Improving the Healthcare Procurement Process: Ask the Expert

Tom Swapp, Vice President of Market Development – Acute for Direct Supply® DSSI™, discusses his history with this healthcare procurement challenge, as well as the ways in which he sees the industry solving this problem in the future. 

DSSI: How did your career path lead you to DSSI and to healthcare procurement?

Tom Swapp: I spent an early portion of my career consulting on physician preference items in acute care, one of the largest areas of spend for most hospitals. One thing I noticed early on was that the data hospitals were working with was very confusing and it was never very clean. My team members and I spent untold hours trying to clean up the data in order to draw conclusions. We wanted to levy that to make better decisions going forward.

I realized that if there was a way to have cleaner data, it would result in huge time savings and increased cost effectiveness for the hospitals. Additionally, it could lead to better decision-making in healthcare procurement strategies. 

DSSI: But grappling with that data led to your next move?

Tom: After that focus on PPI, I translated what I had learned in consulting to the hospital side of things in Denver, focused on procurement and strategic sourcing. I led a team of 25+. I experienced first-hand the manual pain of processing requisitions, purchase orders and the resulting integration process with AP. 

There is such a lack of transparency and collaboration between suppliers and providers when it comes to the transaction side of the supply chain. In situations where market research isn’t as accessible or viable, transparency improves efficiency.

DSSI: Where did you go from there?

Tom: My next opportunity was on the GPO side. I went to work for a leader in the space. I oversaw a healthcare procurement consulting team focused on helping hospitals save money. That lack of easily accessible, clean data made it hard to see and implement the savings opportunities we knew were there.

Pain Point: A Lack of Clean Data

Throughout Tom’s career, the main procurement process pain point and healthcare supply chain challenge was clean data. Organizations in his career either withheld data science or underestimated the wide range of actionable insights it could provide. Strategic planning was more difficult without strong data management.. Direct Supply DSSI has the power to help create a streamlined procurement and purchase process with actionable data.

The Three Pillars of the Healthcare Supply Chain

In the healthcare procurement process, the healthcare supply chain can be split into three pillars. Of those three pillars, logistics and sourcing hinge heavily on procurement. Sound management of the goods or services and the vendor master completely dictates data integrity.

1. Logistics (Distributors)
2. Sourcing (GPOs)
3. Procurement (ERPS)

The foundation that delivers real savings and real outcomes is procurement. You can’t have an effective sourcing strategy without really sound procurement principles. Likewise, you can’t have a good distribution strategy without great procurement. 

Additionally, procurement is often overlooked and the data to drive it is difficult to extract. The data is often pulled from an ERP that is not built to optimize for the supply chain.

Optimizing ERPs in Healthcare Procurement

Not all ERP systems are optimized for supply chain and strategically built for procurement sourcing. When trying to extract data from them, item and vendor masters can be messy. Nothing is built in collaboration with the supplier community to allow for greater visibility and coordination. Optimizing and strategically shaping ERPs in healthcare procurement strategies can bring a lot to the table for process improvement.

The Benefits of Optimization

By optimizing ERPs in the healthcare procurement process, organizations can streamline their supply chain operations and improve efficiency. This can lead to cost savings, better vendor management, and ultimately, improved patient care. 

By working closely with suppliers and integrating their systems with ERPs, healthcare organizations can enhance visibility and coordination throughout the procurement process. This collaboration can also lead to better negotiation strategies and improved relationships with suppliers. Overall, optimizing ERPs in healthcare procurement can have a significant impact on the overall success of an organization’s supply chain management.

Successful procurement strategies are the byproduct of an organization mastering their contract management. The contract should dictate the procurement terms and flow and overall, the entire healthcare procurement strategy. A supply chain ERP would be a contract visualization and compliance engine for Health System’s contracts both local and GPO. However, most ERPs don’t contain a rules engine that can be smart enough to drive procurement in an intelligent manner.

