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GHX Develops Collaborative Contract Commitment Tool For Healthcare Supply Chain

Armen Hareyan's picture

Healthcare manufacturers, distributors, hospitals, and group purchasing organizations join together to build and utilize single solution.

GHX has extended the functionality of its Contract Center to include a collaborative contract commitment module that can be utilized by all providers, manufacturers, distributors, and group purchasing organizations (GPOs) in the healthcare supply chain. More than sixty hospitals have already successfully used the tool to activate hundreds of contracts negotiated by HealthTrust Purchasing Group with Medtronic, Boston Scientific Corporation, and St. Jude Medical. Johnson and Johnson Healthcare Systems Inc. will begin utilizing the contract commitment module later this year. Cardinal Health, which is a leading distributor of medical, lab, and surgical products in the United States, has also expressed support for a single industry solution for contract commitment.

"By building an open and neutral contract commitment tool, GHX is saving healthcare organizations millions of dollars that they would otherwise have to spend to create their own proprietary contract management platforms," says Bill Francis, vice president of Operations for HealthTrust Purchasing Group.

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Effective contract management requires that all authorized parties to a contract share accurate information related to factors such as tier pricing and commitments, customer eligibility, and effective contract dates in a timely manner. When that information is inconsistent or delayed, errors can occur that not only create rework and higher labor costs but also may result in financial losses for the various parties as the result of inaccurate pricing, rebates and chargebacks.

The GHX Contract Commitment Module addresses these issues by automating what has traditionally been a highly manual process and by enabling manufacturers, distributors, GPOs, and healthcare providers to agree on key contract terms and conditions up front. These process improvements help ensure greater accuracy in both transactions and reporting related to contract purchases, whether they are through a GPO or direct with a manufacturer. GPOs can provide manufacturers with data on contract terms and conditions, including tier pricing, definitions, and requirements, as well as which customers are eligible for various contracts. Hospitals and other healthcare providers can then utilize the tool to activate contracts, with manufacturer approval and agreement on effective dates occurring in a collaborative online environment.

"The GHX Contract Commitment Module provides us with a single tool that we can use with all of our customers, regardless of GPO affiliation or whether they enter into contracts directly with us. We can now effectively address many of the data synchronization and automation challenges that have made healthcare contracting highly manual, inefficient, and expensive for everyone," says Kevin Ruffe, worldwide vice president, eBusiness, Johnson and Johnson Healthcare Systems Inc.

"The GHX Contract Center already enables us to validate, in real time during the transaction process, that we are paying the correct contract price," says Susan Wilson Bromley, Supply Chain director for St. Joseph Health System based in Orange, Calif. "Now, with the new Contract Commitment Module, we can all work with the same information from the start. This process change has the potential to yield significant savings for the healthcare industry as a whole."

"GHX is in a unique position to provide the kind of industry solution that many of our member organizations have requested," says GHX President Bruce Johnson. "The Contract Center leverages our working relationships with suppliers, providers, and GPOs, along with the transactional capabilities of the exchange, to foster a more collaborative industry approach to the challenges of healthcare contracting."