Skip to main content
SpringerLink
Log in

A hybrid approach for integrated healthcare cooperative purchasing and supply chain configuration

  • Published:
Health Care Management Science Aims and scope Submit manuscript

Abstract

This paper presents an innovative and flexible approach for recommending the number, size and composition of purchasing groups, for a set of hospitals willing to cooperate, while minimising their shared supply chain costs. This approach makes the financial impact of the various cooperation alternatives transparent to the group and the individual participants, opening way to a negotiation process concerning the allocation of the cooperation costs and gains. The approach was developed around a hybrid Variable Neighbourhood Search (VNS)/Tabu Search metaheuristic, resulting in a flexible tool that can be applied to purchasing groups with different characteristics, namely different operative and market circumstances, and to supply chains with different topologies and atypical cost characteristics. Preliminary computational results show the potential of the approach in solving a broad range of problems.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3
Fig. 4
Fig. 5
Fig. 6
Fig. 7
Fig. 8
Fig. 9
Fig. 10

Similar content being viewed by others

Notes

  1. Source: Hospital Systems Profit and Loss Accounts

  2. A network with 2 suppliers, 1 GPO, 5 hospitals and 5 point of care units per hospital, and a planning horizon of 5 purchasing periods has 165 nodes.

References

  1. INE (2010) Conta Satélite da Saúde 2000–2008. INE (Instituto Nacional de Estatística/Statistics Portugal), Lisboa

    Google Scholar 

  2. OECD (2013) OECD Health Data 2013. OECD, Paris

    Book  Google Scholar 

  3. INFARMED (2012) Análise do Mercado de Medicamentos no âmbito do Serviço Nacional de Saúde, em Meio Hospitalar (CHNM) - Novembro. Observatório do Medicamento e Produtos de Saúde, Direcção de Economia do Medicamento e Produtos de Saúde, INFARMED - Autoridade Nacional do Medicamento e Produtos de Saúde, I.P, Lisboa

    Google Scholar 

  4. Burns LR, Lee JA (2008) Hospital purchasing alliances: utilization, services, and performance. Health Care Manag Rev 33(3):203–215. doi:10.1097/01.HMR.0000324906.04025.33

    Article  Google Scholar 

  5. Monczka RM, Handfield RB, Giunipero LC, Patterson JL, Waters D (2010) Purchasing & supply chain management. Cengage Learning EMEA, Hampshire

    Google Scholar 

  6. Schotanus F, Telgen J, Ld B (2010) Critical success factors for managing purchasing groups. J Purch Supply Manag 16(1):51–60. doi:10.1016/j.pursup.2009.10.002

    Article  Google Scholar 

  7. Schotanus F (2007) Horizontal cooperative purchasing. University of Twente, Enschede

    Google Scholar 

  8. Schoenherr T, Modi SB, Benton WC, Carter CR, Choi TY, Larson PD, Leenders MR, Mabert VA, Narasimhan R, Wagner SM (2012) Research opportunities in purchasing and supply management. Int J Prod Res 50(16):4556–4579. doi:10.1080/00207543.2011.613870

    Article  Google Scholar 

  9. Walker H, Schotanus F, Bakker E, Harland C (2013) Collaborative procurement: a relational view of buyer–buyer relationships. Publ Admin Rev 73(4):588–598. doi:10.1111/puar.12048

    Article  Google Scholar 

  10. Schotanus F, Telgen J (2007) Developing a typology of organisational forms of cooperative purchasing. J Purch Supply Manag 13(1):53–68. doi:10.1016/j.pursup.2007.03.002

    Article  Google Scholar 

  11. Bakker E, Walker H, Schotanus F, Harland C (2008) Choosing an organisational form: the case of collaborative procurement initiatives. Int J Procure Manag 1(3):297–317. doi:10.1504/IJPM.2008.017527

    Article  Google Scholar 

  12. Essig M (2000) Purchasing consortia as symbiotic relationships: developing the concept of “consortium sourcing”. Eur J Purch Supply Manag 6(1):13–22. doi:10.1016/S0969-7012(99)00031-3

    Article  Google Scholar 

  13. Ellison SF, Snyder CM (2011) Countervailing power in wholesale pharmaceuticals. J Ind Econ 58(1):32–53. doi:10.1111/j.1467-6451.2010.00408.x

    Article  Google Scholar 

  14. Scanlon WJ (2002) Group purchasing organizations: pilot study suggests large buying groups do not always offer hospitals lower prices. GAO - United States General Accounting Office:Testimony Before the Subcommittee on Antitrust, Competition, and Business and Consumer Rights, Committee on the Judiciary, U.S. Senate, Whashington DC

    Google Scholar 

  15. Bahinipati BK, Kanda A, Deshmukh SG (2009) Coordinated supply management: review, insights, and limitations. Int J Logist Res Appl 12(6):407–422. doi:10.1080/13675560802476382

