For nearly a decade, W Squared, a Brentwood-based business process solutions company, has provided a shared services model of back-office support to some of the fastest growing healthcare companies in Nashville.
With offerings that include finance and accounting, human resources and payroll, procurement, information technology, and EMR/EHR systems assessment and implementation, the company has become a resource for healthcare organizations requiring a scalable infrastructure. W Squared feels that “outsourcing” is a dated term and prefers to use the more dynamic expression “business process partnering.” This emphasis on forming a close strategic relationship with clients has helped fuel dramatic growth in its healthcare procurement group, launched just one year ago.
“For decades, healthcare procurement has typically been a tactical endeavor rather than a strategic one,” said Deborah S. Long, W Squared’s vice president of procurement and supply chain management. “For example, a physician practice often doesn’t buy something like an X-ray machine until they need it – and then it’s too late to enjoy any negotiated savings. Joining a group purchasing organization (GPO) doesn’t fully solve the problem, either. When organizations ride a GPO’s coattails, they realize savings on items that are under contract, but there are often hundreds of items that aren’t under contract.”
The newest trend in healthcare purchasing is what’s often called “aggregated procurement” – a discipline that turns passive participation in a GPO into an active attempt to bring all needed items under contract and control – everything from blood pressure monitors to waiting room chairs. According to Long, healthcare organizations of all sizes are often shocked to see what they could save when they negotiate and manage all their spending, not just medical/surgical supplies. Negotiated savings can be sizeable on things like office supplies, lab consumables, small parcel shipping, travel, and office renovations.
Unlike a typical GPO, an aggregated procurement partner like W Squared takes a soup-to-nuts approach to negotiating and managing costs. W Squared’s fee structure is based on the number of locations served, not dollar volume, so it’s an arrangement that is cost effective for group practices, urgent care clinics and other organizations that need to scale quickly.
“We’re able to provide each of our clients with a dashboard showing before-and-after results that track total procurement spending, savings achieved, and ROI,” said Long. (See the sample dashboard below.)
“We’re already achieving ROI of 500 percent or higher with our typical client. That’s because we actively negotiate contracts in areas that most GPOs won’t touch. For example, we recently renegotiated a contract for online clinician training, saving the client 40 percent,” she continued.
W Squared is adept at finding suppliers whose strengths align well with its clients’ needs. In the case of physician practices, W Squared negotiates special terms that help prevent inventory from piling up. Some suppliers are willing to consign inventories, which helps control expenses in pricey categories like pharmaceuticals. And some distributors are willing to deliver products several times per week to ensure that the practice is never overstocked or depleted. Long said the strategic supplier relationship is as important to W Squared as the client/partner relationship and is one of the primary reasons results are so compelling.
W Squared’s contract specialists can also negotiate volume incentives and well-designed warranties. Simply by structuring a tiered pricing structure in a flu vaccine purchasing program, W Squared helped lower one organization’s total spending in that category by more than 12 percent. This is accomplished by consolidating the total disparate represented volume and creating a delivery model that meets the business needs for each client partner.
W Squared continues to introduce value-added services where GPOs seldom venture. Long’s team recently created a travel and rental car portal for a healthcare client. It works almost identically to online consumer sites like Travelocity, except that all the contracts have been negotiated on behalf of that single client.
“The services we offer are intended to augment, rather than replace, GPOs,” added Long. “A typical GPO doesn’t help a client create an optimized formulary – and then stand guard over every procurement contract and decision. That’s the extra value that we provide, whether it’s renegotiating a contract with a phone and Internet provider or lowering the cost of medical waste disposal.”
Long said she is confident that W Squared’s documented procurement savings would continue to win new clients. “Our goal is to transform tactical healthcare purchasing into strategic healthcare procurement.”
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