hospital procurement process with certain steps in mind to carry forward your ideas. There are essentially four steps to successfully implement the strategies. These are as follows.
- Gathering data to look for the problems
- Negotiating to know the best solution to the problem
- Testing the solution to check whether it resolves the problem
- Calculating the results
1. Data gathering
Data includes all the important documents such as studies, white papers, product literature, FDA approvals, pricing plans, MSDS (material safety data sheet) , promotions, or any other form of authentication. These documents will not only help you in the sales process but further ensure that you don’t wait for the next meeting. In addition, you must be sure that the clinicians of the hospital support your plans in the procurement process. They must move forward with you.
The sales rep should be prepared with all the formalities and testimonials before meeting the members of the hospital VAT. You must include the concerns and ideas of all the physicians in the documentation. If this step is executed properly, then it is likely that you will secure buy-in from your target audience.
You must sell the products to the hospitals in such a way they understand the benefits and total value proposition. Negotiating involves working and presenting the best solution to the users. Hospitals generally tend to consider patient outcomes and physician satisfaction. Similarly, they consider whether the product is as valuable as the price it is being offered at. Therefore, the product must be competitive.
You must offer the best pricing structure to the hospital. Make strategies to talk about your product effectively in terms of balancing the costs and value. The hospitals think about the product’s impact on clinical staff and the patients. Thus, you must be well-prepared to answer such questions.
3. Trials and tests
This step involves testing possible solutions to the problem. It is a period in which the product testing takes place. Therefore, you must smartly convince the hospital and try to attract more staff to take an interest in the product. The trial period must be limited so that the hospital staff doesn’t consider it as a norm.
The product trial may take several days or even months to carry out certain steps. Thus, you should communicate the potential and the usefulness of your product well. The type of service or product additionally influences the users. As such, make sure that you provide proper knowledge to them during the trial period.
Resolving refers to the process of approving or rejecting a particular solution to the problem. The members of the hospital VAT will certainly make the product cost their top priority. However, this is not the basis on which a product is evaluated. Many VATs consider both financial as well as clinical aspects of the product. The sales executive can greatly reduce the risk of rejection by being prepared for the possible outcomes, you can ensure that your product reaches the hospital.
Sales executives should review and resolve any errors to gain credibility. The main purpose of the VATs is only to improve patient outcomes and reduce waste. Thus, handling the situation well may help you in receiving future deals.
- Manages the purchase of equipment and supplies for the hospital
Hospitals mainly provide assistance in case of emergency, such as accidents. They provide medical care to the patients who meet any unforeseen incident, delivery of children, and various surgeries. It requires equipment and a bulk of other services to go forward in such situations.
Hospitals need surgery rooms, birthing rooms, services such as pharmacy, labs, surgery, radiology, and medical supplies. This is where hospital procurement comes in. The negotiation, sourcing, and obtaining of these useful supplies are done through the procurement process. A specific system and control are required to receive the right products when needed.
Here’s an article on how hospitals make purchasing decisions.
- Supervises the lifecycle management
The total lifecycle management is controlled completely by the hospital procurement. The hospital first analyses and tests the best product required in the first stage. Then, the hospital manages the using costs of the product and determines the utilization costs. In the last phase, they dispose of the products keeping the ecological and their economic aspects in mind.
- Manages the expenditure and supply cost
The hospitals spend the most amount of money on obtaining the supplies and goods. The figures spent in this sector are as much as what they spend on wages of the hospital staff. Efficient management of costs is compulsory to ensure a strategic value based pricing model. Thus, the responsibility lies in the procurement process to control and manage the expenditure.
- Works on organizational sectioning
Hospital procurement processes involve hierarchy. The procurement tends to control major currencies. Various ranks and positions are set to carry each work professionally, including Vice President of Strategic Sourcing, Chief Procurement Officer, or Supply Chain Officer.
- Generates effective results
Small-scale hospitals often go for a centralized procurement system to reduce their overall costs. In this way, they effectively reduce the total cost of ownership and other expenditure. This results in a better clinical outcome. Through hospital procurement, these institutes monitor their product utilization and calculate procedural errors. In this way, they become successful in providing the correct product or services when needed. If the product is wasted or misused, then the hospital has to bear all the unnecessary costs.
- Proper data analysis
The main focus of hospital procurement is finding opportunities to decrease the overall costs. Analyzing the data is one of its functions. The data provides information on where most of the money goes. Sometimes, the hospitals require expensive products to ensure a good clinical service. The utilization of service should be checked regularly to ensure minimal wastage.
For instance, E-commerce helps hospitals to send online help and receive orders from suppliers. Similarly, the inventory tracking systems help the nurses to order and request new supplies. Moreover, they can issue goods to the patient population.
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Strategies to Improve the Hospital Procurement Process
The healthcare system has undergone a major change in the US as well as the other nations. Online consultancy, microscopic surgical procedures, and much more are a part of this change. There lay many hindrances in the hospital procurement process. These include delayed procedures, high procurement amounts, complex supply chains, etc. It is necessary to take some vital steps to correct the procurement system. Following are some ways to organize and improve the hospital procurement process of these institutions.
- Curate a proper pricing plan
Companies need to establish a good and effective planning strategy. Firstly, the overall costs of the institution must be understood. Tools such as accounts systems help in obtaining data about the original costs of every service. They must calculate the statistics of labor, supplies, equipment, and other costs before creating a plan.
