Denver Health, a comprehensive provider of level one care, provides millions of dollars in uncompensated care to its community every year. Consequently, it must operate as efficiently and cost effectively as possible. For more than a decade, Denver Health has been pursuing continuous improvement in its operations. Key leaders understand that long-term partnerships with suppliers are an integral part to achieving these goals. Denver Health’s leaders seek to align with supply partners to streamline the system for the acquisition and flow of products, to align business incentives, and to create a framework for identifying and eradicating waste.
As Denver Health’s largest and highest volume supply distributor, Owens & Minor welcomed a partnership with the provider to maximize supply chain optimization. Working together, Denver Health and Owens & Minor started their journey by first fixing price discrepancies. Price discrepancies were wasting significant administrative resources – costing both organizations tens of thousands of dollars every year.
By Working Together, Denver Health and Owens & Minor were able to Achieve Sustainable Outcomes
Using this proven process for improvement, Denver Health and Owens & Minor reduced the number of purchase orders with price discrepancies by 83% in eight months. Price discrepancies dropped from 387 to 66, representing a significant savings of both time and money for both organizations. Price discrepancy resolution was only the tip of the iceberg and was only the first of five areas of transactional breakdowns solved by working through the same systematic process.
Taking the Partnership a Step Further
Denver Health and Owens & Minor took their relationship one-step further by jointly sponsoring internships for college students majoring in supply chain management at the Leeds School of Business at the University of Colorado. Interns divide their time between the two institutions so they gain visibility into the supply chain from the point of view of the supplier and the provider organizations. Each year interns produce identifiable improvements to the supply chains of each organization.
- Some manufacturers failed to communicate price changes to either party
- Denver Health’s processes to prevent price discrepancies were flawed
- Both parties failed to align item catalogs, thus pricing for ad hoc purchasing was ungoverned
- No standard workflow for flagging prospectively or for resolving price discrepancies
- Processed and uploaded a full price catalog that links the provider’s item master with the supplier’s item master
- Committed resources from both trading partners to review and monitor processes daily
- A periodic price match for products
- Minimized the number of non-stock or special order items
- Received and resolved daily discrepancies using order confirmation