Service New Brunswick: Value-based healthcare through strategic procurement

Service New Brunswick: Value-based healthcare through strategic procurement

Procurement can be a challenging discipline. There’s an increasing pressure to reduce costs and achieve savings, the continuous challenge of sustaining supplier relationships, and the need to keep up-to-date, accurate data. However, when tasked with purchasing the goods and services for an entire province’s healthcare services, the pressure increases tenfold.

With more than 27 years of experience in the sector under her belt, this is the job that’s in the capable hands of Ann Dolan, ‎Executive Director of Strategic Procurement for Service New Brunswick Health Services.

Providing the procurement of goods and services within healthcare for the Canadian province, Service New Brunswick is a crown corporation that has transformed its strategic procurement function in recent years.

Value-based procurement

The corporation (previously FacilicorpNB) was instructed by the government to achieve savings of $20 million. Of this amount, between CA$14 and CA$16mn was to come from supply chain initiatives in the healthcare sector. “It was a real challenge,” admits Dolan.

“For us, it was important to understand the needs of the client - the clinician or physician – and so we asked them ‘what is it that you need in your practice to treat a patient?’” Dolan says. “We asked them ‘what are some of the things you're doing now that you don't want to lose sight of? What are some of the improvements you'd like to see?’

“Only when you understand the business of the client, can you start to understand their needs, their wants, and why they ask for certain things,” she adds. “Our category management methodology really helped us with this but, more importantly, I think in procurement you have to be curious. You have to ask a lot of questions, understand what the product or service does, and you have to know if it provides value to the clients or not.”

Data analytics

Like many organisations, Service New Brunswick tapped into the potential of data analytics to help with its cost-saving measures. The shared services group creatively used Microsoft Excel, its Access database, and its current financial systems, to extract and analyse data about its procurement strategy.

To this end, Service New Brunswick could then clearly see what its clients were buying, which regions had the best contracts, and whether it could get products at the same price province-wide. “When you have the data, the story tells itself,” notes Dolan. “You don't have to be the persuader. Then we essentially looked at the low hanging fruit and asked ourselves ‘can we extend this cost-effective contract? Can we commit a certain volume to get a better deal from our suppliers?’

“Then we brought in a consultant to help us make further savings,” she says. “This helped us move towards a competitive procurement process that we hoped would show not only savings, but efficiencies, changes in practice that would have a better value for the patients of the province.”

Providing meaningful healthcare

Although it was a mammoth task, Dolan and her team successfully achieved these savings by taking a market-driven approach to procurement. But when Service New Brunswick is responsible for the goods and services needed to support the healthcare of around 750,000 people, how did the group balance the need to drive efficiency with the need to provide meaningful, high-quality products and services?

“That's the million-dollar-question,” Dolan says. “I think the way we achieve that is through our market research. It’s important that we’re aware of our operations from a public accountability perspective, from the perspective of the client, from the perspective of the supplier, and from the perspective of the patient.”

Operational transformation

In 2015, the government announced that it would merge four shared service entities to create one larger shared services organization that would provide high quality, safe, and efficient services throughout the province.

This meant that non-health related shared services such as accounts payable, payroll, copying services, procurement, information technology, human resources for internal government, shared services for healthcare, laundry, supply chain, clinical engineering, and the provincial entity that manages customer services centres to the public would be merged. However, despite this transformation, the corporation’s meaningful ethos remains to this day.

Over the past three years, Service New Brunswick has seen further changes to how it does business. It implemented a category management methodology, separating the strategic part of procurement from the transactional part. “The reason for that move was that it allowed us to align ourselves with how the clients are organised. That way, we could have people dedicated to that portfolio, where they could really get to understand the business and needs of the client,” explains Dolan.

"We've just conducted our strategic planning session as an organisation and our 2022 vision is ‘excellence in service delivery,’” notes Dolan. “Essentially, this means that our mission is to provide high quality, innovative services for customers with a focus on value for all New Brunswickers.”

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Developing supplier relationships

To achieve its ambitious aim, Service New Brunswick has worked diligently to sustain its supplier relationships. The group has migrated from the traditional yet restricted request for proposal (RFP) process to the more flexible negotiated request for proposal process. Through this system, suppliers may put forward Best and Final Offers (known as BAFO) whereby suppliers can bounce ideas back and forth. This provides suppliers the chance to present what could be a forward-thinking proposal to the corporation.

“We are moving towards another evolution of procurement, whereby it is more value-based and less focused on price,” observes Dolan. “We have developed strong relationships with our suppliers - companies such as Medtronic, Johnson & Johnson and Baxter. These are global, international companies and they really benefit from working with us because we're able to pilot things and we can do this fairly quickly. Then our suppliers can use that template and apply it to other customers and clients in other provinces or countries. In that way, I think we're progressive because sometimes the relationships that we've built allow us to be on the leading edge of new technology and healthcare practices.”

Adapting to challenges

Working closely with suppliers is not only about forging long-lasting relationships, it's also about preparing for potential crises. In today’s ever-changing climate, natural disasters are increasing in devastation and frequency and this can play havoc with governmental supply chains.

“The last one that affected our supply chain was Hurricane Maria which devastated Puerto Rico,” remembers Dolan. “Four or five of our large suppliers had manufacturing plants there and so suddenly this posed a major issue to the supply chain. Therefore, we have to be ready to address any natural disasters that may happen and which, I think, are going to become more and more frequent. We have to be able to utilise the data and analytics effectively. We need team members who have good interpersonal skills who can talk to people, get to the heart of the problem very quickly, and who can find a solution.”

By driving efficiency in its supply chain, utilising data analytics, and truly understanding the meaning behind its products and services, Service New Brunswick has dealt with its supply chain transformation in its stride. In doing so, it continues to deliver value-based, high-quality healthcare goods and services for the province of New Brunswick.

“In all this change, we have to find balance,” reflects Dolan. “Sometimes it can be hard but one of the main things that keeps us motivated is that we know that for everything that we do, there's a patient at the end of that transaction. That patient could be one of our family members or one of our friends. Our core mission is to provide high quality, innovative services for customers with a focus on value for all New Brunswickers. So, when someone says, ‘thank you very much’, that's what keeps us going during the hard times – knowing that we’re helping New Brunswickers.”

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