$$ SAVINGS INSIDE
28 WE’VE COME A LONG WAY, PARTNER
Since 2001, GPO and its vendors have ironed out the initial knots sufficiently to call it a win-win for those involved and carved out valuable, working partnerships benefiting both sides.
Group Procurement Office
167 Bukit Merah #14-10 Connection One (Tower 5) Singapore 150167 Tel +65 6377 8556 Fax +65 6377 1912 www.singhealth.com.sg Reg No 200002698 Z
Heart to heart with SingHealth Group CEO
TIME TRAVELLER SingHealth GPO’s 10th anniversary is here but Group Chief Procurement Officer Tan Jack Thian isn’t about to rest on his laurels
Valerie Lee Photographer
Amos Wong Copyright © 2011. Singapore Health Services Pte Ltd. All rights reserved. ISBN No.: 978-981-05-7926-5
BIG HIT Satisfied users reveal why centralised buying is the future
SO YOU THINK YOU CAN BE A BUYER? Purchasing common drugs, implants and disposables poses an uncommon challenge
GPO REACHES OUT A tale of milk feeds, diapers and the culture of learning
VETERANS LOOKING BACK Veterans recall their best moments working with GPO
LAST WORD Dr Vivian Balakrishnan sheds light on the vision for GPO
TOWARDS A COMMON GOAL Professor Tan Ser Kiat
group ceo of singhealth The words “group procurement” are not ones that typically set the pulse racing but the last ten years have been exciting and crucial in many ways for SingHealth’s Group Procurement Office (GPO). Let me start with the numbers. SingHealth saved close to $140 million in non-labour expenditure between 2001 to 2010. A good start for a healthcare organisation trying to keep its costs down. Having a GPO has allowed us to consolidate the mass acquisition of medical capital equipment, and SingHealth institutions were able to acquire more than 80 pieces of high-tech medical diagnostic equipment at a savings of $20 million over the last five years. To do all this, we took a good, hard look at how we were making purchases and effectively dismantled some of the existing systems, putting in place a more integrated and centralised one, drawing on the experience and expertise of the clinical and purchasing staff. 02 —
It was a gradual and thorough process, backed by strong clinical leadership to take it forward. Since 2001 we had situations where each hospital thought it was getting a good deal with its medical purchases, but more often than not this wasn’t the case. Purchasing functions at that time were a mix of waste, duplication and poorly informed buying. I’ll give you a classic example. Six or seven years ago, in the department of orthopaedic surgery in SGH, knee prostheses cost $2,000 to $4,000. Every surgeon wanted to use his or her implant of choice. For the 15 or so orthopaedic surgeons working there, we used approximately ten different implants. With the advent of GPO, we eventually cut it down to two or three different implants, resulting in a savings of up to $1,500 for the patient. GPO has built a successful track record of securing substantial discounts and effectively championing measures to better utilise resources. Hospitals and healthcare organisations outside the SingHealth group, as well as the Singapore Civil Defence Force and the Ministry of Defence, have over the years called upon GPO to help acquire pharmaceutical supplies. This last decade has been fairly successful but we are not there yet. The first part was probably the easiest. Moving forward we are looking at
“SingHealth saved close to $140 million in non-labour expenditure between 2001 to 2010.”
going even furtherâ€”for GPO to set up a consolidated information technology system, for instance. We need a system that links patient records and uses Radio Frequency Identification (RFID) to achieve enhanced patient safety and smoother procurement processes. We are also looking at cost efficiencies in services such as hospital maintenance, and energy and power. There is also a need to look at our own supply chain security and raise awareness about strategic sourcing among healthcare organisations and administrations in the region. Recent natural disasters around the world have shown how they can affect the supply of medical items. For me, GPO and procurement issues are part of the big picture to provide the best care for our patients with limited resources. That is our reason for existence. The other components of this picture are maintaining best practices in our service delivery and developing organisational excellence. We want to make sure that every single component works towards a single objective and that is each patientâ€™s welfare and recovery. With that I invite you to enjoy this special publication and take a behind-the-scenes look at the development and growth of GPO and the people who have worked to make it what it is today and who will take it into the future. â€” 03
USER FEATURES ON THEIR ENCOUNTERS WITH GPO
The GPO may not have been around for long but it has made a profound impact on the way SingHealth hospital staff and their colleagues in other related institutions work and deliver patient care. They share their stories in the following pages.
GPO SCORES THE DRUG AND SAVES THE DAY USER
1 Ho Swee Geok Senior Principal Pharmacist, Singapore General Hospital
Lim Mun Moon Deputy Director Pharmacy, SGH
Ho Swee Geok remembers it clearly. It was the day hospitals in Singapore almost ran out of morphine and having a GPO made all the difference. “It happened about two years ago, it’s a long time and yet the memory is still vivid,” she recalls. “Other institutions were down to one week (of morphine stocks) and they were very worried. We were calling each other and asking ‘can you lend us this amount’, and some of us who had more stock said ‘no, we have just enough to last.’” The problem started when a shipment from a pharmaceuticals supplier had stalled leaving the hospitals high and dry. Morphine is a controlled drug, critical for use in anaesthesia for surgeries, and the paperwork and documentation involved in its import takes up to six months. Most hospitals were down to two weeks supply of the drug, some even less at the time. “If I had to tell the anaesthesist, sorry I have run out of morphine, you have to hold off the surgery, we would have been in big trouble!” That’s when GPO stepped in to source for the supply of morphine overseas. GPO also helped to expedite the import of morphine injections, so that continuity of supply could be ensured, and the crisis was over. “Sometimes you need that kind of intervention,” Ms Ho said. Another plus point was having one central institution, in this case GPO, speaking to suppliers with “just one voice,” she added, instead of “everyone calling the same vendor and screaming in panic at them.”
