The hospital as business. How saving money can help save lives

As hospitals and clinics merge into integrated delivery networks dependent for patients on health maintenance organizations, it is sometimes hard to remember who's on first. Instead of doctors, nurses, patients and hospitals, the world of health care now contains an alphabet soup of IDNs, HMOs, providers, consumers and payers. The changes extend deeply into the materials management department, where simply bargaining for the best price has been complicated by standardization, capitation, and a host of expense management strategies. Perhaps as a result of this ever-changing identity, most hospitals have yet to fully adopt the style and culture of the businesses they really are. Even purchasing managers, who are closer to the business end of the operation, are caught up in the traditional image. In the following comments, two experts in materials management explore the impact that this ambivalence has on a hospital's relationship with the outside world--including suppliers. Joseph Colonna is corporate vice president of the purchasing program at Shared Services Healthcare, Atlanta. Michael Garvin is an adjunct professor at the University of Iowa, and a researcher in medical supply purchasing practices.