- Enhance the order correctness
The incorrect ordering process is the biggest reason for the income loss. It is a struggle for hospitals to manage the orders, which ultimately results in untimely delivery. It may then lead to a poor healthcare system and medical help. Institutions can work on improving order accuracy. It will help in spending less time on the reordering procedures. This way, they can improve the hospital procurement process. Adapting a computerized form of entry for all the orders is further helpful in increasing the accuracy.
- Correct contract management
To save the product or service costs, many hospitals depend on third-party organizations to organize their contracts. The key point to note here is that institutions must thoroughly understand the clauses of the contracts before signing them. They must be aware of overcharges through an analysis of the pricing structure and its effects long term.
- Improve operational efficiency
In order to improve the hospital procurement process, the institutes can include the newest technologies to calculate analytics. Effective data analysis can change the supply chain into a business asset. Therefore, automatic leverage of data should be adopted, as automation helps in decreasing the economic expenses and holds up the data strategies.
- Identifying tail-end costs
Hospitals often spend way more than their initial estimates. This unplanned spending needs to be managed properly to avoid waste of resources. The transactions sometimes add up and result in unfavorable losses. The hospital then lacks in providing good quality services to the patients. So, they need to address the root cause of over-expenditure. The hospitals should establish a centralized system with favorable procurement channels to receive optimal pricing.
Ways Hospitals Can Benefit From E-Procurement Portals
As discussed above, investing in technologically advanced supplies help hospitals to ensure patient-centered organizational benefits. This can be achieved through hospital procurement systems. E-procurement portals have become increasingly popular in the healthcare industry and provide benefits such as automated expenditure controls and advanced approvals.
These portals help the hospitals to buy goods and equipment from different retailers and manufacturers. They simplify the entire process of management and optimize the purchasing activities of the hospitals. Here are some benefits of online procurement portals.
- Ensure safety
Unlike the older times, the online procurement portals bridge the gap between the supply vendors and the non-procurement employees. These include the physicians, nurses, and other hospital staff. Through e-procurement, they freely interact with the suppliers and discuss their problems regarding a product. It saves time to examine and resolve the issues and errors.
- Consent of various norms
Hospitals and healthcare systems have several rules and regulations to deal with. The procurement portal makes it convenient for the members to receive details of any supplier in an organized and centralized manner. The dynamic requirements of the FDA and Medicare are met effectively if the regulations are monitored with their consent.
- Incalculable demands
If you take an example of the contemporary world, the Covid-19 outbreak has excessively increased the demands for certain medications and equipment. It is almost impossible to make arrangements beforehand for such severe situations. Thus, the general suppliers of a hospital may not be able to deliver the orders on time. Through an E-procurement portal, one can reach out to other vendors and suppliers to secure goods, generating new buying opportunities.
- Order accuracy
Sometimes the procurement team is not familiar with the medical affairs. This often gives rise to errors in the ordering process. The team mainly aims to receive the best at the lowest price possible. So, a medical expert such as a doctor has more knowledge about the matter.
The directness and transparency of the portals allow the doctors and medical staff to order medicines and various other supplies according to their requirements. The portal with certain rules allows the tacking of the procurement process. This adds to the accuracy of the orders. Due to the centralization, all the information is available in one place for the staff from the institution to access.
- Expiring patents
The expiring of product patents lead to several scenarios. For one, the product may completely vanish from the market if the supply chain stops. New producers don’t have to wait for the testing periods, approvals, and other market activities. They bring out new products in the market. The replacements may not be introduced in the market for a long time, or the entire process of manufacturing may take a toll on the company’s financial well-being.
Ultimately, hospitals will need to make changes or adjust their requirements. They might need to negotiate or reconsider the existing norms of the contract. The web portals work as helping hands in such cases. They notify the users in advance so that they do not have to rush to look for a new supplier. In addition, they provide information regarding the patent expiry, potential suppliers, etc.
- Finding alternative suppliers
The doctor or medical practitioners often indicate their preferences while choosing a product. If the supply of a particular product discontinues, then a new supplier should supply to the hospitals. The costs often become a secondary factor if the requirements aren’t met at the earliest. A large web of vendors is available on the procurement portals. This means hospitals can switch anytime and reach out to new vendors.
- Finance and accounts benefits
E-procurement brings forth cost-saving methods. This leads to greater revenues, easy operation of enterprise resource planning (ERPs), and account systems. The finance and account teams of many hospitals identify the benefits of using E-procurement.
- Corruption issues
Hospitals are institutions with whom people trust with their lives. However, corruption may be present in this sector just as much as in others. Using low-quality medications and poor services may potentially lead to fatalities. As the procurement portals are completely transparent, they provide clear knowledge of what goes on. They greatly decrease the opportunity for any errors or manipulations.
The hospital procurement through an e-portal is of critical importance for today’s industries. They receive good prices for the products they want and ensure an improved management system. In short, these portals detangle the complex procedures of costs and help in monitoring vendors.
Hospitals are organizations that require big profits from a proper procurement system. A computerized solution has always proven to provide good costs and medical vendors. The repetitive work is cut down thanks to such digital solutions. Professional procurement individuals possess knowledge of the medical matter, digitalization, and manufacturing. The mixture of backgrounds helps in generating new strategies. If done perfectly, hospital procurement can aid in refining the bottom line.