THE GOOD DOCTOR AND HIS MINI EPIPHANIES Dr Ong Nai Theow describes his work with GPO and his speciﬁc committee as a series of “mini epiphanies”. “Whoever started (GPO), we really have to thank them. It gave the medical and nursing staff the chance to provide feedback on various products, whereas in the past we had to take what we were given.” His committee, comprising a team of nurses and health professionals, was responsible for small surgical supplies such as venous cannulas, endo-tracheal tubes, and chest tubes. “They had years of experience buying different products from different vendors and were enthusiastic and keen to make the process work.” GPO would call for tenders. Each one drew a number of vendors who supplied them with a range of samples. The fact that committee members were able to touch and handle the variety of products with differing designs was a huge plus. “As we went along we found that cheapest is not necessarily best. There were people who were willing to quote a very low price but when you examined the product, it was not up to scratch.” He describes one product, a venous cannula, used for administration of intravenous ﬂuids, obtaining blood samples and administering medicines. The product the team saw had a needle protruding too far for its particular use which would have made the procedure painful. They found and rejected a slate of other poorly designed products. “If we had called for a blank tender without seeing the actual product or getting medical or nursing inputs, then the person who approved the tender would have no idea of how to use it or the relative virtues of each product.”
2 Dr Ong Nai Theow Consultant, Department of Paediatric Surgery, KK Women’s and Children’s Hospital
IT’S A NUMBERS GAME—WHY GPO WORKS FOR MR WU A big plus of having GPO? It helps hospital pharmacies navigate tricky situations when drugs are going off patent and hospitals are just beginning to switch to the use of generic versions of that particular drug. When this happens, hospitals have to negotiate with vendors who have contracts with the patented drugs and check on the safety and ease of use of the generic drug. Strength in unity, that is what collaboration is all about. And for Mr Wu Tuck Seng, Deputy Director of Pharmacy at National University Health System, there lies the power of GPO, that all the common pharmaceutical needs of every public healthcare institution in Singapore are met by one central purchasing body. “We are talking about millions of dollars here,” Mr Wu said, adding that the collective might of GPO is invaluable in such negotiations. Then there is the introduction of tested generic drugs, which while having cleared safety and efficacy tests may face patients’ or clinicians’ resistance because of their lack of familiarity with the medication. Here GPO facilitates “trials by users,” getting feedback from patients and clinicians at their wide base of institutions to check on any side effects from the drug use. “This is the value of the group. Because feedback comes from various institutions, we can ﬁnd out if the product is either good or not so good or has problems. That’s the beauty of working with GPO.”
3 Wu Tuck Seng Deputy Director, Pharmacy, National University Health System
4 Chia Soon Noi Assistant Director, Division of Nursing, KK Women’s and Children’s Hospital
A STORY OF THE THREE-YEAR CONTRACTS For the Assistant Director of Operating Theatre / Day Surgery at KK Women’s and Children’s Hospital (KKH), Chia Soon Noi, the beneﬁt of having GPO lies in the threeyear contracts the purchasing office is able to negotiate with medical suppliers. “They are able to lock in the price for three years. That is wonderful! You are assured that for three years your Proﬁt and Loss won’t get affected. For example, we locked in the pricing of sutures for three years and it is something that we use for every operation. It’s great savings hospital-wide. They also lock in the price for equipment—monitors, syringe pumps, infusion pumps, operating lights and operating tables.” Ms Chia said her central store has several thousand consummable items, 80 per cent of which are purchased through GPO contracts, a situation which allows her to take her mind off stock levels, and focus on her clinical work. And then there is the story of GPO’s hand in sourcing cheaper rubber gloves. “For decades, the institutions have been using a single source of gloves. But since surgical gloves are the bread and butter of the surgical team, we needed to look into alternative sources. With an open Request for Proposal, analysis and by working closely with the clinicians, we were able to switch to two vendors to ensure continuity of supply.” It took some persuasion to get the medical staff to use an alternative brand of gloves but over time, KKH’s use of these original, more costly gloves dropped signiﬁcantly, a big boon for the hospital’s bottomline. — 09
5 Elaine Ng Deputy Director of Nursing, Changi General Hospital
NURSES’ FASHION PARADE THANKS TO GPO Elaine Ng is youthful looking for a Deputy Director of Nursing but she can be assured of instant respect from nursing staff in other SingHealth institutions she visits, because of her uniform. “In the past if I were to wear the old nursing uniform and go to Tampines, the Tampines Polyclinic nurses wouldn’t know who I am,” she said. “But because of this uniform they instantly recognise that I’m a Deputy Director of Nursing and a colleague, and they smile at you and acknowledge you. There is this common identity, they have that kind of respect and they will greet you. That’s nice.” Together with the respective nursing departments, GPO facilitated a move to make nurses’ uniforms more, well, uniform, across the SingHealth Group with common logos and corporate colours as well as fabric, which Ms Ng sees as a bonus. It not only saved the group considerable sums in terms of costs but also gave staff an easily identiﬁable corporate identity. “For instance if someone comes from another hospital we can’t tell if that individual is a registered nurse or an enrolled nurse. No one knows. But with this group design, we know which uniform represents which rank of nurses.” The process of whittling down the uniforms across the Group and designing one with the right fabric, while challenging, was fun, says Ms Ng who was on the committee spearheaded by SingHealth’s Nursing leadership. It culminated in a fashion parade during Nurses’ Day. The uniforms are such a success that GPO is now helping the department of Nursing Administration do the same for the Group’s ancillary staff group which has some 40 uniform designs currently. Here’s looking ahead to another fashion parade!
