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How about an Amazon-like procurement model for Canadian hospitals?



- By Tim Wilson -

Healthcare’s spending crisis has been a prominent news issue in 2017. In Ontario, we heard from the financial accountability office that the province must remove $2.8 billion from health spending by 2019. Then the Ontario Chamber of Commerce published a report arguing for more efficient procurement and supply chain processes. And now, the Institute of Fiscal Studies and Democracy says the federal government has to come up with more cash.

Amidst this handwringing, there have been few specifics on how the system can save money. But one Canadian technology company, ThoughtSpeed eCommerce Ltd., has evolved its cloud-based offering to position it as a major player, driving advanced capabilities from its experience providing a SaaS-based order management system for the Canadian Pharmaceutical Distribution Network (CPDN).

CPDN is a group of 25 plus pharmaceutical companies that supply their products to over 800 hospitals in Canada.

using integrated technology and distribution services to lower drug costs.

“The innovation and efficiencies are realized through our software’s ability to consolidate orders with multiple suppliers and warehouses,” says Ken Will, ThoughtSpeed’s CEO.

“This creates significant cost savings and moves beyond pharma and into medical-surgical devices and consumables.”

The ThoughtSpeed technology could take the Canadian healthcare supply chain toward an Amazon-like model. However, despite the company’s ability to ensure custom pricing in a multi-channel, multi-supplier environment, the healthcare sector has been slow to respond, with the mainstream news focusing on the problem and not the solution.

The report from the Ontario Chamber of Commerce, for example, devotes considerable space arguing for a framework for modern supply chain practices – but with few specifics on the technologies that will drive this change.

“Right now, wholesale ordering in healthcare is a black hole,” says Mike Neary, ThoughtSpeed’s VP Business De-

velopment. “But we’ve developed a system that supports one-stop shopping, with full inventory, contract and pricing visibility, which drives operational efficiencies and reduces overall costs.

It’s the Amazon model for Canadian healthcare, which allows any supplier to ship directly.”

This shift toward a consolidated, nimble, and more consumer-oriented ap-

It’s possible to move toward an Amazon-like ordering and delivery system for medications in Canada.

proach has been in the air for years, but there has been little news of a technological solution because it was assumed that Canada’s single-payer system, and its centralized funding models, tended to support traditional B2B technologies. This is certainly true of Ontario’s Shared Services organizations (SSOs).

“We bought SAP, and we coordinate Ariba for contract management,” says David E. Yundt of Plexxus, an SSO that

represents 10 hospitals in Ontario. “SAP is used for supply chain and finance, and Ariba is primarily run for contract management.

“These are complex projects – there was no way any of the hospitals could have hoped to have implemented that solution on their own,” notes Yundt. “It took us 3.5 years to get SAP running, and another year to get the data cleaned up. Only then can we leverage the advantages.”

To date, Yundt says that Plexxus’s common information technology platform, which the hospitals share for the supply chain finance function, has saved them upwards of $100 million.

That’s significant, and speaks to the advantages of having shared services organization manage a common IT system on behalf of a group of hospitals. But it remains the tip of the iceberg in terms of potential savings.

“Our experience with CPDN is a good indication of where future savings can be found,” says Will. “ThoughtSpeed can handle a range of different products, from multiple manufacturers and third party warehouses.”


This article first appeared in Canadian Healthcare Manager on Canhealth.ca, and is reprinted with permission. Read the Full Issue