Get me supply chain, stat!

FRAMINGHAM (12/12/2003) - Combining the words middleman and health care in one sentence is a sure way to produce grimaces among the most kind and optimistic people. But here goes: With the right kind of middleman, even managed health care can be improved.

If you think I've been sitting too close to the ether, then consider the results for Jeff Solarek, director of material management at Dayton, Ohio-based Premier Health Partners Inc. Solarek oversees all the purchasing, distribution, receiving and warehousing for seven large Dayton-area health care facilities. By hooking up with San Jose, California-based Neoforma Inc., Premier is connected via the Web to a hosted marketplace to order and track purchases.

Back-order notification, which used to take 36 hours, is now processed in a mere two hours. The replenishment supply system has been automated, with fill rates now managed through a link to Premier's purchasing system, which in turn does a handshake with Marketplace@Novation -- Neoforma's supplier, distributor and manufacturer network. And there's even a wireless connection for those actually walking around providing care and dispensing products.

Solarek said Premier has saved $1.3 million over the past two years by cutting transaction fees, streamlining purchasing procedures and negotiating better prices. Through the hosted application, Premier accesses 330 health care supply vendors. Impressive, sure, but the real innovation is the last mile into Premier's legacy purchasing module and ERP systems.

Corporate IT lets third-party IT operations make dedicated connections to internal applications. The benefit is that the hosted operators map to myriad electronic data interchange systems while IT maintains a single Web connection from the data center to the service provider.

As a result, you can keep your mainframe. Plus, you get savings by tracking what you buy, measuring what comes in and knowing how much you spend. Having up-to-date information gives you contract power, whether for syringes or bed linens. And you don't have to be a 1,000-bed facility to qualify. Neoforma has teamed up with Vista, California-based dj Orthopedics Inc. to take the hosted setup to smaller sites such as doctors' offices, pain management clinics and surgery centers.

"Nobody tracked what was going on (before]," said Michael McBrayer, senior vice president at dj Orthopedics. "Now administrators are running things more as a business. And they've got to know what's coming in, what's going out." They can track everything from the Ace bandages that your doctor hands out to X-rays and office supplies. (Say, does that mean no more free samples?)

Sure, it's depressing to think of the practice of medicine in terms of ROI, but like the common cold, such thinking is here to stay. At least hosted solutions for supply management are a tangible palliative.

Pimm Fox is a freelance writer in Santa Barbara, California. Contact him at pimmfox@pacbell.net.

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