    Article  Google Scholar 

  16. Arshinder, Kanda A, Deshmukh SG (2008) Supply chain coordination: perspectives, empirical studies and research directions. Int J Prod Econ 115(2):316–335. doi:10.1016/j.ijpe.2008.05.011

    Article  Google Scholar 

  17. Meca A, Timmer J (2008) Supply chain collaboration. In: Kordic V (ed) Supply chain, theory and applications. I-Tech Education and Publishing, Vienna, pp 1–18

    Google Scholar 

  18. Drechsel J (2010) Cooperation in supply chains. In: Cooperative lot sizing games in supply chains, vol 644. Lecture Notes in Economics and Mathematical Systems. Springer, Berlin, Heidelberg, pp 55–61. doi:10.1007/978-3-642-13725-9_4

  19. DeScioli DT (2005) Differentiating the hospital supply chain for enhanced performance. Massachusetts Institute of Technology, Boston

    Google Scholar 

  20. Bhakoo V, Singh P, Sohal A (2012) Collaborative management of inventory in Australian hospital supply chains: practices and issues. Supply Chain Manag Int J 17(2):217–230. doi:10.1108/13598541211212933

    Article  Google Scholar 

  21. Pasin F, Jobim M, Cordeau J (2002) An application of simulation to analyse resource sharing among health-care organisations. Int J Oper Prod Res 22(4):381–393. doi:10.1108/01443570210420395

    Article  Google Scholar 

  22. Beaulieu M, Patenaude G (2004) La gestion des approvisionnements en réseau: le cas du Centre hospitalier Notre-Dame de la Merci. Logistique & Management Numéro spécial (Logistique Hospitalière):59–64

  23. Bhakoo V, Chan C (2011) Collaborative implementation of e-business processes within the health-care supply chain: the Monash Pharmacy Project. Supply Chain Manag Int J 16(3):184–193. doi:10.1108/13598541111127173

    Article  Google Scholar 

  24. Wang Y, Lai F, Vespa P (2010) Enabling technologies facilitate new healthcare delivery models for acute stroke. Stroke 41(6):1076–1078. doi:10.1161/STROKEAHA.110.587261

    Article  Google Scholar 

  25. Kodner DL, Spreeuwenberg C (2002) Integrated care: meaning, logic, applications, and implications - a discussion paper. Int J Integr Care 2(1):1–6

    Google Scholar 

  26. Bazzoli GJ, Dynan L, Burns LR, Yap C (2004) Two decades of organizational change in health care: what have we learned? Med Care Res Rev 61(3):247. doi:10.1177/1077558704266818

    Article  Google Scholar 

  27. Burns LR, Pauly MV (2002) Integrated delivery networks: a detour on the road to integrated health care? Health Aff 21(4):128–143. doi:10.1377/hlthaff.21.4.128

    Article  Google Scholar 

  28. Boonstra A, Govers MJG (2009) Understanding ERP system implementation in a hospital by analysing stakeholders. New Tech Work Employ 24(2):177–193. doi:10.1111/j.1468-005X.2009.00227.x

    Article  Google Scholar 

  29. Ford EW, Wells R, Bailey B (2004) Sustainable network advantages: a game theoretic approach to community-based health care coalitions. Health Care Manag Rev 29(2):159–169. doi:10.1097/00004010-200404000-00009

    Article  Google Scholar 

  30. More E, McGrath M (2002) An Australian case in e-health communication and change. J Manag Dev 21(8):621–632. doi:10.1108/02621710210437590

    Article  Google Scholar 

  31. Laing A, Cotton S (1997) Patterns of inter-organizational purchasing: Evolution of consortia-based purchasing amongst GP fundholders. Eur J Purch Supply Manag 3(2):83–91. doi:10.1016/S0969-7012(96)00020-2

    Article  Google Scholar 

  32. De Vries G, Bertrand JWM, Vissers JMH (1999) Design requirements for health care production control systems. Prod Plann Contr 10(6):559–569. doi:10.1080/095372899232858

    Article  Google Scholar 

  33. Schneller ES, Smeltzer LR (2006) Strategic management of the health care supply chain. Jossey-Bass, San Francisco

    Google Scholar 

  34. van Donk DP (2003) Redesigning the supply of gasses in a hospital. J Purch Supply Manag 9(5–6):225–233. doi:10.1016/j.pursup.2003.09.008

    Article  Google Scholar 

  35. Schneller ES (2000) The value of group purchasing in the health care supply chain. School of Health Administration and Policy, Arizona State University College of Business, Tempe

    Google Scholar 

  36. D’Aunno T, Zuckerman H (1987) The emergence of hospital federations: an integration of perspectives from organizational theory. Med Care Res Rev 2(44):323–343. doi:10.1177/107755878704400206

