PEER recommends changes to UMMC purchasing policies

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Published: September 2,2011

Tags: healthcare, hospitals, medicine, state government

JACKSON — The Peer Committee has released a Report 552, “An Analysis of Selected Procurement Decisions of the University of Mississippi Medical Center.”

According to PEER, in 2009 and 2010 complaints arose about UMMC’s procurement of building automatic controls systems. The complainants believed that because the medical center was a member of the University HealthSystem Consortium (UHC)/Novation2 group purchasing organization (GPO), some bidders were unfairly excluded from competing for the medical center’s building automatic controls systems equipment and installation services.

Also, the complainants were concerned that items that UMMC purchased through the UHC GPO were more expensive than they would have been if not purchased through a GPO.

To address the complaints, PEER commenced a review of UMMC’s procurement of building automatic controls systems through the UHC GPO. However, PEER said it subsequently determined that UMMC’s use of the GPO agreement was not a significant factor in its building automatic controls purchase decision.

Therefore, PEER addressed the larger issue of whether UMMC’s participation in the UHC GPO has enabled it to procure quality products at a lower price in an efficient manner. PEER also sought to determine whether UMMC complied with legal or regulatory requirements and best practices for its procurement of building automatic controls systems.

PEER made numerous recommendations. These include, but are not limited to:

• UMMC should identify and consider all reasonable alternatives in procuring products and managing its supply chain. UMMC’s decision to move forward should be based on a cost-benefit analysis that fully assesses and documents UMMC’s supply chain needs and the costs and benefits of each proposed supply chain solution.

• UMMC should amend its group purchasing agreement with UHC to include a net costs measurement figure (potentially subject to inflation) for all products purchased under the GPO as opposed to, or in addition to, the cost savings figure that UMMC currently uses to track product savings for products in which savings occur.

• UMMC should review the prices of products purchased under the GPO to assess where GPO prices were held steady year-over-year, where product prices increased at the rate of inflation, and where product prices increased at a rate above the rate of inflation.

• UMMC should establish a system to ensure that its group purchasing agreement is successful in delivering lower prices than the market in which UMMC would compete.

• UMMC should consider increased opportunities to purchase outside the GPO when financially beneficial.

• UMMC should consider all reasonable alternatives in procuring, operating, and overseeing its building automatic controls system environment for its medical and research facilities.

While UMMC may only be required to solicit proposals from no less than two contractors for its non-medical and non-research facilities, PEER said UMMC should attempt to obtain building automatic controls systems for the best value, including making an effort to seek proposals from all bidders that meet documented, justified bidding qualifications and which have sought an opportunity to compete to provide UMMC with products or services.

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