IN BIG TICKET BUYING, COLLECTIVE MIGHT IS RIGHT “The whole is greater than the sum of its parts” the saying goes, and A/Prof Tan Bien Soo, while working with the GPO team, saw that adage put into action. It was especially so in the world of purchasing for hospital ‘big ticket’ items such as MRI (magnetic resonance imaging) machines and X-Ray equipment, where in the old days, vendors, would use different strategies with different institutions to seal deals to their advantage. “The standardisation across different institutions was not so robust before. By coming together as a group, I saw two advantages. Firstly, the vendors’ tactics to use different pricing strategies for different departments in the same organisation didn’t work because we could easily see what they were offering.” “Secondly, by putting things together we achieved better discount pricing.” And in the end, it was the vendors who had to shift into the new GPO mode. “They needed to adapt to it, they were used to dealing with individual departments prior to that. I think it was just a matter of vendors’ understanding that the process had changed to a more transparent one.”
6 A/Prof Tan Bien Soo Senior Consultant, Department of Diagnostic Radiology, Singapore General Hospital
A WILLING EAR— GPO’S STRENGTH Lynda Soong of the Agency for Integrated Care (AIC) has many positive things to say about working with SingHealth’s GPO but there is one quality that made a huge impression on her—their willingness to listen. “The GPO office really took pains to understand that the Intermediate and Long-Term Care (ILTC) sector is quite different from the acute health sector. The work they did was very contextualised, very relevant to us,” she said. The fact that the GPO team made an effort to visit the Voluntary Welfare Organisation (VWO) homes under the AIC umbrella to understand their needs and make cost-cutting proposals was greatly appreciated. With GPO’s help, the VWOs focused on bulk buying for two key items, diapers and milk feeds. “The GPO office didn’t say to us—‘The acute sector uses this, why don’t you use this as well?’ There was a lot of willingness to listen and come up with solutions for our sector rather than impose their experience from the acute sector.”
7 Lynda Soong Chief, Community Care Development Division, Agency for Integrated Care
STREAMLINING TO BETTER CARE “GPO has streamlined the purchasing process and systematised it so all users can follow a protocol when they purchase any item. This shortens the total leadtime for purchases and ensures that the user receives the best-for-use, value-formoney item. This ultimately translates to better care for our patients.”
8 Alson Goh Chief Operating Officer, National Heart Centre Singapore
9 Dr Lai Fook Onn Senior Consultant, Department of Anaesthesiology, Singapore General Hospital
REFINING THE CHOICE “The way GPO functions, getting a group of experienced users together to select a product, is deﬁnitely beneﬁcial. The wide range of preferences can be educational, product selection is enhanced, and personal exchanges with individual vendors help us to decide in favour of one product over another.”
SINGHEALTH GPO CHIEF LOOKS TO THE
FUTURE NOW AND WANTS IT
SingHealth GPO’s 10th anniversary is rolling around but Group Chief Procurement Officer Tan Jack Thian isn’t just dwelling on past glories.
e is busy laying down the groundwork for the future to spend too much time reminiscing. In fact if Mr Tan, known to his colleagues as Jack, could wave his magic procurement wand, much of what lies in the future for GPO would be happening now. It would be instantly transformed into a one-stop, go-to supermarket for all of SingHealth’s needs. And with the click of a mouse or the swipe of a barcode, a nurse, doctor, or any healthcare professional could use its sophisticated state-of-the-art supply management information technology suite to link a drug or product to patient records, check the drawdown of supplies in central stores and instantly download information on the source of a product or drug and its country of origin. The GPO of the future would feature a network of warehouse and distribution centres, vendors would be whittled down to a responsive, reasonably priced, dependable core, and any trace of duplication, inefficiency and waste in the SingHealth system would be eliminated. It would be the poster boy for hospital procurement, spearheading supply chain management in the region, and extending its outreach beyond hospital circles. It’s an ambitious plan but the foundation stones for that future GPO are already being put in place in the group’s 10th anniversary year. The year 2011 has seen the milestone *Material Management Department purchases nonpharmaceutical products/devices for SingHealth's institutions 16 —
consolidation of the seven MMD* groups across the hospitals that GPO services—a complicated, multi-layered process involving payroll, procedure and staff benefit harmonisation— that will shape the way GPO moves forward in the years ahead. “We have gone full steam ahead to achieve the target of transition cutover,” Mr Tan said, adding that the benefits of the consolidation are multi-pronged. Consolidation eliminates what he calls possible “silo mentality” allowing staff to work together under the SingHealth GPO umbrella, sharing information across boundaries. Another advantage is the training and development of MMD staff. With staff grouped under the GPO umbrella, the group is well placed to chart a better career path for them. “Training is targeted and focused and there will be greater opportunity for career advancement,” Mr Tan said. And should there be a pandemic outbreak, staff will be able to step in to do each other’s jobs. More importantly, purchasing of most goods would come under GPO. There would be greater transparency for expanded consolidation of products under group procurement to achieve more savings. Vendors would deal only with one contact rather than disparate departments from each of the hospitals.
THE BIG CLICK THE TRANSFORMATION OF HEALTHCARE DELIVERY The “people cutover” is only the first phase of the GPO transformation.
A user should be able to go online, click on the medical product or drug they want, and the information would be sent down to the GPO and suppliers.
What is also in store is the massive overhaul of its IT infrastructure, a key pillar of GPO’s future. Mr Tan plans to link up the entire supply chain system from vendor to clinicians to warehousing, down to the ultimate user— the patient. “We have to think big. We need to transform the procurement function of the IT system to one that can take all patient safety aspects and user procurement efficiency into consideration.” He envisages that a user should be able to go online, click on the medical product they want, and the information would be sent down to GPO and suppliers. Suppliers would then deliver items directly to the ward and also use the IT system to monitor stock levels. The system would generate a bill to finance to make payment to suppliers, the wards update their stock levels and all of this would be linked to patient records so that in the event of a product recall, the patient would be notified more quickly. In reality, the whole picture will take a while to crystallise and will be implemented in phases, Mr Tan acknowledges, “but at least, we know at the end of the day, a few years down the road, the kind of system we want and will work towards.” Currently, hospitals under the SingHealth group are separately operating under the SAP system, “but once we are all linked up there are plenty of wonderful things we can do.” Other future initiatives include further exploring strategic procurement. “We are looking at how we can cut down
purchasing costs even more so we can pass the savings on to patients. It is something we need to study.” Mr Tan said with a robust IT system in place, GPO would also explore enhancing the ability to analyse buying patterns and streamlining processes to reap more cost benefits.
