Health Resource Services – with Burkhart Dental – tackles the dental market
Hospitals have used it for decades. Doctors are starting to catch on. And med/surg device and supply manufacturers consider it part of the landscape. It’s group purchasing, and, after some false starts, it may be set to make an impact on dentistry.
Seattle, Wash.-based Health Resource Services, an affiliate of the national group purchasing organization (GPO) Amerinet, is among those hoping that’s the case.
“We recognized insurance companies are starting to cut back on reimbursement to dentists,” says Tammara Gibbons, vice president of operations. “So dentists are looking to save money wherever they can. We have contracts in place that dentists can use and save money with. That’s the opportunity.
“We’ve been received very well [by dentists], as soon as they understand what it is we do,” she adds.
What Health Resource Services does – like all GPOs – is aggregate potential purchasing volume, and then pursue favorable agreements with vendors. Membership in HRS’s dental program is free to dental practices, just as group purchasing is free to most hospitals and medical practices. The organization is funded by administrative fees, that is, fees paid to the GPO by contract vendors – manufacturers and distributors – based on sales.
Significant opportunity
“Several GPOs are using their affiliate or sponsor partners to implement marketing strategies for the non-medical/surgical markets, such as research, veterinary and dental,” says David Rose, vice president, business development and corporate programs, National Distribution & Contracting Inc., Nashville, Tenn. “It’s a strong enough growth initiative, but they’re flying low on the radar, building their case.
Success in the dental market has been limited to this point, he continues. “That said, the dental market is a significant opportunity for the GPO that figures out a strategy. It has to be [a combination of] the right manufacturer contracts and attractive programs, and it has to have a win/win administrative fee structure, which doesn’t tax distribution without any benefit.”
“GPOs look at the dental market as an opportunity,” adds Lori Paulson, NDC vice president, dental and specialty markets. “It’s an untapped market. They’re developing their strategy.”
Provider-owned
Health Resource Services is owned by Virginia Mason Medical Center in Seattle, a fact that may explain its willingness to expand the reach of group purchasing, says Gibbons.
“We’re owned by healthcare providers; so we understand providers’ preferences and needs,” she says. Virginia Mason owns a network of clinics. “So we thought, ‘Why not take group purchasing to the clinics?’” Roughly two years ago, she and others at HRS made the decision to explore the dental market.
Being an affiliate of Amerinet, with a network of national contracts, HRS had a good head start. Amerinet has contracts that can roll over to the dental market, including agreements for sterilization equipment and supplies, needles and syringes, personal protection apparel and devices, paper goods, pharmaceuticals and more, says Gibbons.
HRS is also pursuing dental-specific contracts, such as contracts for instrumentation, implants and dental lab services. The organization has also aggressively pursued contracts with service providers, such as Verizon (wireless services and accessories), Airgas (non-mixed gases and safety supplies and equipment), SHI (computer hardware and software), Office Depot and OfficeMax (office supplies and services), CuraScriptSD (pharmaceuticals), UPS (shipping), The Home Depot and Energizer.
Distribution – an integral part
HRS is marketing its program through partnerships with state and national dental associations, and by exhibiting at various shows, including the California Dental Association, the Hinman, and the Midwinter Meeting of the Chicago Dental Society.
But an integral part of any group purchasing program is distribution. “[GPOs] know they cannot be successful without the cooperation and support of distributors and manufacturers,” says Rose. Manufacturers have to offer competitive pricing on their products and services, and distributors must be in practitioners’ offices selling the program.
HRS members can access manufacturers through Burkhart Dental, with whom it negotiated a distribution contract in September 2012.
The HRS program offers dental practices more than just special deals on dental products, says Jeff Reece, vice president of sales. In fact, the supplies are just one of the many areas that bring savings into a partnership with Burkhart, he says. “We felt by complementing our offering with the HRS portfolio of benefits, it would bring important value to our clients.”
It takes some time for dentists to grasp the program, says Reece. “We explain that we have a cell phone program that will save your associates money, and they do a double take.” The Burkhart rep through HRS has the opportunity to demonstrate that by offering favorable rates on cell phone services to staffers. In turn, the practice owner can distinguish his or her practice from others, a fact that might help with associate retention, he adds.
Meanwhile, discounts for shipping services, medical gases and office supplies help the practice reduce overhead and increase office efficiency, he continues. “If we are able to present HRS partnered services that save the practice valuable overhead dollars, it sends a clear message that we care about their business.”
Distributor reps play an important role in the success of the program. “It goes back to understanding the big picture,” says Reece. “Do you want to be first, or do you want to be on the outside looking in? Ultimately, group purchasing is making its way into dentistry. It may not touch everyone. But someone will walk through the door and present an offering. I want to make sure they think of Burkhart/HRS first.”
Even so, getting busy sales reps onboard takes some doing. “It’s been an education for our account managers and our clients, to understand how programs like HRS can complement a traditional supply dealer relationship,” says Reece.
“We’re starting to get traction,” with help from Gibbons and HRS Business Development Manager Laura Long, who work with reps at sales meetings.
Independent distributors do face some administrative challenges associated with offering a GPO portfolio, including filing for rebates from contract vendors, points out Rose.
“But NDC is able to assist our distributors with that processing,” says Paulson. “We help out significantly, to make it as seamless as possible and to minimize the cost.”
