Published on the 19/08/2010 | Written by

Ryall confirms board of Health Benefits Ltd as crown shared services organisation to explore opportunities…

The medical e-gateway, and related eProcurement and supply chain initiatives, promise savings between $21 and $51 million through immediately available efficiency improvements. This is part of $700 million in savings that health minister Tony Ryall’s shared services board estimates is possible over the longer term through national initiatives in health.

Highlighting the current inefficiencies was a finding from a recent healthcare providers’ study across hospitals that 100 orders can generate up to 167 invoices. The discrepancy provides an insight into the amount of rework going on in the health procurement process.

The finding adds grist to the mill of the Medical Technology Association of New Zealand’s call for more DHBs to use the e-trading gateway it has developed.

MTANZ president Rohan Williams, before departing the role recently, said the online gateway is not a marketplace but rather a mechanism to aid efficiency when it comes to buying by District Health Boards and hospitals.

It’s easy to generate multiple invoices for the same purchase, says Williams.

Double and triple handling is the root cause of the problem which the e-trading gateway aims to address. It won’t let an order progress to the next stage without a data match, he says. This does away with the problem of constant re-keying of order data.

“When there’s a mis-match, our customer service people follow up with a call to see what the problem is. This could be a wrong customer number or wrong unit of measure, or perhaps no stock,” says Williams.

With five DHBs and 22 non-pharmaceutical medical suppliers already on board, MTANZ, along with fellow e-gateway user healthAlliance, is now in the process of persuading the newly-formed Health Benefits Ltd of the wider cost-saving efficiencies possible through the e-trading gateway.

“As a national initiative, we estimate these eProcurement and related supply chain initiatives could deliver savings of between NZ$21 and $51 million, across 21 DHBs, in the first 18 months,” says Williams.

“As more hospitals join up, the choice of suppliers is expected to increase and the costs decrease even further.

The savings made can be re-directed to patient care.”

“There are more savings in supply-chain efficiencies than there are in just seeking lower prices,” he says.

“The aim is to have 90 percent of public hospitals on board by 2011.”

He says the example of the 167 invoices generated for 100 purchase orders is indicative of how healthcare providers have to struggle through a maze of suppliers to find the products they need, and that they need to streamline their supply chain.

MTANZ assessed a number of software solutions that could help, eventually settling on Australian company Pacific Commerce’s Pacific Health Exchange network. This is already used in the Australian health sector. Support in New Zealand is provided through Pacific Commerce partner Tranzsoft, a B2B messaging hub which already had e-business connections with Auckland DHB.

The e-trading gateway allows hospitals and suppliers to interact online without the need to develop individual interfaces. This means hospitals can order from different suppliers through one portal and makes for efficiencies at both ends of the supply chain.

MTANZ represents the medical technology industry, and is composed of manufacturers, importers and distributors of medical devices in New Zealand. MTANZ members supply 95 percent of such products to both the public and private health sectors.

Meanwhile, Tony Ryall’s office has confirmed the board of Health Benefits Ltd will be chaired by former managing director of Progressive Enterprises, Ted van Arkel.
The other newly appointed directors are:

• Dr Lester Levy (Deputy Chair) – Chair of Waitemata DHB.
• Ms Paula Rebstock, Deputy Chair of NZ Railways Corporation, former Chair of the Commerce Commission
• Mr Brent Esler, Chief Executive of Combined Rural Traders Society Christchurch
• Mr Paul Harper, Professional director and partner in Lodestar Business Consulting, former General Manager of Procurement and Distribution at Carter Holt Harvey
• Mrs Edie Moke, Professional director and accountant, former board member on the Crown Health Financing Agency
• Mr Chris Fleming, Chief Executive of South Canterbury DHB
• Ms Tracey Adams, Chief Executive of Wairarapa DHB

“I’m confident that this group brings a high level of commercial expertise to the board. Collectively, they provide an excellent balance of health sector, shared services, procurement and contracting experience.

“The organisation will play a critical role in working with DHBs to ensure that savings are returned to frontline health services,” Mr Ryall added.