CONVERTING THE REGION GPO SUPPLY CHAIN SEMINARS Mr Tan’s crystal ball gazing also has SingHealth GPO positioned as a leading regional educator in the business of health care supply chain management—and again in this area, the foundation stones have already been laid. The GPO held a seminar for regional participants last year and will hold one annually to share best practices. “We found that, in this region, expertise is scarce. We have invited (overseas) experts and will also allow our staff to share the expertise that they have garnered,” he said. The plan is to keep attracting more regional participants and include visits to factories for suppliers with the hope of engaging them as well. Despite its ambitious plans for change, Team GPO will not lose sight of it’s key mandate, Mr Tan promised, which is to enhance patient care and create value. “Our mission is very clear, we are here to serve, to provide the best benefits in terms of returns, speedy delivery and dollar savings.” — 17
SO YOU THINK YOU CAN BE A BUYER? PURCHASING COMMON DRUGS, IMPLANTS AND DISPOSABLES POSE AN UNCOMMON CHALLENGE
MAJOR GENERAL HOSPITAL SEEKS BUYER Position suitable for individual who is passionate about getting the best for patients and doctors. Must have nerves of steel and emotional strength to deal with challenging situations. Must be a skilled negotiator, who can work with suppliers and sufficiently athletic to sprint short distances from stores (usually in basements) to hospital wards with medical products in hand, in cases of emergency. Ability to retain composure while occasionally being ignored by busy medical staff a distinct advantage.
lisee Koh, a senior executive with the Materials Management Department in KK Women’s and Children’s Hospital (KKH) has many stories to tell about life in a busy hospital as a medical buyer. She didn’t quite know what she had signed up for when she started her career more than six years ago, but now she is unlikely to change it for anything else as her job gives her a sense of purpose.
ROUTINE? WHAT ROUTINE? The way Elisee tells it, a day in the life of a hospital buyer starts and ends on a fairly routine note. The first half of the day is spent going through her stock list, replenishing or re-ordering according to stockpile levels. She also spends time following up with vendors on delivery shortages and takes any action if this is likely to happen. 20 —
“We can’t wait for the vendor to call us, we have to take the initiative.” Afternoons are typically spent checking existing contracts to see if any are expiring and following up with sourcing quotations, evaluations and purchasing orders. Time is also spent dealing with random operational issues. Such as product defect problems, or meeting with users to look at common items which have been contracted. It all sounds fairly mundane. That is, if you don’t include times like when she had to deal with a massive earthquake in Japan, a major supplying country. “The GPO had to establish whether the supply of products manufactured in Japan was disrupted by the 9.0 magnitude quake and subsequent tsunami that hit Japan in March 2011,” she said. The pandemic that struck fear in the hearts of Singaporeans also tested
her capability. “It happened on a Saturday night, and on Sunday I received an SMS from my boss requesting stock of critical supplies such as antiseptic wipes, which were not essential in such large quantities under normal circumstances,” she said, recounting what happened when the H1N1 virus hit Singapore in 2009. “By early Monday, we were going directly to vendors looking for stock. The situation required quick action from our end.” Hospital buyers all over Singapore scrambled desperately looking for these critical supplies. It was not easy, as every hospital was also sourcing for the same items. At times like these it was the good relations with vendors, carefully cultivated over the years that proved most helpful to GPO buyers. If they were good, buyers
…it was the good relations with vendors, carefully cultivated over the years that proved most helpful to GPO buyers. got the necessary helping hand. Elisee and other non-medical staff in hospitals had to take on the role as temporary staff stationed at the entry of the hospitals checking the temperatures of visitors while the H1N1 situation lasted. “We all took shifts over the weekends as well. We couldn’t really tax the nurses and doctors who were already working hard in the wards.”
DEALING WITH PRODUCT RECALL And then of course there are the inevitable product recalls. — 21
“Once there is a recall, we can be stuck if we have no product to use for a period of time,” a stressful situation for all concerned. She remembered a period last year when there was a product recall for a slow-moving stock item used in the operating theatre by the hospital. This happens when manufacturers discover product defects and initiate recalls voluntarily as spelt out in the terms and conditions. The situation left the buyers desperately seeking alternative brands as the vendor’s reserve stock was also affected by the recall. “For this case, it’s very challenging if
“I enjoy procurement at the group level. It allows me to interact with other institutional buyers and you gradually build a rapport with them.”
a vendor has 90 per cent of the market share and we have to source from the vendors who supply ten per cent to replace the stocks. “But we managed to work with the clinicians on product evaluation for alternative supplies and successfully sourced two alternative brands who were willing to reserve stocks for us.”
THE ART OF USERS ENGAGEMENT Even mundane day-to-day work at GPO demands the tactical skills of Sun Tzu and the patience of Job. “As a buyer we are sometimes sandwiched between the user and the vendor,” she said, recounting occasions when medical staff encounter problems with new products. That is when skilled relationship management with the medical staff steps in. Elisee, as with most buyers, is philosophical about the tension that may arise
in the relationship between buyers and medical staff and the need to keep them engaged in the whole process of drug and medical product purchasing.
