Pacific Healthcare

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PACIFIC HEALTHCARE CASE STUDY 1

Pacific Healthcare

American Public University System

Professor Wade Keith

Pacific Healthcare:

I. Major Facts

Mr. Howell, the director of radiology for Pacific Healthcare has passed away. He was in charge of the supplier section of X ray film. Mr. Howell would not authorize the use of any X ray film other than Kodak. Barney Rubble is the corporate director of supply management for Pacific. He is in charge of buying supplies for all of the Pacific Healthcare Subsidiaries. Mr. Rubble will be Mr. Howells replacement. He now has the opportunity to authorize the use of any X ray film other than Kodak. An investigation was complete in where Mr. Rubble had a reason to believe that the current Kodak price was above that of possible competition. There was an existing agreement with Kodak calls for furnishing X ray equipment along with maintenance and service, at a considerable discount for using Kodak as a single supplier of the X ray film. Kodak refused to provide those services if they were not their only source for X ray film.

II. Major Problem

Kodak has been Pacific HealthCare’s main supplier for X ray film. Now that Mr. Howell has pasted it is Mr. Rubbles’ responsibility to either decide to keep the Kodak for the X ray film or change to a different X ray film supplier. What needs to be kept in mind is that Kodak was also offering Pacific Healthcare discounts for furnishing X ray equipment along with maintenance and service. This was all because they were their only X ray film supplier. If Pacific Healthcare switches to a different X ray film supplier they will lose those discounts. Obtaining the highest quality with the best service at the lowest price is Pacific Healthcare’s supply strategy for medical supplies. Their objective is to find a single source supplier for a one year contract.

III. Possible Solutions

A. There are four other companies that make X ray films DuPont, Agfa, Fugi, and 3M. The quality of DuPont and Agfa are consistent with Kodak. Mr. Rubble can choose to go with DuPont since it holds the standard of Kodak and cost less than Agfa. The price of DuPont $1.50 per sheet of X ray film. B. There are four other companies that make X ray films DuPont, Agfa, Fugi, and 3M. The quality of DuPont and Agfa are consistent with Kodak. Mr. Rubble can choose to go with Agfa since it holds the standard of Kodak. The only real issue I see here is that there is another company that makes the same quality of X ray film than both Kodak and Agfa. DuPont make the same quality of film for a lower price. The price of Agfa is $1.58 per sheet of X ray film and DuPont offers it for $1.50 per sheet. C. Mr. Rubbles can choose to stay with Kodak. The price for Kodak is higher than the other competition but they give Pacific Healthcare discounts on other services. Kodak furnishes Pacific Healthcare with X ray equipment, along with maintenance and services at a substantial discount for using Kodak as a single supplier for X ray film. I have found three issues with this possible solution. One, I do not know how much of a discount they are getting for the X ray equipment, along with the maintenance and services they are receiving from Kodak. With that I also need to know how much the competitors are willing to give Pacific Healthcare for those additional services that Kodak is offering to them. Last, but not least there are other competitors that are at a lower price range with the same quality as Kodak. DuPont offers their X ray film for $1.50 per sheet and Agfa offers theirs at $1.58 per sheet. Kodak is charging Pacific Healthcare $1.80 per sheet of X ray film. With this solution we have to keep in mind that Pacific Healthcare uses approximately 1,500 sheets of X ray film per day. That is approximately $2,700 per day. If Mr. Rubbles chooses to go with DuPont which is the same quality as Kodak that would be...
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