Troy Kirchenbauer of aptitude joins ANAE Supply Chain Leaders Series

In a recent Supply Chain Leaders Series call, ANAE interviewed Troy Kirchenbauer, general manager for aptitude LLC (Irving, TX). Launched in April 2013, aptitude is the healthcare industry’s first online direct contracting market. The company seeks to drive innovation in the healthcare supply chain environment to create a more logical and empowered market. More than 600 hospitals, 40 suppliers, and a number of major markets are represented through the aptitude platform. In its first year, nearly 70 awards were made from buyers to sellers through aptitude, and the platform recently completed its first $2 million transaction.

Troy Kirchenbauer played a vital role in creating the aptitude concept. His wide-ranging skills and expertise, from his innovative application of emerging technologies to his understanding of industry sourcing processes from each stakeholder’s perspective, have helped him successfully guide the company’s development and business strategy. Prior to working at aptitude, Kirchenbauer served as VP of information and data services for Novation LLC (Irving, TX) where he provided leadership and direction for activities related to Novation’s centralized data management activities. In previous positions, he led product development efforts for various analytics and contract management solutions including the development of Novation’s contract management and e-commerce platform. He received a Masters of Business Administration with a focus on strategy and leadership from the University of Dallas, and a Bachelor of Business Administration in Human Resource Management from Texas A&M University at Commerce.

Some of the topics Kirchenbauer covers on the Q&A call include:

aptitude’s unique business model

“aptitude is an online platform for contracting that connects buyers and sellers directly,” says Kirchenbauer. The platform is market-ready in 100 categories that span from simple commodity categories, to physician preference items, and more. Unlike GPO models which are inherently biased to helping their hospital or IDN members, “aptitude seeks to serve both the buyer and seller as customers… The platform really enables buyers and sellers to come together and get many of the efficiencies that they might find in the national model but in a very specific, partnership-driven relationship that brings an element of transparency and performance management to both buyers and sellers, streamlining the process.” Kirchenbauer says the aptitude platform creates transparency around price and, more importantly, creates transparency around performance of the contracts by offering standardized data, benchmarking tools, and monthly performance reports that are available to both buyers and sellers..

The benefits aptitude offers for providers/buyers

According to Kirchenbauer, about 35 percent to 40 percent of all industry purchasing is done outside of GPO contracting. “Aptitude is not structured as a GPO, it is in fact, an LLC that is offering an open-market approach, charging a fair market value for the service… but not [set]-up under the GPO safe-harbor.” Kirchenbauer says that many providers believe that they could realize substantial supply savings if they were to expend time, effort, and money to pursue smaller or local contract arrangements. “The challenge for the provider organization is that it is difficult for them to do that at any scale and its difficult for them to really manage those contracts once they’re in place. So when they look at aptitude, our key message to them is that this is an opportunity for them to accelerate their ability to drive supply cost reductions and supply management in their organization,” says Kirchenbauer. “Even more so, it is an opportunity for them to more effectively monitor and manage those contracts to create the savings realities they are seeking in the first place… Value exchanges in aptitude usually create higher levels of commitment and then bring with it the ability to measure that commitment over time.”

The benefits aptitude offers for suppliers, especially smaller ones

Although the platform is just over a year old, Kirchenbauer says that many of the smaller or regional suppliers have met with unprecedented success. “[The aptitude platform allows suppliers] to get access to healthcare organizations where they may have been held out in the past due to whether their reach is national or regional… Some of the early adopters to the platform came back and reported that by being on the platform, it has opened doors for them where their sales rep wasn’t able to get past the door. It has allowed them to be active in a channel that, in many cases, wasn’t necessarily there [before].”