VENDOR LINK And then there are the vendors. Vendors of pharmaceutical and medical products may quote different prices to different institutions, depending on the quantity ordered, in an attempt to get pricing to work in their favour. Buyers also have a role to keep a close watch when vendors cite currency fluctuations or price increases of raw materials. In response to this, buyers need to be aware of market trends, currency fluctuations and world crises. “If they increase and say it is a currency valuation, then we check against the currency fluctuation in currency tables.” Buyers also act as the link between vendors and clinicians, nurses and allied health professionals. Sometimes they have to take nursing staff to visit vendor sites to see how products are made. They also arrange for in-service training for staff to acquire new product knowledge and usage. On occasion, during evaluations, buyers may be asked to provide medical staff with more background about the efficacy of products. In these cases, they may request additional information from the vendors such as latest clinical studies related to the product.
…buyers need to be aware of market trends, currency ﬂuctuations and world crises. busy buying for one hospital and now I have added responsibilities for the other institutions under the GPO. But the GPO is looking at how some processes can be automated to free up our time.” “I enjoy procurement at the group level. It allows me to interact with other institutional buyers and you gradually build a rapport with them,” she said, adding this was invaluable when it came time to swap information with her buying colleagues on products or vendors. Also, as Elisee learnt, when it comes to one’s standing with buyers, size matters. “They respect you more, and will go out of their way to get things for you.”
GPO PLUS Elisee said despite the workload she has as a KKH buyer handling common stock, she welcomes the interaction with other buyers that comes with her added duties with the GPO. “On a personal level it’s already so — 23
Chan Wah Tiong (left) Chief Executive, All Saints Home Lok Mun Leng Assistant Director, Non-Pharmaceutical, GPO, SingHealth
GPO REACHES OUT A tale of milk feeds, diapers and the culture of learning
They had tried time and again to get a groupbuying project off the ground. The need for collective buying for the 30 nursing homes was clear to all concerned. But it was only in January 2009, after enlisting the help of GPO and the Agency for Integrated Care (AIC), that group buying was successfully launched for these homes. Six months into the two-year project, the homes run by Voluntary Welfare Organisations (VWO) had already chalked up savings of about ten per cent in their purchases of milk feed and diapers, a jump from the more conservative five
per cent they had initially projected. “The nursing homes worked as a team. I promised them that if they put their hearts and minds together and worked as one this would be the desired result,” said Mr Lok Mun Leng, Assistant Director, Non-Pharmaceutical, GPO, SingHealth. The pilot project by the nursing homes, the Agency for Integrated Care (AIC) and the GPO office is one of GPO’s corporate social responsibility initiatives, driven by its belief in service to the larger community beyond SingHealth. It has also launched yearly seminars — 25
on the business of health sector supply chain management and plans to advocate for greater professional recognition for hospital buyers. But first the nursing homes. Mr Chan Wah Tiong, Chief Executive of All Saints Home, recalls the days before group buying arrived at the homes, when purchasing was marked by duplication, waste and inefficiency. “Each nursing home did its purchasing separately. For example, All Saints Home had two different locations buying their own things. It sometimes depended on which supplier had approached the nurse manager.” Products selected were not always the best and were sometimes used improperly. He remembered how one VWO home used night diapers in the day for their patients to save costs. Working with the AIC, through a committee of colleagues drawn from the nursing homes and community hospitals, GPO evaluated the quality and cost of the products the homes bought as they moved to standardise and streamline their supplies, and bring a more structured approach to buy medical consumables, Mr Chan said. But it took commitment from the nursing homes and a willingness to change their past practices for the project to take off, adds Ms Lynda Soong, who heads the Community Care Development Division of the AIC.
own, showed their commitment to the project by foregoing these contracts because they saw a longterm benefit from the collaboration. Another benefit was that discussions about these products engaged the vendors as well and resulted in a two-way feedback process between the VWOs and the suppliers, sometimes leading to product improvements. “Previously if things didn’t work out, we would just switch brands,” Mr Chan said. Even after the project was launched, Ms Soong and Mr Chan recalled, there were some vendors who tried to separately “entice” the homes away from the bulk buying contracts negotiated by the group with special offers. “But the partners gathered and said, ‘See, I said no to them.’ I like to think we were all singing the same tune,” Ms Soong said. An additional bonus was that staff from the VWOs were able to tap a wider network of contacts as representatives from all the homes worked together on the pilot project. “We sometimes held meetings at their respective nursing homes and some of them went, ‘Oh I haven’t visited this home’, remarks which made me think that there are more potential benefits than just cost savings,” Ms Soong said. The same was true of their dealings with GPO, Mr Lok noted. “Initially, GPO staff would get cold responses when we contacted the nursing homes for information, as the nursing home staff were not familiar with the process. We had to gradually refine our approach by simplifying templates and gaining a better understanding of their operational constraints. Now when we do call, we get responses straightaway. We have become their friends.” The VWO pilot project and bulk-buying efforts
THE GREATER GOOD “We talked a lot about the greater good of the project,” she said, adding that sacrifices had to be made for example when homes, which had previously negotiated good deals for diapers and milk feeds on their 26 —
“The VWO pilot project and bulk-buying efforts were so successful for diapers and milk feeds, which make up the highest costs in terms of products for the nursing homes.”
The first regional seminar, with the theme Strategic Sourcing for Healthcare Providers was held on 10 May 2010 and drew participants from abroad. It helped GPO strengthen its ties with the University of Pittsburgh Medical Centre and the Bangkok Hospital Group. It will continue to hold one annually to share best practices. “There is very little professional education that targets health care. We see a lot of procurement conferences that target the general audience but not specifically for health care, so we want to pioneer this,” said Mr Lok. The group has also embarked on internal workshops for buyers and end-users in the SingHealth cluster focusing on issues such as procurement procedures and policies. While still in its early stages, another part of GPO’s education agenda is the setting up of professional certification for health industry buyers, Mr Lok said. He said GPO envisages developing a course of training for buyers for accreditation in tandem with local institutions. He said currently Singapore institutes do not have such focused training. “There is no healthcare specific procurement training. Presently it is just modules which are part of a course,” Mr Lok said, adding though that this was an idea that is still “in the works.” The procurement profession in the healthcare industry is a very established one in the United States, the United Kingdom and Australia. He said that GPO would like to see procurement staff in healthcare institutions locally given a higher profile. “We want our people to feel proud of their work so that they can one day recognise themselves as professionals.”
