Applying collaborative contracting to the supply chain department of a regional health care provider

Abstract

With health care costs continuing to increase, a southern California health care system struggled to balance its budget. A lack of hospital department participation in development of the supply contracts has lead to fractured relationships between the hospital departments and the Regional Supply Chain Department as well as fiscal deficits. Poor communication between supply chain partners can lead to differences in perceptions, misinterpretations, and misunderstandings. This paper examines the results of efforts by one organization to close the "gaps" within a supply chain through the creation of a Value Analysis Team (VAT). The results demonstrate a marked improvement in the bottom line, but more importantly, a significant improvement in the relationship between supply chain partners within this health care system.