The Role of AI in Data-Driven Decision Making 

Artificial intelligence (AI) in healthcare procurement provides another advantage to data-driven healthcare procurement strategies. AI and machine learning can drive savings in the healthcare procurement process. By utilizing AI in healthcare procurement, organizations can streamline their processes and make more informed decisions based on data analysis. AI can help identify cost-saving opportunities, optimize supplier relationships, and improve overall efficiency in the procurement process. 

With automated alerts and recommendations, healthcare organizations can stay ahead of market trends and make proactive decisions to ensure they are getting the best value for their procurement needs.

As technology continues to advance, leveraging AI in healthcare procurement will become increasingly important for organizations looking to stay competitive in the ever-evolving healthcare industry. Discover why AI matters in healthcare in conjunction with your healthcare procurement strategy.

Improving and Optimizing Healthcare Procurement with DSSI

Clean and actionable data can lead to overall procurement process improvement and a streamlined healthcare procurement strategy. When healthcare organizations optimize their spend and can effectively utilize their ERPs, they can unlock true supply chain savings. Products or services move efficiently and effectively, cost reduction soars, and the procurement department can meet their business goals. 

Thanks to the Direct Supply DSSI patented OGM (order guide management) solution, and DSSI Analyze, for the first time ever, healthcare organizations can do just that. See for yourself how DSSI builds an optimized healthcare procurement process that revolutionizes the way organizations make procurement a strategic priority.

What is Artificial Intelligence?

According to Investopedia, “Artificial intelligence (AI) refers to the simulation of human intelligence in machines that are programmed to think like humans and mimic their actions.” While that may draw our thoughts towards the aforementioned robots, it’s slightly more complex than that.

Over the past two years, artificial intelligence (AI) has made remarkable strides, revolutionizing various industries with its abilities and innovations. AI-powered tools now analyze vast amounts of data to provide more accurate diagnoses, recommendations and personalized plans. Machine learning algorithms can predict real-world events, track progress, and even suggest preventive measures, enhancing overall business outcomes. Natural Language Processing (NLP) chatbot models, popularized by OpenAI’s ChatGPT, have become a staple for quick and effective customer service.

The beauty of AI is that it is a concept put into play through the use of machines. Computer science developed AI to make it easier for humans to learn from data. However, it is designed only to mimic or simulate how humans think and what their actions may be. Ultimately, AI is not human, though, so there is always room for improvement with AI based decisions – that’s where machine learning comes in.

What is Machine Learning?

MIT Sloan explains that “Machine learning is behind chatbots and predictive text, language translation apps, the shows Netflix suggests to you, and how your social media feeds are presented.” 

The simplest way to think about machine learning is likely by thinking about an algorithm. The example of Netflix is a solid one. Think about how the streaming app begins suggesting movies and TV shows you may like to watch. This happens after it starts to “learn” through your viewing.

So many components are taken into play when it comes to this type of machine learning. First, how much time you spend watching a particular show or genre. Second, your ratings of a film. Third, your saved selections. All of it feeds into an AI that gets “smarter” every time you tell Netflix yes, you’re still watching. 

Machine learning (ML) models are similar to traditional AI algorithms in one regard: the “fuel” used to create them. The amount and size of data sets fed into the model by data scientists is key. When large amounts of data are passed into machine learning models, the predictive analytics become more accurate. This is why diverse data sets with a wide range of demographics are so important to ensuring accurate predictions.

Types of AI

AI has been around since American computer scientist John McCarthy first coined it in 1956. Since then, there has been a springboard of growth, particularly from 2005 to the present. We’ve seen the development of speech recognition, robotic process automation, super computer enhancements and more. Now, the variety of the types of AI solutions are plentiful:

• Purely reactive: this type of artificial intelligence has no memory or data and can only specialize in one area. This is considered “weak AI” (think chess video games).
• Limited memory: this AI system can collect previous data and continue adding it to its “memory”. It can begin making correct decisions despite having a limited reference point. Examples include recommendation algorithms for products and videos.
• Theory of mind: this AI understands thoughts, emotions and can interact socially. The most common examples in the modern day are AI chatbots powered by Natural Language Processing (NLP). Think ChatGPT and Google Bard.
• Self-aware: future interactions of this technology will be intelligent, sentient and conscious. This type of AI is also known as Artificial General Intelligence. There are no self-aware AI currently available, but companies such as OpenAI (developers of ChatGPT) are working towards a functional model.

