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Healthcare Financial Management Association

Healthcare Financial Management Association. Premier Health Partners & Scorpion Data Security May 17, 2011. Supply Chain Division Who are we?. Purchase for all five hospitals Sourcing Managers Negotiate with the > 4,100 suppliers Procurement – Buying the product to Truck Delivery

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Healthcare Financial Management Association

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  1. Healthcare Financial Management Association Premier Health Partners & Scorpion Data Security May 17, 2011

  2. Supply Chain DivisionWho are we? Purchase for all five hospitals Sourcing Managers Negotiate with the > 4,100 suppliers Procurement – Buying the product to Truck Delivery Coordinate the: ~335 orders per day ~$540 M per year Control the ~ 84,000 supply items Laundry plant - >900 bags per day Capital Acquisition – Purchase capital equipment Minor construction Supply Management Information – Contract, rebates Control the > 1,500 contracts

  3. Supply Chain DivisionPHP Cost Breakdown Salary and Benefits 52% Supplies+ Purchased Services 35% Depreciation 7% Bad Debt, Interest Exp, Tax 6% TOTAL $1.7 Billion 2011 PHP Budget

  4. Supply Chain DivisionPHP Sourcing purpose / business foundation: SAVINGS The reduction of cost from the prior average 12 month spend that result in a net expense decrease to the P&L statement. Cash savings. COST AVOIDANCE Actions taken by Sourcing personnel that prevent increased expense from hitting the P&L for PHP.

  5. Supply Chain DivisionPHP Premier Health Partners Pricing Strategy PHP strives to be in the lower quartile (<25%) on all supply costs and vendor contracts.

  6. Supply Chain DivisionPHP How we achieve our goal: • PHP supply commitment. • Standardization – Achieve <10Th Percentile. OR • PHP supply global pricing. • All suppliers can work with PHP but at a global (ceiling) price – Achieve 10th-25th Percentile.

  7. Supply Chain DivisionPHP Strategic Intelligence Price Lynx Data Base VHA Group Purchasing Affiliation Local Coalition Midwest Purchasing Coalition with Ohio Health and Community Health Operational Efficiency Supply Chain Organizational Assessment - Infrastructure

  8. Supply Chain DivisionPHP Supply Metrics System Scorecard (Last 4 Qtrs.)

  9. Supply Chain DivisionPHP

  10. What we need to do better…… Physician Preference items (~15% of PHP supply cost) Standardization Clinical supplies Non Clinical Equipment Implementation process Follow up / Feedback on products Communication – no surprises. Supply Chain DivisionPHP

  11. Supply Chain DivisionChallenges – Today and Tomorrow Vendor industry Staying ahead of the vendors sales strategy Internal staff Cultivate highly trained / skilled sourcing personnel Need to possess greater specialized skills Technology – higher cost of healthcare Surgery – Skeletal hardware (spine, joint, etc.), neuro, Equipment – DiVinci robot, Cardiology cath labs, 3-D, 4-D, patient beds. Supplies – MRI compatible stents, Silver coated catheters Healthcare Reform Medical Device Tax (2.3% of Revenues) Drug Shortages – 200 scarce meds (2010) vs. 56 (2006) Price Point and Utilization - ‘Total cost per discharge.’ It will determine a large part of the hospitals margin.

  12. Scorpion Data Security The Future of Information Management and Document Destruction

  13. Our core competency: • Scanning/imaging - “Digital conversion of Medical Records” • Physical / electronic storage • Destruction of confidential documents and material. • Our competitive advantage and value proposition model embraces lean methodologies and six-sigma strategies to create a high quality, cost effective value stream for our customers. In addition, Scorpion Data Security offers executive level account management and involvement with quantitative and qualitative analysis of your document’s total life cycle.

  14. Strategic Relationship ManagementThe Vendor’s Perspective… • Defining and identifying strategic accounts • Why is this ‘strategic’? Does “BIG” make it ‘strategic’? • Buying Influences • “The Approach” • Research • BATNA • Buying Motives • Positioning “uniqueness's” as requirements • Strategic Relationship Behavior

  15. Defining a Strategic Account • A strategic account is “game changing” for you and the CUSTOMER. • A strategic account is a significantly large prospect and “win-able” enough to demand your time, effort and attention. • A target account should be a stable company without obvious signs of financial distress (big lay-offs, revolving door Mgmt.).

  16. Identifying Strategic Accounts • Database • Periodicals and Publications • Network • Referrals from Customers • Referrals from Advocates • The Internet

  17. Strategic? • A better word may be “complex” • A strategic account requires research and multiple sales calls • Multiple buying influences / decisions makers • Decision makers with different wants, needs and biases • Senior Executives are involved in the decision making process. Procurement collaborating with end users. • Awareness of current spend/budget

  18. BUYING INFLUENCES

  19. The Economic Buyer • This person can say “YES” when all others say “NO” • This person can say “NO” when all others say “YES” • Normally the top officer of the Company • CEO • Owner • COO • General Manager • Has full P/L responsibility for the Company or location

  20. The User Buyer • Often mistaken as THE decision maker • This is the vendor, supplier’s “day to day” contact • This person is the most “in touch” with the vendor, supplier’s product or service • This person will derive the most benefits from the vendor, supplier’s product and/or service • VALUE is more important than PRICE

  21. The Technical Buyer • Most sales professionals make the mistake of spending all their time with this buyer • Purchasing agent or finance professional (CFO) • Seeks to “apples to apples” comparisons for the vendor, supplier’s product or service • Inclination is to “bid” the proposal to assure competition (lower pricing, better terms etc…) • PRICE more important than VALUE • Having “savings targets” in their comp plans • The best buyers have taken courses in sales and strategic selling

  22. The Coach(es) • The vendor, supplier must have at least one! And they must … • Be tenured • Report “high” • Be influential • Want you to win! • Must derive a benefit from you winning • Have the “ear” of the Economic Buyer • Great coaches love to coach

  23. Understand Competitive Advantage • Points of Differentiation?? • What do you do better than all of our competitors? • Why should companies do business with you?