“…the keenness to share their expertise stems from the very strong learning culture in GPO.” were so successful for diapers and milk feeds, which make up the highest costs in terms of products for the nursing homes, that GPO may help the homes extend the list beyond medical supplies, Mr Lok said. He said in the future, GPO may consider expanding their scope of work with the VWOs by managing the entire end-to-end supply chain as the homes have difficulty hiring and retaining employees in this area.
SPREADING THE SUPPLY CHAIN MESSAGE The vision of building strong procurement teams and programmes beyond SingHealth’s doors is a key pillar of GPO’s corporate social responsibility focus. The group is keen to spread the supply chain message and share its experience, whether locally or in the region, hence the yearly seminars. Mr Lok said the keenness to share their expertise stems from the very strong learning culture in GPO. The group had started to document its new processes and techniques and what it was continually learning from overseas visits and visitors. “Each encounter had a very positive effect and the group evolved the idea that one day we would want to share our knowledge and experience with others. “We have had visitors from all over—New Zealand, the United Kingdom, Finland, Brunei, Thailand—when they come here we exchange information and benchmark our work with them. We also visit factory sites and procurement organisations with similar objectives. It’s constant learning.” In 2009, GPO started with a pilot run of an inhouse seminar on procurement issues which proved successful. It led to a larger scale regional seminar for local and external healthcare organisations.
WE’VE COME A LONG WAY, PARTNER
SingHealth vendors talk about forging strategic relationships with the GPO
Mr Loo Bee Keong will tell you that hospital or vendor relations are potential minefields that need careful navigation, recalling that exchanges with GPO staff in the department’s early days were sometimes fraught with frustration as he tussled with hospital staff enthused about getting discounts for as many products as possible. “A lot of the initial meetings we had with GPO were centered on pricing. ‘Can you reduce your
price by 15 or 20 per cent?’ for instance, for us that kind of price reduction was unrealistic,” recalled Mr Loo, Senior Manager, B.Braun Singapore Pte Ltd. “From the hospital buyers’ perspective, understandably, they had their KPIs (key performance indicators) to meet, but at some point the decision makers in their wisdom realised that pricing isn’t everything,” he said, adding that the GPO management’s early decision to focus instead on building strategic — 29
“…decision makers in their wisdom realised that pricing isn’t everything,”
long-term relations with vendors saved the day. Ten years on, GPO and its vendors have ironed out the initial knots sufficiently to call it a win-win situation for those involved and carved out valuable, working partnerships benefitting both sides. Apprehensions about the shape and form of GPO in the early days caused anxiety not just for Mr Loo but for many other vendors accustomed to years of dealing directly with individual hospitals and their staff. The concerns were that a central buying agency would be all about getting rock bottom prices for products, ignoring the goodwill built up over the years between the separate institutions and vendors. “When GPO announced that they were going into central procurement, there were fears about committees sitting in the procurement office,” said Ms Sally Ng, Senior Vice President, IDS Medical Systems, an Ai Li & Fung company. “If these committees were looking purely at the economics of decisions, we would have been worried because there would be a price war,” she said. GPO’s move to add clinicians and other hospital practitioners on its committees proved a far-sighted one and a boon to deepening the discussion when choosing a product beyond mere price considerations. Mr Loo and Ms Ng’s early anxieties captured the inherent tension between any health care vendor and a hospital, a relationship sometimes given to fractious negotiations, as both sides try to get the 30 —
best deal for their institutions. “But over the years it became obvious that as long as the company was aligned with the quality objectives of GPO then GPO was ready to deal with them and that was a good thing,” Ms Ng said. “As a company, we would win some and lose some but we believe that it is positive that GPO makes decisions based on these criteria.” For vendors as well as SingHealth institutions, the benefits of having a centralised procurement system are multi-fold, GPO vendors said. It allows them to plan better in terms of managing their supply chain, most importantly in the area of stock control. Familiarity with consumption patterns of the buyers allows vendors to reduce wastage, decide how much stock they should hold and conversely for GPO, gives them the buying power to have vendors carry extra stock should the need arise. Also, the consolidation of the supplies of all the institutions under the GPO umbrella meant that each institution could access a wider range of inventory compared to a single hospital, vendors said. The new tender system or the Request for Proposals (RFP) system, they said, also allowed for negotiation and dialogue between buyer and seller, unlike the previous close-ended tender system. In addition, vendors also deal with fewer parties for the sale of a larger number of big ticket hospital equipment items.
OPENING DOORS For B.Braun, being a GPO partner also meant they could get a foothold in medical product supply, which was previously closed to them. “There was one range of products—sutures— where we were latecomers in the market and were trying to get in the hospitals. At the same time, GPO was trying to groom market competitors and that presented an opportunity for us,” Mr Loo said. He said GPO essentially brought B.Braun together with some heads of departments, allowing their products to be evaluated. “They opened a door to the operating theatre, the rest was up to us to manage, to go in and convince them,” he said. For IDS Medical, which supplies medical consumables and general equipment to the group, the opportunity for dialogue was key. “Because there was a GPO, we could deal with a formal GPO team. And as the dialogue with the same team of committee members went on for a couple of years, it became apparent that they sought a partnership that aligned with what they wanted to achieve.” “I wouldn’t say there was no apprehension on our part but they knew we were ready to add value for everything we sell and we had people to make sure it was carried out,” Ms Ng said. She cited the SARS (Severe Acute Respiratory Syndrome) epidemic, which hit Singapore in 2003, as an example of when the company forged stronger ties with GPO. “That was when we became a very strong partner. GPO recognised that we were dependable enough. We didn’t need a contract to do things or move things faster. During that phase we were bringing in
goods without an order. With a partnership, it is a matter of ‘give and take’ and there is a lot of trust and respect for each other.”