The Applications of AI in Healthcare

 AI can help in healthcare, and senior living, in the following ways:

• Enhancing surgical procedures through technology that offers a better outcome
• Managing Medicinal dosages and individualized treatment plans
• Providing diagnostic assistance
• Maintaining and tracking medical records
• Managing health insurance claims
• Managing medical product inventory, ensuring contract compliance with suppliers
• Optimizing labor spend and organizational efficiency
• And More!

Use Case Analysis – AI in Healthcare

One of the most significant applications of AI in healthcare is in diagnostics. Recommendation engines, trained on vast datasets of medical images and patient records, are now able to detect diseases with remarkable precision. For instance, AI-powered imaging tools are identifying early signs of conditions like cancer, cardiovascular diseases, and neurological disorders, often with greater accuracy than human experts. This early detection allows for timely intervention, significantly improving patient prognosis.

Personalized medicine is another area where AI and ML are making a substantial impact. By analyzing genetic information, lifestyle factors, and medical history, AI can predict which treatments will be most effective for individual patients. This approach moves away from the traditional one-size-fits-all model, offering tailored therapies that increase the chances of success and reduce the risk of adverse reactions.

Operational efficiency in healthcare facilities is also being transformed by AI. This not only reduces the burden on healthcare staff to complete a specific task, but also enhances the patient experience by minimizing wait times and ensuring the availability of necessary supplies and equipment.

By analyzing historical data and predicting future demand, AI systems can optimize inventory levels, ensuring that healthcare facilities have the right supplies at the right time without overstocking or understocking. This leads to significant cost savings and reduces waste, which is especially important in a sector where resource management is critical.

Moreover, AI enhances procurement by providing insights into spending patterns and supplier performance. Healthcare providers can use these insights to negotiate better terms with suppliers, identify cost-saving opportunities, and ensure they are getting the best value for their purchases. AI-powered analytics help in tracking and controlling expenses, enabling more transparent and accountable financial management.

AI-driven solutions are also enhancing patient monitoring and management. Wearable devices and remote monitoring systems equipped with AI capabilities continuously collect and analyze health data, providing real-time insights into a patient’s condition. This enables proactive management of chronic diseases, reduces hospital readmissions, and supports aging in place for elderly patients.

AI can become implemented as either a tool or software program. It is often designed to make a human employee’s life easier. It can serve as a virtual assistant, its own employee, as a recommendation system, or something more. AI can also cut down on human error through an organized system process that doesn’t get tired and is available 24/7. This is important for healthcare organizations that rely on accuracy and consistency for their patient care.

Why Does AI in Healthcare Matter?

AI healthcare solutions assist caregivers in their daily work to drive efficiency and savings. AI features provide better quality of life for patients and their families. The use of AI automation can help with that. Supply chain optimization, reduced labor, and automated customer service is achievable with the help of AI and machine learning. 

These changes are evident in the customer service and nursing space. AI tools known as natural language processing (NLP) are already helping millions of patients and providers get answers. The most common NLP-powered feature is the chatbot. One of these tools can be seen on almost every healthcare provider homepage.

Direct Supply® DSSI™ has been ahead of the AI curve in healthcare procurement for the last decade. Our track record for successfully implementing AI technology is proven and trusted by many organizations nationwide. We were there before the explosion of AI in the workplace, and we’re here to help out with whatever needs you have in this ever-changing field. Reach out to a specialist today to learn more.

What is Procurement Automation?

Procurement automation automates manual processes to reduce time and maximize efficiency. Automated procurement processes for businesses can increase productivity, reduce manual errors and provide greater spend visibility.