  24. The Approach • Identify the “Coach” first if possible • Managers/Directors/Champions • Site surveys • After much research • Start a folder/binder • Craft an “interest creating” statement that is customized to the target prospect • Procurement should not be the first call

  25. BATNABest Alternative To a Negotiated Agreement • This is the vendor, supplier’s “real” competition • Every Company and every Buyer has one • What will they do if they don’t choose YOU? • And, what would their BATNA cost?

  26. Buying Motives • Companies and people move very quickly to alleviate “pain” • Everyone has a buying motive (or motives) • Better product • Better service • Lower overall cost • Fulfill a “business connection” (Green, Safety etc…) • Faster • Diverse supplier initiatives • More features • Less hassle – more convenience • Image

  27. Motives and Requirements • Buying motives leads into conversations about REQUIREMENTS • When your UNIQUENESSES become REQUIREMENTS – YOU WIN!

  28. The Definition of Winning • A win in a buy-sell encounter is one in which the vendor, supplier perceive the encounter as having served the vendor, supplier personal self-interest. • Sales that leave you feeling satisfied are those that you felt you have won because some aspect of your self-interest, be it financial, personal or social, has been served by the transaction. • The same is true of the vendor, supplier’s buying influences. They enter the buying-selling encounter hoping to win too and they leave the encounter satisfied when and only when they feel it has served their personal self-interest.

  29. Outcomes to Buy/Sell Encounters 1. Win-Win • The vendor / supplier Company, buyer and Buyer’s company all profit from the transaction • All parties feel positive • All needs are satisfied

  30. Outcomes to Buy/Sell Encounters 2. Win-Lose • The vendor wins at the buyer’s expense • We feel good about the transaction but the buyer does not • Tough to get renewals or repeat business in this scenario • Do not “oversell” or “misrepresent” yourself or your company to any prospect

  31. Outcomes to Buy/Sell Encounters 3. Lose-Win • We lose at their expense • “Low-ball” pricing • They lose in the long run • Service has to be cut or “nickel and dime” tactics are utilized in order to make a profit • False expectations are established on performance, low renewal opportunities

  32. Outcomes to Buy/Sell Encounters 4. Lose-Lose • Everybody loses– the vendor / supplier, the buyer, and their company • Nobody feels good about the sale • Must manage sales process to prevent this from happing • Every prospect is a long term partner

  33. Manage the Sale into a Win-Win by using Win/Results • An objective business result that gives all buying influences a personal win as well as satisfying organizational needs • Personal wins and business results • Show how our products and services will satisfy organizational needs and allow personal wins for all buying influences

  34. Manage Sale into a Win-Win by using Win/Results • The vendor’s is to show each one of your buyers how their product or service serves both his or her personal self-interest and his or her business objective Remember, there is a big difference between a personal win and a business result

  35. Determining Buyers’ Wins Remember: • It is never enough to sell results alone, to manage a Target Prospect Sale into a win-win proposition, you have to determine how each of your buying influences will win.

  36. Sample “Results”

  37. Sample “Results” • Economic Buyer • Reduce cost from: • Loss/Replacement Charges • Phantom inventory levels • Better Images due to: • Product Performance • Supply Chain • Improved Productivity/Teamwork

  38. Relationship Behavior : Relationship • Basic … • Product or service as commodity • Strategic … • Unique advantage is valued • Example …

  39. Relationship Behavior : Operation Mode • Basic … • Competitive bid • Strategic … • Flexible, agile, collaborative • Example …

  40. Relationship Behavior : Capability • Basic … • Fulfill to requirements • Strategic … • Ability to assist with market changes/demands • Example …

  41. Relationship Behavior : Information Sharing • Basic … • Limited – electronic • Strategic … • Direct linkage access to parts of company database • Example …

  42. Relationship Behavior : Risk Management • Basic … • Contract penalties • Strategic … • Process management, shared risk/reward • Example …

  43. Relationship Behavior : Planning horizon • Basic … • Current deal • Strategic … • No end point, joint strategic planning • Example …

  44. Relationship Behavior : Nature of trust • Basic … • Confident in ability to fulfill contract • Strategic … • Shared vision, ownership of intellectual capital • Example …

  45. Relationship Behavior : Metrics • Basic … • Compliance tracking • Strategic … • Business results; shared incentives • Example …

  46. Relationship Behavior : Customer Interaction • Basic … • None to limited • Strategic … • Impacts major number of customers • Example …

  47. Thank You

  48. Contact Info Eric T. Joiner President/CEO 800-482-7473 eric@scorpiondatasecurity.com www.scorpiondatasecurity.com Nick Lair Vice President, Chief Purchasing Officer 499-8427 jnlair@mvh.org

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