STAKES ARE HIGHER Mr Tan Yew Seng, owner of Vision Stationery, which supplies stationery to the SingHealth group said where his group was concerned, the formation of a GPO raises the stakes significantly for all suppliers. “With consolidation, the stakes are raised in that either you are given the opportunity to serve all institutions under GPO, or the opportunity slips away.” Thankfully for Vision, the formation of a GPO meant that the stationery group benefitted from the GPO’s bulk purchasing and was able in turn to “amass a larger buying power, allowing us a stronger bargaining power with our suppliers.” That has helped the company cut its procurement costs, ultimately translating to greater savings for SingHealth. “So, I would say that with GPO, the inherent winwin situation worked out because we had access to increased sales through the consolidation; at the same time, GPO achieved its goal of reducing costs for its healthcare institutions.”
CHANGE IS INEVITABLE GPO vendors said that changes in the next ten years would be inevitable as the partnership with GPO evolves, such as when the SingHealth group overhauls its information technology system. “But I believe, through these changes, we will have stronger ties. We look forward to growing and nurturing this partnership with GPO in the years to come,” Mr Tan of Vision said.
“…with GPO, the inherent win-win situation worked out because we had access to increased sales through the consolidation; at the same time, GPO achieved its goal of reducing costs for its healthcare institutions.”
VETERANS LOOKING BACK
urong Health Services’ CEO Foo Hee Jug likes to joke that he was “tricked” into his previous job as SingHealth Group Chief Procurement Officer of GPO from 2003 to 2009 but turns serious, even passionate, when he talks about the Dream Team that had worked with him. “Despite the fact that I have moved 32 —
on, the team at GPO continues to be the Dream Team. They are passionate about what they do, they gel very well and they truly believe that the creation of GPO will bring about benefits to public welfare.” Mr Foo said GPO’s early beginnings were tough and the group was faced with an uphill task on many fronts, whether it was getting buy-in from clinicians to hospital administrators alike, or convincing them that a new staff reporting system put in place because of GPO would work. In the end, it was the results that the group delivered and the significant savings that were made that convinced the naysayers and won over the sceptics, he said. By Mr Foo’s account, the challenges that GPO faced in the earlier days were many. When it came to the streamlining of products used in hospitals for instance, whether it be stents or stationery, they faced resistance from many hospital staff. His team thought that streamlining the use of hospital stationery would be easy. They were mistaken. Confronted with a “mountain of pens like Pentel, Zebra, Kilometrico” when he asked staff from different health institutions to bring in the stationery they used, the team managed to trim the number of brands somewhat but decided they would pick their battles elsewhere. “End-users are very attached to what they use and it’s not just the doctors. It’s everybody else as well. When it comes to a need for change, everyone will have their preferences and it’s very hard. You have to have very concerted conversations.”
Mr Foo said despite the challenges, GPO has chalked up many milestones in its progress in the last ten years, including the formulation of a uniform procurement manual, a higher level of engagement with vendors and endusers, as well as raising the profile and professionalism of hospital buyers. GPO’s dealings with vendors became a beneficial relationship in more ways than one, Mr Foo said. He gave the example of a situation when the idea of putting surgical supplies together into one packet for ease of use by hospital staff was first mooted. “Vendors said this would lead to waste. ‘The staff will grab one packet, use one item, like gauze, and throw the rest away because that is all they need.’ This feedback helped us avoid potentially large losses.” GPO’s plan to raise the profile of hospital buyers was one which initially ruffled some feathers among those used to the more traditional buyer/ clinician relationship. “Traditionally procurement was back-office work. It was on the basis of medical staff issuing instructions like ‘Thou shalt buy this’, and then the buyer would proceed with the purchase. But the buyers at GPO and Materials Management Departments started asking users ‘why?’, to try and maximise savings.” Mr Foo said in sum, it was his work with the GPO team that was the most rewarding part of his experience. “They work overtime in overdrive for their respective institutions. To see this group of people working so hard despite people saying it was a virtually impossible task, was very gratifying.”
“When both the pharma and non-pharma teams were consolidated in 2003, we actively found ways to gel the staff together by sharing information, participating in joint projects and having informal gatherings. That helped to build a stronger and better-performing team.” “We have a very motivated team, with virtually no attrition in GPO (Pharma) since its inception ten years ago. This continuity and stability in staff is unusual and highly valued.” “Staff motivation and morale will be high when they feel that the work they do is meaningful and appreciated. Working in GPO, they can see that they are directly involved in achieving and tracking the cost savings of drugs over the years, and really contributing to making healthcare more affordable. Also in SingHealth, they get the endorsement that senior management ent is supportive and appreciative ciative of their contributions.” ons.”
Mrs Chan Ek Huar uar Director, Pharmaceutical, l, GPO
GPO Non-Pharmaceutical Formed
Prior to GPO formation in 2000, pharmaceutical purchases for the whole public sector including healthcare institutions and government bodies (such as Ministry of Defence and Singapore Civil Defence Force) were handled by National Pharmaceutical Administration (NPA) under the Ministry of Health. For medical and surgical supplies, bulk purchase was coordinated by Central Contracts Negotiating Office, an initiative led by the Singapore General Hospital.
GPO’s non-pharmaceutical arm is formed to consolidate non-pharmaceutical purchases for both clusters. SGH provides the resources to form the team.