Top 4 Benefits of Healthcare Supply Chain Automation: Features of eProcurement

Electronic invoicing (or e-invoicing) began in the 1990s to streamline the invoicing process. New automated features along with cloud-based capabilities are gradually becoming the norm.
Large, independent, and even self-managed healthcare organizations have jumped on board with this third-party technology. They are noticing the difference in more ways than expected. Benefits of healthcare supply chain automation include higher processing efficiency with lower costs, reduced exceptions, and improved visibility and auditability.

1. Higher Processing Efficiency

Communities using an electronic invoicing system only take days to process an invoice. Compared to what could sometimes take weeks with manual entry, this marks a significant improvement. Automated invoicing also reduces the stress and hassle of pushing through an invoice at the last minute.
The increased efficiency of automated invoicing can also bring financial benefits. Faster payments can mean early payment discounts in some cases, and certainly a reduction in late fee charges. It’s a win-win-win for providers, suppliers, and the corporate office alike.

2. Lower Processing Costs

Several factors go into processing costs. Think labor, fees – even postage. On average, communities using an automated invoicing system can save up to 80% of their processing costs! Considering most healthcare organizations process thousands of invoices, it’s easy to see the appeal of automation.
What’s more, e-invoicing provides a great opportunity to save massive amounts of paper and be more compliant with green initiatives. Over the long term, companies that automate paper-heavy processes will appreciate a more streamlined accounts payable department that spends much less on raw materials for the office.

3. Reduced Exceptions

Automated invoice tools allow for improved exception management, since data can be readily reviewed faster. The improved accuracy of real time data means fewer rejections and less time resolving payment issues. Faster payment processing leads to a more streamlined invoice approval process where issues are identified and corrected quickly, ensuring smooth operations and fewer delays in the procurement process.

4. Improved Visibility & Auditability

Being able to spot inconsistencies and trends in invoicing payments, as well as forecast future business decisions are invaluable capabilities to any organization. E-invoicing also allows organizations to get the bird’s-eye view of their spend. This includes consolidated reporting and analytics in real time. This visibility enables healthcare providers to make informed decisions, manage budgets more effectively and identify areas for cost savings.

The Future of eProcurement: Integrating Advanced Technologies

As the healthcare industry continues to evolve, the integration of advanced technologies such as AI, machine learning and blockchain will play an increasingly important role in eProcurement. These technologies offer new ways to enhance transparency, security and efficiency in the procurement process. 

AI and machine learning algorithms can analyze purchasing data to identify trends, predict future demand and recommend optimal procurement strategies. Blockchain technology can provide a secure and transparent ledger of all transactions. Secure transactions reduce the risk of fraud and ensure the integrity of the supply chain.

DSSI: Healthcare’s eProcurement Solution

More and more organizations are using Direct Supply® DSSI™ for help with transaction automation and what’s next in healthcare supply chain automation. Our proprietary DSSI Capture™ service offers 100% invoice automation from both local and national vendors – suppliers don’t even have to be on the system. Currently, more than 250 organizations are leveraging the DSSI platform to streamline their transaction automation, with more than 15 million transactions moving through the platform each year.

Many organizations using the DSSI platform can save $10,000 or more annually. The evidence shows that by digitizing transactions through the DSSI platform, suppliers are more easily able to fulfill orders and send the invoice back to the integrated vendor. When the invoice arrives, DSSI also has tools to automate that process. DSSI Capture™ eliminates manual entry, reduces errors, and speeds up payment cycles, leading to significant cost savings and operational improvements. It also allows organizations to capture their regional and local vendor spend for reporting and decision making.

AI in Healthcare Supply Chain Automation

AI-powered procurement solutions optimize profitability and efficiency in healthcare supply chain automation. The DSSI procurement services team can transform healthcare supply chain operations with machine learning algorithms and next-generation AI tools to determine the most cost-effective solutions. These AI tools analyze vast amounts of data to identify patterns, predict future needs and recommend the best purchasing strategies. This not only enhances efficiency but also ensures that procurement decisions are data-driven and aligned with organizational goals.

