Minimizing Stakeholder Disruption

Client Issue/Challenge:

Pathstone partnered with a large healthcare system on the west coast to evaluate the full scope of Office Supplies & Related Product spend. This process began with developing an understanding of the current state including vendor landscape, previous system efforts, and future goals.

This client had success selecting one primary vendor for most purchases and beginning to assess the types of purchases permitted through that vendor; however, we identified opportunity to revisit the items purchased to further negotiate pricing and refine the permitted purchase list.

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Approach:

Pathstone’s non-clinical purchased service consultants began identifying incremental opportunities by breaking spend into categories that may be purchased through an office supplies vendor: Ink & Toner, Paper, Office Supplies, and Other Related Products.

Ink & Toner: Ink & Toner may be covered under a relationship with a Managed Print Services provider, through a technology value added reseller, or a traditional office supplies vendor. For Ink & Toner purchased through an office supplies vendor, we considered pursuing cost reduction on original equipment manufacturer (OEM) products, shifting volumes to remanufactured products, and shifting to high-capacity cartridges with higher page yields.
Paper: Paper also typically represents a large portion of spend in this category. Pricing is typically influenced by external factors, such as the global supply chain. Contracts may feature favorable fixed pricing on certain paper items, which presented standardization opportunities.
Office Supplies: The core of this category, health systems have a wide variety of office supply needs such as writing utensils, staplers, and binders. We evaluated average costs within each item type and set cost thresholds to eliminating the purchase of higher cost items while maintaining variety and choice for different end users.
Other Related Products: Other related products often available with office supplies vendors include furniture and breakroom supplies. These categories were reviewed to determine if purchases are necessary or if other channels existed for more effective purchasing.

Impact:

The total financial impact in this category was $500K. Qualitative benefits included enabling better control and visibility of purchases while maintaining variety for end users to be able to select items that meet their needs.

Ink & Toner: Achieved $200K value by shifting remanufactured ink to OEM to maintain increased discounts and moving eligible toners to high-capacity cartridges.
Paper: Achieved $30K value by shifting volumes to paper that was contracted at a flat, competitive rate.
Office Supplies: Developed a price capping methodology to drive $270K, or 13% value across all office supply purchases.
Other Related Products: Identified targeted categories to restrict purchasing within the client portal; further evaluation of alternative products available to quantify value.

Key Takeaways

Choice. Healthcare workers are often asked to compromise preference for various factors from compliance to cost savings. While office supplies can seem like a low-stakes category, there can be frustration if necessary or preferred products are not available. Retaining choices for the staff helps to ease tension. In addition, ensuring the necessary items are available encourages staff to continue to use the designated purchase channel, rather than going to an alternate source which can be more costly and time consuming (e.g. requiring expense reports).

Flexibility. Paying attention to the needs of end users and being willing to take a more creative “price capping” based approach rather than a more typical, restricted formulary can maximize both value and satisfaction.