The purpose of a Cost Analysis is to accurately analyze potential spend and savings related to conversion of existing purchases to the applicable GPO contracts. To insure the best possible result for your cost analysis the following information should be included in any data provided for medical surgical, pharmacy or laboratory products, the data should be provided in Excel, one row per line item and separate columns for the following data elements

• Vendor/Distributor Catalog Number (if purchased through a distributor)
• Vendor/Distributor Name
• Manufacturer item number or
  • For pharmacy “NDC” number
• Current Manufacturer Name
• Complete product description
• Designated Purchase Unit of Measure (BX, CS, EA, etc)
• Numeric Quantity contained in Unit of Measure (Eaches)
• Package detail for Unit of measure Qty (eg. BX of 10)
• Quantity purchased of Designated Unit of Measure
• Current or last paid price for Designated Unit of Measure
• Po / Invoice Date
• Hospital / Facility ID
• Hospital / Facility Name
• Annual Spend
• Hospital Item Number

The data set described above will provide the information to make a “moment in time” price comparison weighted by facility purchase history. Quantity purchase range of 6 months is normally sufficient to capture a quality representation of items purchased for Medical Surgical and Laboratory products, 3 months is normally sufficient for Pharmacy, 1 month for Food and Nutrition (as described further below). For pharmacy analyses, NDC is required.

 

We are also requesting an AP Spend report for the same time period as your data submission. This will assist us in evaluating your full spend and opportunities, as well as validating our analysis. (see example on data requirements template)

 

Data Format: Microsoft Excel spreadsheet (one row per item, each data element in a separate column) is the preferred format for the data provided. A separate spreadsheet for each type: 1) Medical Surgical and Laboratory, 2) Pharmacy, and 3) Nutrition is preferred. However, information can be provided in other formats if necessary, please communicate any special data formats prior to providing information.

In addition to the above information the following data is required for a food analysis:

• Dollars spent per week
• Number of deliveries per week
• All purchase data should be within the same month.

Food analysis data format:

For dietary spend analyses we request the Excel spreadsheet to include no more than one month of purchases (4 weeks of purchases in the same month).

• One month of purchase data with pricing from current distributor for one primary facility.
• Data must all be from the same month.
• Excel spreadsheet format Average drop (delivery) size in dollars
• Number of deliveries per week

Data set to include:

• Distributor item code
• Item description
• Pack size
• Manufacturer Name
• Manufacturer product code
• Price
• Cases/Each purchased
• LBs purchased (for catch weight items)
• Brand

A Letter of Commitment is a signed agreement between a member and a vendor with whom GPO has a contract. Most LOC’s are completed electronically for ease and quicker turnaround time for price assurance.

 

GPO negotiates a contract with every vendor with whom we do business. A GPO negotiates a contract is to gain significant discounts on the products purchased by members. The vendor is very interested in members buying their products since it means increased revenues for them.

 

To ensure members support a particular contract, a vendor may require a signed commitment form between the member and the vendor.

For example: member agrees to purchase 80% of its sutures from Ethicon

 

Signed commitment forms give vendors an assurance that the quantity of the product purchased by members will be worth the discounted pricing negotiated between themselves and the GPO contracting team.

Med/Surg/Lab/Dietary

• GPO pricing go-live can be 90 days after cost study is completed.
• Cost study can be completed in 2-4 weeks

Pharmacy

• GPO pricing go-live can be 60 days after cost study is completed.
• Cost study can be completed in 1-2 weeks

Notice of Cancellation to Current GPO

• Should be coordinated with GPO Implementation prior to cancellation to ensure no interruption in contract coverage

Why does it take 90 days (60 for RX) AFTER Completion of a Cost Study to implement?

Time is built in to the process to:

• Time to review the cost study for appropriate tier slotting
• Time to determine which forms need to be signed and prepare them for signature
• Time to process and confirm LOCs (most vendors require at least 30 days for processing and notification to distributors)
• Time to ensure appropriate tier connections are made at distributor and wholesaler
• Time to allow the member to load new pricing to their MMIS

There is no fee to join, please reach out to a RHA Client Service Director to learn more.