Leverage the Power of the DSSI Healthcare Supply Chain Automation

The Direct Supply DSSI platform offers a comprehensive suite of tools designed to optimize every aspect of the procurement process. From electronic invoicing management to real-time spend analytics, the DSSI platform empowers healthcare providers to streamline their operations, reduce costs  and improve efficiency. By leveraging the power of the DSSI healthcare supply chain automation and eProcurement P2P, healthcare providers can achieve exceptional process improvement and strategic savings.

Automated Supplier Management

Effective supplier management is critical to the success of any procurement strategy. The DSSI platform includes features that automate supplier management, making it easier to track supplier performance, manage contracts and ensure compliance with organizational standards. By automating these processes, healthcare providers can build stronger relationships with their suppliers, negotiate better terms and ensure that they are getting the best value for their money.

Enhancing Strategic Sourcing

Strategic sourcing is a key component of effective procurement. The DSSI platform provides tools and insights that help healthcare providers identify the best suppliers, negotiate favorable terms and manage supplier relationships. By leveraging data analytics and AI, the platform enables healthcare providers to make informed sourcing decisions that drive cost savings and improve efficiency.

Optimizing Inventory Management

Effective inventory management is essential for ensuring that healthcare providers have the right products in the right quantities at the right time. The DSSI platform includes advanced features that support healthcare providers in tracking inventory levels, predicting future purchase needs and optimizing reorder points. By automating inventory management, healthcare providers can reduce the risk of stockouts and overstocking, save on storage costs and minimize waste.

Driving Continuous Improvement

Continuous improvement is a core principle of effective procurement. The DSSI platform provides tools and insights that help healthcare providers identify areas for improvement, implement changes and track the impact of those changes over time. By fostering a culture of continuous improvement, healthcare providers can ensure that their procurement processes remain efficient, cost-effective, and aligned with organizational goals.

The new features added to DSSI in just the past two years have already driven positive outcomes for our customers. ContractWatch, our contract management tool, informs organizations that seek visibility into contract negotiations, expirations, renewals and overall compliance. 

Our real-time product availability and product alternate functionality protects organizations during periods of supply chain volatility. The additional support helped prevent more than 200,000 product stock outs in 2023 alone.

Another helpful feature for purchasers using DSSI is the off-order guide substitute. This tool recognizes when a purchaser is trying to buy a product that does not meet the requirements of contractual pricing as specified by their organization. It then recommends a similar alternative that is in the company order guide as a replacement. 

Customer Success Stories

Many healthcare providers have already experienced the benefits of the Direct Supply DSSI. Recently, a large, national healthcare organization used DSSI to improve its invoicing and procurement management processes, resulting in more efficient procurement and significant cost savings of over $1 million. DSSI success stories demonstrate the power of the platform to transform procurement process automation and drive strategic advantages.

The Future of Healthcare Procurement

Developing and maintaining an automated supply chain can significantly improve eProcurement for healthcare providers. The Direct Supply DSSI software platform incorporates automation as a key value proposition, offering a comprehensive suite of tools and features designed to optimize every aspect of the procurement process. From electronic invoicing to advanced inventory management and AI-powered analytics, the DSSI platform empowers healthcare providers to achieve exceptional process improvement, cost savings and strategic advantages.

The DSSI platform provides the tools and insights needed to navigate the complexities of healthcare procurement, ensuring that healthcare providers can focus on delivering the highest quality care to their patients and residents. With Direct Supply as a trusted partner, healthcare providers can confidently move towards a future of optimized procurement and strategic success.

¹https://www.einvoicingbasics.co.uk/benefits-of-einvoicing/buyer-benefits/

OnSite Waste Technologies specializes in the in-house processing of medical waste. But what is medical waste to begin with? And how would processing medical waste right at a Senior Living community be of value? All your questions – and more – will be answered in this fascinating episode!

If you’re interested in hearing more from the ITC (you should be!), please fill out this short form. You can see the entire Master ITC Theatre series here.

Key Takeaways

From Senior Living investment opportunities to demographic trends on the West Coast, there was a wealth of valuable information and new insights presented at the conference. Here were our team’s key takeaways: