Competition. Transparency. Savings.
Reverse Auctions in Healthcare Procurement
October 23, 2015
Our Values
Trust
•
Passion
•
Leadership
Agenda
• Why Reverse Auctions are relevant in
healthcare today
• What is a reverse auction?
• What about my GPO relationships?
• Case Study Results
• Demo Video
• Developed in the 90’s by the private sector businesses to harness the
competitive nature of vendors – still used today by “best in class” companies
• The process has evolved to meet healthcare procurement requirements while
integrating seamlessly with your GPO relationships
As healthcare transitions from a
fee-for-service to a
value-based reimbursement model,
there is increased pressure to control costs.
How do you cut costs without cutting services?
What is an Auction?
Products or services
are sold to the HIGHEST bidder
Typical Auctions:
• Over time the price Increases
• Many Buyers - One Vendor
One Vendor
Multiple Buyers
What is a Reverse Auction?
Bidder compete, on the internet,
through an electronic sealed bidding
platform by submitting multiple lowering
bids in a timed event
Reverse Auctions:
• Over time the price Decreases
• Many Vendors – One Buyer
• Bid vs. Bids - Provide vendors
multiple opportunities to gain your
business
Multiple Vendors
One Buyer
What will the Buyer see?
1
5
1.
Time remaining
for the event
2.
Each participating
supplier and their
current ranking
3.
Each suppliers’
current bid
4.
Each suppliers’
previous bid
5.
Real-time bid
statistics
2
3
4
What will the Suppliers see?
1
2
Suppliers do
not see data
from competing
suppliers.
1. Time remaining for
the event
2. Supplier’s bid
amount and rank
How are they different from paper bids?
Traditional Paper Bid
Electronic Auction
Prepare Specs
Prepare Specs
Release Bid
Release Bid
Questions & Answers
Questions & Answers
Receive Responses
Receive Responses Without Pricing
Buyer Response Review / Approval
Vendor Training
Bid Opening
Live Online Auction Event
Bid Evaluation
Bid Evaluation
Bid Award
Bid Award
What about my GPO relationships?
• GPO’s have helped hospitals control costs
• GPO’s have helped hospitals with value-added consulting
• GPO’s have created barriers to entry
• GPO’s are vendors too
But what about all that volume?
Adequate Volume + Transparent Competition
=
SAVINGS
Healthcare Purchasing Examples
Budget
Auction Description
Low Bid
Savings $
Savings %
# of Bids
# of Suppliers
Elevator Maintenance
$
471,693
$
360,000
$
111,693
24%
141
5
Biomed Contract
$
1,255,344
$
1,055,344
$
200,000
16%
255
5
Hospital Grade LCD TVs
$
513,846
$
355,200
$
158,646
31%
196
11
Ink and Toner
$
7,500,000
$
6,514,951
$
985,049
13%
71
8
Instrument Sharpening Repair
$
170,000
$
118,788
$
51,212
30%
145
7
Janitorial Products
$
534,360
$
429,655
$
104,705
20%
306
6
Custodial Services
$
1,042,200
$
725,570
$
316,630
30%
1,099
12
Landscaping Maintenance Services
$
1,458,000
$
1,095,444
$
362,556
25%
13
2
Laundry and Linen
$
1,800,000
$
1,294,651
$
505,349
28%
140
8
Copy Paper
$
3,209,880
$
2,552,496
$
657,235
20%
69
5
Furniture / Beds
$
1,481,390
$
1,278,255
$
203,135
14%
167
3
Personal Protection Consumables
$
569,898
$
342,158
$
227,740
40%
264
11
Chemicals
$ 10,000,000
$
8,711,905
$ 1,288,095
13%
175
20
Radiology Equipment
$
1,135,000
$
704,547
$
430,453
38%
52
5
Uniforms
$
1,833,638
$
1,370,114
$
463,523
25%
21
4
Security Guard Services
$
350,000
$
253,761
$
96,239
27%
1,338
23
Surgical Center Renovation
$ 14,000,000
$ 13,000,000
$ 1,000,000
7%
438
9
Temporary Employment Services
$
2,100,000
$
1,804,000
$
296,000
14%
187
7
Trash Bags
$
594,832
$
435,323
$
159,508
26%
312
11
Waste Collection
$
500,000
$
280,850
$
219,150
44%
162
7
What are my options?
Manage Internally
• Invest in eSourcing Software
• Assign or hire staff to this time-intensive process
• Develop expertise through trial and error
eBridge
• No direct cost to your hospital or IDN
• Low-effort initiative for you and your staff
• 13 years of eSourcing expertise
Top 25 Healthcare Reverse Auctions
Purchased Services
Office Supplies & Equipment
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•
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•
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•
•
•
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•
•
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•
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Janitorial Services
Waste Management
Temporary Staffing
Security Guards
Landscaping
Pest Control
Elevator Maintenance
Window Cleaning
Uniform Rental
Instrument Sharpening & Repair
Biomed Equipment Maintenance
Medical Records Management
Computer Equipment
Flat Screen TV’s
Printers
Copiers
Copy Paper
Ink & Toner
Janitorial Paper
Lamps & Ballasts
Can Liners
Office Furniture
Medical Supplies
•
•
•
Personal Protection Consumables
Purchased Linens
Radiology Equipment
“Our first eBridge event saved three times the amount we budgeted, but the best part
was that their team truly did the lion’s share of the work!”
- Cindy Gueltzow, Corporate Director of Procurement Services
Baptist Health Kentucky
THANK YOU!!!
David Starbuck, PhD
[email protected]
502.836.8520