eSourcing and Incumbent Training

The client.

A healthcare group purchasing organization (GPO).

The business issue.

This GPO, which serves 1,500 hospitals in the United States and buys approximately $17 billion annually, needed substantial assistance with its organizational design and effectiveness. The organization was losing market share as a result of contracts that were not competitive with its peers' contracts. In addition, its contracting organization was not responsive to stakeholders. Stakeholders had lost confidence in the GPO, and the GPO had not yet embraced electronic sourcing tools.

The solution.

Claro Group professionals helped the GPO source several billion in annual spend by managing the reverse auction and incumbent negotiation processes and by providing most of the analysis required throughout these activities. In addition, the team directed negotiation of a $750 million annual spend contract with limited supplier alternatives.

After stabilizing the existing contracts, The Claro Group helped the GPO assess its organizational structure and needs. As part of the rollout of the new organizational processes, the team provided training for all of the key sourcing functions to prepare employees for their new roles.

The results.

This approach enabled the GPO to achieve savings of between 10 and 20 percent in most spend categories, yielding almost $200 million in annual savings. In addition, it helped the organization to redesign its operations – including more than 200 professions – to improve contracting speed, efficiency, effectiveness and results. As a result, the GPO improved its relationships with member hospitals and improved its market position.