The past – Price instead of value
I vividly remember a meeting more than half a decade ago with a director of procurement for an NHS Trust. The meeting had been set to sign a contract that had been through several rounds of negotiation, amendment and validation to be finally agreed by all parties. But the director of procurement was not happy.
I was told bluntly I needed to reduce the price and was somewhat taken aback by this as I had been led to believe the meeting was a formality. My fault, of course, for not engaging with procurement from the start. The meeting had quickly turned confrontational, with both sides pitted to do battle to secure a win. Not ideal by any means.
At first, I was angry by being assessed solely based on the price and not the value of the solution. But on reflection, I was more sad than angry. Ultimately, we both had the same goal: to solve a problem for clinicians and patients in the hospital.
The present – A complex solution that adds value
Since that incident I have thought a lot about the traditional vendor/buyer relationship when it comes to healthcare, and especially complex clinical solutions. The transactional relationship is fine in certain circumstances. For instance, you don’t need the guy who sells you a shower curtain to stay in touch regularly for the life of that shower curtain. Don’t get me wrong, shower curtains do an important job, but it’s one job and it doesn’t change. This approach does not work for complex clinical solutions - mainly because they are exactly that, complex.
This is an investment into a toolkit that enables improvements to workflows; it requires an ongoing relationship with the supplier, to help the solution evolve as healthcare needs evolve.
From this point of view the traditional transactional relationship is flawed because it is inherently antagonistic. the starting point for each party is at opposite ends of a spectrum. On one side there is the need to balance a limited budget against a multitude of complex needs throughout the healthcare organisation. On the other, the need to maintain profitability so that the supplier can invest in the development of new products and services that the market needs. In this scenario both parties inevitably must compromise. This can lead to resentment and a desire to “get back” something over the course of the relationship.
When suppliers under-deliver to maximise profit, healthcare organisations, and ultimately clinicians, and patients are let down. When healthcare organisations squeeze suppliers on price there is the risk they stifle the innovation of smaller companies who cannot support loss-making projects, distorting the market to a point where those who survive have a monopoly. That’s not good either!
The future – Working together
I propose a different approach, where both sides work in partnership to begin developing the technology to solve complex clinical problems. This means open and honest discussion at the very beginning to understand the end goal of a project, and work together to get there. These goals could be clinical or operational but both parties should work on the basis of “what can I bring to the table to make this happen?” By repositioning the relationship in this way, the true value of what each party brings to it is more easily recognised. It leads to a better, more collaborative relationship. Healthcare organisations are more likely to make strong investments without focusing solely on price and suppliers are more likely to go the extra mile, take guidance on roadmap development and stay close to their partners in the long term.
Of course talk is cheap. It’s easy to say “I want to be your partner, not sell you something” but unless it’s baked into the way you approach projects it won’t make a difference. That goes for the buyers too. I think the meeting I had with that procurement director made me realise how we ALL need to change. It boils down to this. You’re more likely to trust those on the same side as you. And that’s what it’s all about. Trust.
Ian Binks is a passionate advocate for innovation in healthcare with over 10 years’ experience in healthcare ICT working across sales, product management and partner management. "I fundamentally believe healthcare can be revolutionised with the right technology deployed in the right way to help organisations manage, change and deliver world class care every time."