St. Joseph's Health System

Collaboration the key to success in purchasing hospital equipment

Twenty years ago, St Joseph’s Healthcare in Hamilton, Ontario and St. Mary’s Hospital in Kitchener, Ontario both needed to purchase a CT scanner. In spite of the fact that the two hospitals were part of the larger, collaborative St. Joseph’s Health System where CEOs from Hamilton, Brantford, Kitchener, Guelph, St. Mary’s and Dundas met regularly to discuss issues of cost containment, neither organization knew the other was buying a CT—both purchases of more than $1 million. The two hospitals went to market three months apart and paid dramatically different prices for exactly the same piece of equipment from exactly the same supplier. That galvanizing moment was the birth of the St. Joseph’s Health System Group Purchasing Organization based in Brantford, Ontario.

In Canadian healthcare, organized and formalized group purchasing is less than 25 years old. However, it has fundamentally changed the way supplies and equipment are purchased by hospitals. By aggregating purchasing volumes of multiple organizations, hospitals gain better pricing and greater overall value.
In the case of the St. Joseph’s Health System GPO, the specific focus was, and remains today, capital equipment and food.

“The healthcare organizations that made up the St. Joseph’s System were, and still are, members of Medbuy, a national Group Purchasing Organization whose focus is medical/surgical supplies and pharmaceuticals,” notes Jay Ayres, Director of the St. Joseph’s Health System Group Purchasing Organization. “Our hospitals were already getting great value from the work Medbuy was doing. We didn’t need to duplicate that. The gap was with capital equipment and our goal was to show hospitals and vendors that capital equipment can be bought by multiple hospitals at the same time, without compromising patient care or the clinicians’ ability to work with the best possible equipment that was right for a specific facility.

“In many instances we will be dealing with dozens of organizations with multiple equipment configurations,” says Ayres. “It’s unusual for any two hospitals’ needs to be identical. But we have a highly effective and streamlined process that keeps everything and everyone on track.”

The process Ayres and his team use has been continuously refined over the past two decades.

“A lot has changed in the industry,” he says. “We have technology that changes at a rate that’s faster than NASA, the financial pressure on hospitals is becoming increasingly more acute and regulations that govern healthcare procurement are more specific and prescriptive than ever before. It’s our job to stay ahead of all of it.”

The St. Joseph’s Health System GPO’s original mandate was to aggregate volumes of equipment for the Systems’ hospitals only. About two years into the program, the newly formed department began to get calls from other hospitals asking if they could participate. Surprisingly, those hospitals had been encouraged to reach out to St. Joseph’s by the supplier community, which was also finding value in the aggregated approach.

“It costs suppliers a great deal of money to respond to an RFP,” said Ayres. “We bringing multiple hospitals together into one process, which means the supplier community has to respond only once. It’s efficient for everyone. Our job is about creating the greatest efficiency possible.”

Today, hundreds of hospitals from coast-to-coast participate in the more than 60 capital equipment initiatives run by Ayres and his team. Ministries of Health, Infrastructure Ontario and Canada Infoway have also tapped into the program with multi-million dollar projects to upgrade capital equipment infrastructure in various provinces.

“We’ve coordinated the purchase of $300 million for Digital Imaging Repositories for three provinces at once. We put 420 organizations together to purchase patient lifts for the province of Ontario and increased the lift capacity in the province by 60 per cent. We’ve had the opportunity to do so many unique and exciting projects that have exceeded the expectations of those who participated.”

Most recently, St. Joseph’s was the bid administrator for a pilot project under the guidance of the Council of Academic Hospitals of Ontario. The two-year project was designed to determine if group purchasing could reduce the overall acquisition costs for capital equipment in the province—one of the most prolific purchases of capital equipment in the country.

“My 20 years of experience already told me it could be done,” says Ayres. “Still, we were eager to participate in the pilot to gain a wider understanding across a broader audience that it is possible to purchase highly complex capital equipment in a group setting.”

In terms of its nutrition initiatives, SJHS-GPO has 26 member organizations working together, combining volumes and reviewing new products in forums like annual vendor fairs and regular bi-monthly meetings.

“We want to continue to create opportunities to aggregate volumes and to support strong relationships with vendors and distributors.” Ayres stated. “Working together as a group is a great benefit. Not only are the members able to realize cost savings and increased efficiencies, but they are also able to share information and knowledge about what’s best for the patients in the process.”

As if the St. Joseph’s team isn’t busy enough with the amount of activity they do for their membership, the group is also heavily involved in community and international outreach.

“While we struggle here in Canada under the burden of costs in our health system, there are other countries that will never be able to afford what we have. At St. Joseph’s, we are in the position of having access to surplus equipment. Our team of biomedical engineers dedicate their time to reviewing the equipment and reprocessing it for use overseas in countries such as Haiti and Uganda.”

The future looks promising for the St. Joseph’s Health System GPO. They have just completed an agreement with Medbuy designed to expand their reach across the country, called CAPsource.

“Our goal is to have as many hospitals participating in CAPsource as possible. Our collaboration with Medbuy will help us help more hospitals,” says Ayres. “As a not-for-profit, it’s not about growing our business and having a positive impact. The greater our reach, the greater our impact on the entire healthcare system. We always have room for one more.”