Broadlane Launches New Set of Services

    September 20, 2004

Broadlane today announced the launch of a new set of services that will address one of the most inefficient and costly elements of hospital business office operations — the series of steps required for the sourcing, procurement and ultimate payment for goods and services.

Called Broadlane’s Procurement Services, this new set of services will address the entire procurement process cycle through a combination of industry best-practice business processes and advanced technologies including Internet-based purchase order transaction processing, workflow management, enterprise application integration, Web services, rules engines, and active data warehousing for real-time analysis. The service will ensure centralized process management for common procurement functions to create a powerful integrated solution at a far lower cost and with greater efficiency than has previously been possible.

“Broadlane’s Procurement Services will revolutionize the way providers manage one of their most costly operational areas,” said Charles E. Saunders, M.D., Broadlane’s chief executive officer. “Healthcare costs are escalating, and not just in such areas as the unit cost of clinical technologies and drugs. A more insidious culprit is the tangled and inefficient process of procuring the resources that drive the care delivery engine. Today the process is characterized as a sequence of fragmented labor- and paper-intensive activities, inconsistent practices and controls, lack of visibility and real-time access to pricing, rogue buying and manual error that result in gross overpayment for goods and services, not to mention high transaction costs. Worse, resource costs and consumption considerations are disconnected from clinicians’ product use decisions. And at the end of the day, no one really knows the true cost of the goods, how much was spent, whether contract compliance has been achieved, whether the right price was paid, what is driving cost increases or who is accountable.”

Said Les Popiolek, Broadlane’s senior vice president for procurement services: “Providers alone cannot easily solve the problem. Within the healthcare industry, there is a move toward implementation of provider ERP systems to help manage the procurement process. But these approaches are expensive, risky and take years to fully implement. ERP systems have arisen from manufacturing and can be costly and difficult to sufficiently customize for healthcare, resulting in an inability to support complex healthcare contracts, access up-to-date pricing on hundreds of thousands of SKUs that change daily, and integrate electronically with the myriad healthcare suppliers across the country. There must be a more cost-effective and readily available solution to ensure dollars that could be more effectively invested in patient care are not being wasted by paying higher prices for supplies.”

Broadlane’s Procurement Services will use a combined technology and business process management approach to address the provider procurement-related processes that hold the key to the greatest savings: sourcing, contract management, item and price management, requisitioning, procurement processing, receipt acknowledgement and payment processing — in essence, the procurement-to-payment continuum.

The solution will be delivered through a Web-based ASP model that is designed to integrate with existing provider and supplier systems. In addition, Broadlane will take responsibility for managing certain costly core processes, such as spot sourcing of off-contract products, purchase order exception management and item master file management. In this centralized, leveraged service model, the per-purchase order transaction price can be dramatically reduced through economies of scale, while at the same time vastly reducing off-contract purchasing, rogue buying and pricing errors. As a byproduct, compliance with vendor contracts will increase along with savings — thereby reducing cost while improving efficiency.

Providers will benefit by gaining a user-customized approach to managing contracts, item masters and purchase orders in a centralized manner. This ensures high compliance at a far lower cost and provides real-time visibility to spend patterns and savings opportunities, enabling more accurate budgeting and forecasting. In this model, purchase orders contain accurate item information, pricing and contract terms, and shipments and invoices can be verified in real time; thus accounts payable reconciliation can be reduced to an exception process, and purchase order-invoice mismatches become a thing of the past. And because the service will integrate with existing materials systems, the investment providers have made in their legacy systems can be leveraged without a disruptive change to their core systems.

Providers also will not need to perform costly integrations with hundreds of supplier systems. Only one integration point will be required, because Broadlane’s service will provide back-end connectivity to suppliers and exchanges. Advanced approaches to workflow and rules management will be extensively employed in a Web-services framework, thus dramatically reducing the development and integration time and cost, while allowing extensive customization for each provider.

“We believe this approach can transform complex, cross-enterprise transaction processing and deliver dramatic gains in efficiency and savings in healthcare,” said Popiolek. “Broadlane will continue to add components to our new service, and we will be looking for innovative companies that share our procurement vision to collaborate on even more exciting opportunities in this area.”

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