Navigating procurement excellence in healthcare

SAP’s Gordon Donovan and Aramex’s Ronan Kitchin share how they oversee both the Procure-to-Pay (P2P) and Source-to-Pay (S2P) processes in healthcare

Procure-to-Pay (P2P) and Source-to-Pay (S2P) are procurement processes which indicate the stage in acquiring goods or services. 

The primary purchase is covered by P2P, which involves identifying the product or service, then having the order approved and paid for. 

S2P however, is a strategic activity which reaches across the whole procurement lifecycle, including sourcing and relationship management. 

Here, two experts tell us about their work in healthcare procurement, from their initial conceptions to the desired end result. 

Aramex's healthcare vertical streamlines P2P processes

Ronan Kitchin is proud to oversee the Life Science and Healthcare vertical at Aramex, a logistics and supply chain company. His primary focus is on cultivating and expanding the client portfolio within the realm of life sciences and healthcare.

“I’m entrusted with identifying opportunities for growth and forging strategic partnerships with esteemed organisations in the industry,” Kitchin explains. “In understanding the unique demands of the life science and healthcare sector, I aim to establish Aramex as the preferred logistics and supply chain partner for these esteemed clientele.”

As the leader responsible for overseeing the Life Science and Healthcare vertical at Aramex, both P2P and S2P processes play a crucial part in his role.

“In my position, I actively engage in the P2P process to ensure a seamless and efficient procurement experience for our life science and healthcare clients. This involves identifying reliable suppliers, negotiating contracts, and managing purchase orders for essential supplies, equipment, and materials.” 

Through streamlining the P2P process, Kitchin can ensure that clients receive the necessary products promptly, contributing to their operational efficiency and overall success.

The entire S2P cycle encompasses various stages, such as supplier selection, contract management, requisitioning, sourcing, purchase orders, receiving, invoicing, and payment processing. “By effectively managing our S2P process, I can optimise our procurement operations, ensure cost savings, mitigate risks and drive value for our clients. This involves identifying reliable suppliers, negotiating contracts, monitoring compliance, and fostering strong supplier relationships.”

By actively managing both P2P and S2P processes, Kitchin contributes to the success of Aramex’s life science and healthcare clients. A streamlined and well-executed procurement process ensures timely access to critical supplies, reduces operational costs and strengthens relationships with suppliers. This, in turn, enhances the overall efficiency and competitiveness of the organisations that Aramex serves.

“It is important to note that leveraging technology solutions, such as procurement platforms and supply chain management software, further enhances the effectiveness of our P2P and S2P processes. These tools automate and streamline various stages of the procurement cycle, improving accuracy, visibility, and data-driven decision-making.”

SAP’s clinical and nonclinical realities in procurement 

Gordon Donovan, Global Vice President Research, Procurement and External Workforce at SAP, leads market research in these solution areas. 

“I also keep close tabs on procurement challenges and trends across industries, with a special interest in healthcare. I spent four years working for private healthcare organisations and seven years with the National Health Service in Britain,” says Donovan.

Working in the healthcare sector is a different journey to others, he says, because it’s not always possible to measure the impact of your work.

“You might have helped to procure a piece of equipment – like a robot that does radical prostatectomies, which makes it possible for patients to be released from the hospital the same day or the next. That is unbelievable given that with previous procedures, the length of patient stays was up to four weeks. From a procurement perspective, I learned so much about sourcing, stakeholder management and effective ways to manage contracting terms and conditions.”

When thinking about P2P and S2P in healthcare procurement, Donovan advises to differentiate between clinical and nonclinical.

“From a non-clinical perspective, P2P is a classic indirect procurement P2P process. Keep it simple and limit the number of buyers, because in healthcare you don’t want people like nurse unit managers spending precious time ordering things.”

Yet from a clinical perspective, P2P is more involved.

“You’re dealing with products that literally touch patients and have a direct impact on their lives,” he explains. “It’s also a different way of thinking about how you manage inventory because availability is critical. How is inventory warehoused? Who’s watching stock levels and placing orders? Is it insourced or outsourced?”

In the healthcare organisations he’s worked with, the clinical staff are consulted about what should be stocked, but they don’t do the counting or scanning. Instead, a third party would go into the ward stockrooms, swipe barcodes to determine supply inventories and reorder as needed.

“Unlike non-clinical P2P, equipment and supplies aren’t ordered one ward at a time. Orders will be larger, to meet the day-to-day needs of many wards. That means organisations will need a warehouse that’s either staffed by its own personnel or outsourced to a third party.”

These insourcing and outsourcing decisions are likely to be the first big decisions a healthcare procurement team would have to make in establishing its clinical procurement strategy.

From a non-clinical perspective, healthcare S2P processes aren’t that different from any other industry. “It's about understanding the markets to decide your strategy and involving stakeholders to make sure you’re procuring the right goods and services.”

Yet from a clinical perspective, S2P can be more challenging. Stakeholders become much more involved, and you have to deal with something called ‘clinical preference’. 

“This can be as simple as a staff-wide preference for a dressing because it has unique adhesive properties. That’s their clinical preference and they refuse to use any other. Of course, sometimes clinical preference is more subjective than clinical. For example, a surgeon may have been trained to use a particular brand of device, tool, or prosthesis, making them hesitant to try another. Surgeons are also trained to be risk-averse, so they avoid variables or changes that might complicate the procedures they perform.”

Additionally, at a time when medical devices are becoming increasingly complex, relationships with supplier sales reps who provide assistance and guidance to surgeons can influence clinical preference.

“This has challenged healthcare procurement professionals for years,” explains Donovan. “When is clinical preference really a clinical preference and when is it an inferred preference? Pick your battles. Take on the ones where you have a chance to prevail. But also, build credibility by working with your clinical stakeholders to find situations where you can reach agreement.”

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