2000 GPO Pharmaceutical Arm Formed Associate Professor Vivian Balakrishnan, Co-Chairman, Working Committee on Supply Chain Management (SingHealth and National Healthcare Group (NHG)), announces that SingHealth and NHG jointly establish the GPO on 1 October 2000. NPA’s Purchasing Unit is closed, and the pharmaceutical procurement function is transferred to GPO.
GPO achieves more than
$10 million savings in drug cost for SingHealth and other public healthcare institutions in its first year.
2002 GPO International Exchange Programme GPO regularly holds dialogue with international organisations tasked with the same objectives to share best practices and discuss strategies and future trends. First visit to Hospital Authority, Hong Kong takes place in 2002. Subsequent meetings with organisations in Australia, United Kingdom, Thailand, New Zealand, Denmark and Germany. SingHealth kicks off a Purchasing and Supply Chain Management (PSM) initiative. A sevenmonth project, it re-organises non-pharmaceutical staff to focus on SingHealth purchases through a deliberate strategic sourcing process. A total of 23 workstreams are started under the pilot scheme that helps save $10 million in non-pharmaceutical purchases in seven months.
2003 One GPO Both the pharmaceutical and non-pharmaceutical groups are aligned under a single department and renamed as Group Procurement Office.
2007 GPO begins an internship programme for students from Temasek Polytechnic and the National University of Singapore to educate in health care supply chain management.
GPO Drug Cataloguing System
GPO begins work on upgrading the coding system for pharmaceutical products that go live in 2004. The non-pharmaceutical arm also harmonises product codes for common stock items for adoption in the cluster SAP system. This eventually leads to easier data retrieval and analysis to reduce time for group procurement.
2009 Internal Seminar Launched GPO initiates a pilot seminar for in-house staff in September 2009 titled Savings Beyond Strategic Sourcing for staff to understand the group-buying concept.
2010 2005 Launch of the New Procurement Manual
Corporate Social Responsibility
GPO partners the Agency for Integrated Care (AIC) to launch the pilot project for shared procurement service for 30 nursing homes run by Voluntary Welfare Organisations.
GPO helps to harmonise the procurement policies across SingHealth institutions.
GPO achieved almost
$200 million in cumulative savings
GPO works with radiologists to consolidate the mass acquisition of medical equipment for the hospitals and specialty centres. The collective effort helps institutions to acquire 32 pieces of high-tech diagnostic equipment with savings of $10 million over two years. The deal also includes free training and established training sites for users.
within ten years of operation. External Seminars Started
GPO organises a regional seminar, with the theme Strategic Sourcing for Healthcare Providers on 10 May 2010. The aim is to raise the awareness of strategic sourcing among healthcare administrators in the ASEAN region. The seminar helps GPO strengthen ties with the University of Pittsburgh Medical Centre and the Bangkok Hospital Group.
SEEING THE LIGHT
A tale of ocular lens implants and vision for the GPO Dr Vivian Balakrishnan
When Dr Vivian Balakrishnan stepped up to head
SingHealth’s supply chain management committee in 2000, he was already a convert to the cause, having been convinced about the pivotal role centralised buying can play while running the Singapore National Eye Centre (SNEC). He recalled the not-too-distant days of the past when he and fellow eye surgeons were uninformed and mostly unconcerned with procurement issues such as economies of scale and value for money, as long as they got their hands on the medical products they needed. “We used to accept implants on consignment basis, which meant the different manufacturers would just leave sets of implants there and surgeons would pick whichever we were most familiar with and preferred for a variety of reasons. We didn’t know how much they cost and the patients were billed on a cost-plus basis.” Those were times when bulk buying was of concern only to hospital buyers and procurement wasn’t a topic of discussion on ward rounds. “I realised this was the situation in SNEC and I said, no, we should look for central purchasing wherever possible,” he said, adding that by then, he was already a strong believer in the importance of keeping clinicians informed about the cost of drugs and medical products and heightening their awareness of these issues so that they could be factored into clinical decisions. And as timing would have it, just when Dr Balakrishnan moved to take on the position of CEO of Singapore General Hospital in June 2000, SingHealth took on the entire central procurement team, when the ministry decided to shed its central purchasing role. With that he laid the first bricks in place for GPO of today and the rest, as they say, is history. “I thought it was a mistake to get rid of the central procurement function and my key priority was to keep the institutional memory and the people, particularly the team that had been doing
central procurement for such a long time,” Dr Balakrishnan said. He felt it necessary to step in and “pick up the slack” as he saw great value in the team’s industry knowledge, contacts and deep familiarity with their domain. The need for a central procurement office to play a strategic role in terms of obtaining value for money in the purchase of medical products through economies of scale, for information transfer and for GPO’s ability to procure supplies quickly through existing networks especially in crisis situations was already apparent to him. The early days for SingHealth’s GPO were challenging Dr Balakrishnan recalls, as the cluster sought to group its buying in order to reap the benefits of bulk purchasing and wield greater clout with vendors of pharmaceuticals and medical products. “The pharmaceutical industry is a business with profit objectives,” he said, adding that the industry used a standard business model it called “territorial pricing,” charging different territories, different prices on the basis of what the market could bear. “There is a built-in tension in the relationship (between GPO and vendors) which has to be managed,” he said. He added that this remained a challenge for GPO which he felt had to be single-minded in its pursuit of value for money. He added that another “ongoing challenge” for GPO was to continue to raise awareness among clinicians about the concept of value for money and encouraging this to be factored into clinical decisions. Ultimately though, Dr Balakrishnan said, the biggest contribution that GPO has made to Singapore’s health system is its impact on the prices patients pay for drugs. “That to me is key,” he said, adding that the potential for GPO to take its procurement strategies up another level is significant and that the team is well placed to do so.
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