GHX business case

Topics: Supply chain management, Contract, Health care Pages: 17 (4565 words) Published: March 8, 2015
North West Supply Chain Business Case
Savings Opportunities
Through GHX

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Contents
Executive Summary ............................................................................................................................... 3 Project Overview ................................................................................................................................ 3 Savings Continuum ............................................................................................................................ 4 Current Process ................................................................................................................................. 5 Reason for Change ............................................................................................................................. 6 Risks ..................................................................................................................................................... 8 Recommendations ............................................................................................................................... 11 Solution Overview: ........................................................................................................................... 11 Cost Analysis ................................................................................................................................... 13 Schedule 1 .......................................................................................................................................... 14 Schedule 2 –Value Study: NSC Value Study Explanation.......................................................................... 16 Schedule 3- Pricing by Product .............................................................................................................. 17

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Executive Summary
Project Overview
The following information has been provided to GHX to create a business case analysis regarding procurement and Contract Price Management solutions. The Northwest Supply Chain (NSC) is comprised of 13 hospitals who have a combined medical/surgical spend of over $20M per year. For the purpose of this business case it has been determined that the scope will be focused on the 6 largest hospitals as they will drive the greatest value in terms of savings. Currently 19% of invoices are being processed electronically. 73 % of goods are on contract; however, the challenge is that there is no guarantee that these items have been purchased at the lowest price. The remaining 27% of goods that are purchased off contract also lack an electronic method to validate correct pricing. Whilst 5 of the 6 sites operate on independent ORMED ERP installations and Dryden uses Great Plains the current IT configuration limitations does not provide a comprehensive and all inclusive view for NSC to maximize their EDI capabilities, validate pricing, unit of measure, SKU or back order issues in real-time. This situation also does not allow NSC to reduce manual processes when dealing with invoices, since the vast majority is still being received in a paper format. The result is a system in which staff lacks visibility to problems when they occur, thus reducing efficiency and increasing costs. The proposed system by GHX will validate contract pricing to ensure NSC is paying the lowest and correct price on all agreements, as well as capture an estimated 50-55% of all invoices electronically so they can be managed within their systems, thus allowing AP to take advantage of early payment discounts and other supplier incentives. Due to the manual nature of the current environment, the result is an existing structure that does not provide visibility to hard dollar cost savings, the ability to measure savings, or the opportunity to streamline operations. This, in-turn, hinders contract compliance and ultimately actual, real savings. Based on the information provided by NSC, it is estimated that...
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