Increased Costs and Confronting Challenges

As we settle into 2024, how can national account executives best serve their customers? During the ANAE Regional Meeting in Nashville, attendees got to hear from Jay Kirkpatrick, the VP of Supply Chain Operations at LifePoint Health, and Bill Keller, VP of Strategic Sourcing at HCA, in a conversation moderated by Maria Hames, a partner at Healthcare Links. They discussed how national account executives can address the financial challenges facing integrated delivery networks and the healthcare supply chain, integrating transparency into business conversations,  and the need for transparency.

Here are a few of the main takeaways from this session.  

Initiatives for 2024  

Companies throughout the healthcare industry are hoping to start 2024 off on the right foot, ensuring that their customers and their patients are taken care of through the initiatives and processes they are implementing this year.   

For HCA, Keller said, “What we typically have budgeted for is 2% of supply expense as the saving target of the year. Our target for 2023 was 3% to offset all of the inflationary increases that we’re seeing on the GPO side. For 2024, our target is 4%.” Keller explained that the credit that HCA gets for the savings will become the new baseline for the next year, which is “a difficult encore to repeat.”  

For Lifepoint Health, Kirkpatrick said, “We’re focused on purchase services and categories that we’ve never focused on at a corporate level, and we’re finding a lot of opportunity.” 

The need for transparency  

The need for transparency in any business setting is critical, but it’s especially important in a healthcare setting. Because of the decentralized nature of some of the sourcing touchpoints, it creates a lot of variation for approaching sourcing activities. That’s exactly the situation that Kirkpatrick and his team at LifePoint are working with.   

Kirkpatrick said, “There is a desperate need for transparency today, but there’s no incentive, on a number of fronts, for that transparency to be put on the table today. I had a guy explain it to me the other day that said, ‘Healthcare doesn’t have a Walmart.’ There’s no 500-pound gorilla that can say ‘Here’s the way it’s going to be.” 

Due to that lack of transparency, it makes all the sticky parts of the industry – relationships and emotions – even more complicated. Introducing a sense of transparency and honesty into your business dealings. Like Lifepoint Health, many organizations aren’t interested in having the newest, shiniest tools. Kirkpatrick says that he’s now asking questions like “What does the new technology do that the old technology doesn’t do?”  

 Finding solutions for today’s challenges  

One of the main challenges that healthcare is facing is an increase in costs across the board, meaning that it’s more important than ever for national account executives to find solutions for those challenges.  

“The reality is that, whether we like it or not, my responsibility to my organization is always to reduce cost,” Keller said. “Some of the price increases that we’ve had to accept are fair and not something that the manufacturer has any control over. The question becomes, how do we mitigate and offset those costs? That’s where we need the help of account executives.”  

This is another area where transparency is crucial to the success of these business relationships. “We’re going to make sure we’re upfront, honest and transparent with all of our contacts and we need them to do the same with us. But this isn’t a world like Coke or Pepsi where they can just pass their increases along to Kroger and Kroger passes it onto us and we just live with it or don’t buy it. We have to buy products. At the end of the day, we don’t have an option of passing those increases along,” Kirkpatrick said.