As told to Robert Neil
On March 31, one of the industry’s oldest group purchasing organizations will have a change in leadership as Amerinet’s CEO, Robert “Bud” Bowen, retires after 20 years with the company.
Bowen has been with Amerinet since its formation in 1986, and in that time, he says he’s seen numerous changes in the health care supply chain, including the ability of hospitals to understand and deal with more sophisticated supply chain management practices. Bowen has seen GPOs evolve beyond their original function of negotiating supply contracts and expand to offering other support services. The changes, he notes, have developed in response to hospitals demanding more assistance in managing an expensive portion of their budgets.
In one of his final interviews before stepping down as Amerinet’s leader, Bowen talks about the importance of education in the materials management department, and the need for materials managers to have a visible presence throughout the hospital.
Q How has hospital reliance on GPOs changed over the years?
A From an overall perspective it’s increased, which may seem the opposite of a lot of the things we see in the business. From the practical standpoint, hospitals are so stressed financially. Oftentimes hospital personnel and other cuts are laid upon the materials management department—cuts in staff, the inability to invest in the right type of materials information software systems and things like that. Increasingly, hospitals are becoming dependent on their GPOs to provide services that many of the hospitals can no longer afford to provide on their own.
Q Have GPO services been there from the beginning or have they evolved over time?
A They’re evolving. If you just take the core services of a GPO, which is negotiating contracts for a lot of goods and services, most all of the national GPOs have very rich portfolios. Hospitals probably have 1,000 contracts or more. If hospitals had to, all of a sudden, do all of their contracting independently, very few would be in a position to do it—forget about how effective the contracts would be, the sheer magnitude alone would be difficult. And increasingly, GPOs are getting much more consultative.
They’re providing on-site support in many cases. Sometimes full-time personnel are assigned by a GPO to a large system to help the organization take full advantage of the GPO’s contracts and relationships, or any variety of things that the hospital otherwise wouldn’t be doing on its own. And if nothing else, the pricing relevancy of the GPOs is even more important today to hospitals than it ever has been. Even if a hospital or an IDN is doing a lot of its own contracting, we all know that in most cases, the GPO pricing is the benchmark being used. So, from that standpoint, if you use the word “reliance,” I think hospitals rely heavily upon GPOs these days for a wide variety of service and support.
Q Some materials managers have said they’re not happy with the level of ability some of their workers have? Have you noticed that?
A Not specifically, but I would say what they are seeing is something that is a much bigger societal issue. If you talk to any business person, you get the same kind of response—that younger people entering the workforce are not as well educated. We’ve not only “dumbed down” our public primary schools, but our colleges and universities, and so that’s part of it.
And then there’s the whole issue of motivation. Young people today, on average, are much more of the mind-set that things should just come to them rather than having to get out there and work for it. All businesses, I think, are encountering that.
Q So, does that create another challenge for the materials management department?
A Well, yes and no. I think a lot of it has to do with the quality of the manager as well. There are certainly enough great, young employees in the workforce to be able to find the ones who have those traits.
Also, a manager can do an awful lot to cultivate and instill a good work ethic, and so I don’t think materials managers should pass the buck on this. They may not be getting the raw materials at the high caliber they had in the past, but once you get into the workforce, good managers can bring out the best in people and really elevate them to do great things.
Q Where else should materials managers be focusing?
A From a standpoint of what materials management folks can do to have a bigger impact on the bottom line of their organization, most of that is process oriented. I look to the materials management folks as the ones who should make sure that the systems are tight, efficient, with little waste and that there’s standardization and efficiency—ordering, inventory, etc.—but to make sure you’re getting the right product and the right application at the right price.
Those are the places a materials manager can have the biggest impact. At the same time, you’ve got to make sure your pricing is relevant. There are lots of ways to do that; and from time to time there’s a need to step back and scan the horizon to see what other GPO opportunities there are for hospitals and to make sure that where they are is still the best place to be—or if necessary, consider a change.
Q Are hospitals and health systems shopping for new GPO contracts more than in the past?
A I think it’s something that’s like any source of a product or service that a hospital or system has. You need to, from time to time, test the marketplace; and a GPO service shouldn’t be any different.
I don’t see that hospitals are doing it more frequently than they did before. They are just aware of the fact that it’s appropriate to take a look at your GPO, if for nothing else, than to validate that it’s the right one for the organization or to determine whether there’s a better one out there.
Q Do you think materials managers are ever going to be elevated to the executive level?
A It has gotten a lot better than it used to be. I’ve known people in the materials management profession before they were ever called materials managers. They used to be called purchasing agents, and then people adopted the materials management title, but it didn’t really change what they did. But, materials managers today are better educated, they’re more professional and they’re given a higher status in the organization than traditional purchasing agents or buyers 30 years ago. And that’s a good thing. Certainly there’s still a way to go, but there’s more recognition from hospital administration of the value of competent people in the supply chain arena and more willingness to bring them into the executive management row.
Q What are some key traits of a successful materials management department?
A The successful settings for materials are those where the materials manager is involved in all aspects of the hospital. Everyone from the OR, the business office, the food service department, the lab, you name it, they should all know the materials manager. Materials should be viewed as support service for all those department functions, and they should be trusted and respected. Also, it’s important to engage clinicians in the purchasing decisions. Traditionally, there’s been tension between clinicians and purchasing. Purchasing is just viewed as, “you just want to buy me something cheap to save money.” That’s not what materials is all about, but the poor image can be overcome by involving clinicians.
Q Do you have any parting advice for materials managers and hospitals?
A All too often senior executives of a hospital or a system look at purchasing or materials management as an expense department. Their thought is that 17 people in purchasing are costing the organization this much money per year in salaries and benefits, and 10 percent needs to be cut out of the budget, so we’ll cut that 10 percent in materials. It’s important for materials managers to convince CEOs and CFOs that materials management is really a revenue department. It’s probably the purest revenue department a hospital has because every dollar that purchasing and materials can save—whether it’s through price or process—is a dollar that drops straight to the bottom line. If you take a look at the revenue implications of an effective materials management or supply chain department, it creates a whole new perspective on the part of senior management as to what materials management ought to be. MMHC
Robert Bowen is the chief executive officer for Amerinet, St. Louis, and has been with the company for 20 years. Initially, he was hired as senior vice president and was responsible for contracting.
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