    Article  Google Scholar 

  37. Johnson PF (1999) The pattern of evolution in public sector purchasing consortia. Int J Logist Res Appl 2(1):57–73. doi:10.1080/13675569908901572

    Article  Google Scholar 

  38. Nollet J, Beaulieu M (2003) The development of group purchasing: an empirical study in the healthcare sector. J Purch Supply Manag 9(1):3–10. doi:10.1016/S0969-7012(02)00034-5

    Article  Google Scholar 

  39. van Weele AJ (2009) Purchasing and supply chain management: analysis, strategy, planning and practice, 5th edn. Cengage Learning EMEA, Hampshire

    Google Scholar 

  40. Myerson RB (2004) Game theory - analysis of conflict. Harvard University Press, Cambridge

    Google Scholar 

  41. Nash JF (1953) Two-person cooperative games. Econometrica 21(1):128–140. doi:10.2307/1906951

    Article  Google Scholar 

  42. Sandholm T, Larson K, Andersson M, Shehory O, Tohmé F (1999) Coalition structure generation with worst case guarantees. Artif Intell 111(1–2):209–238. doi:10.1016/S0004-3702(99)00036-3

    Article  Google Scholar 

  43. Rego N, Pinho de Sousa J (2009) Supporting the definition of strategies for the configuration of health care supply chains. In: Voss S, Pahl J, Schwarze S (eds) Logistik management - systeme, methoden, integration, Proceedings of LM’09, Hamburg, 2nd-4th September. Physica-Verlag, Berlin, pp 435–456. doi:10.1007/978-3-7908-2362-2_22

    Google Scholar 

  44. Ahuja RK, Magnanti TL, Orlin JB (1993) Network flows - theory, algorithms and applications. Prentice Hall, New Jersey

    Google Scholar 

  45. Muriel A, Simchi-Levi D (2003) Supply chain design and planning – applications of optimization techniques for strategic and tactical models. In: Kok AG, Graves SC (eds) Supply chain management: design, coordination and operation, vol 11. Elsevier, Amsterdam, pp 17–94. doi:10.1016/S0927-0507(03)11002-X

    Google Scholar 

  46. Voice T, Polukarov M, Jennings NR (2012) Coalition structure generation over graphs. J Artif Intell Res 45(1):165–196. doi:10.1613/jair.3715

    Google Scholar 

  47. Glover F (1989) Tabu search - part I. ORSA J Comput 1(3):190–206. doi:10.1287/ijoc.1.3.190

    Article  Google Scholar 

  48. Glover F (1990) Tabu search - part II. ORSA J Comput 2(1):4–32. doi:10.1287/ijoc.2.1.4

    Article  Google Scholar 

  49. Mladenovic N, Hansen P (1997) Variable neighborhood search. Comput Oper Res 24(11):1097–1100. doi:10.1016/S0305-0548(97)00031-2

    Article  Google Scholar 

  50. Griffis SE, Bell JE, Closs DJ (2012) Metaheuristics in logistics and supply chain management. J Bus Log 33(2):90–106. doi:10.1111/j.0000-0000.2012.01042.x

    Article  Google Scholar 

  51. Stadtler H (2009) A framework for collaborative planning and state-of-the-art. OR Spectr 31(1):5–30. doi:10.1007/s00291-007-0104-5

    Article  Google Scholar 

  52. Hu Q, Schwarz LB (2011) Controversial role of GPOs in healthcare-product supply chains. Prod Oper Manag 20(1):1–15. doi:10.1111/j.1937-5956.2010.01121.x

    Article  Google Scholar 

  53. Schneller ES (2009) The value of group purchasing-2009: meeting the needs for strategic savings. Health Care Sector Advances, Inc., Arizona

    Google Scholar 

  54. Tella E, Virolainen V-M (2005) Motives behind purchasing consortia. Int J Prod Econ 93–94:161–168. doi:10.1016/j.ijpe.2004.06.014

    Article  Google Scholar 

  55. Huff-Rousselle M (2012) The logical underpinnings and benefits of pooled pharmaceutical procurement: a pragmatic role for our public institutions? Soc Sci Med 75(9):1572–1580. doi:10.1016/j.socscimed.2012.05.044

    Article  Google Scholar 

  56. Nollet J, Beaulieu M (2005) Should an organisation join a purchasing group? Supply Chain Manag Int J 10(1):11–17. doi:10.1108/13598540510578333

    Article  Google Scholar 

  57. Dimitri N, Dini F, Piga G (2006) When should procurement be centralized? In: Dimitri N, Piga G, Spagnolo G (eds) Handbook of procurement. Cambridge University Press, Cambridge, pp 47–81. doi:10.1017/CBO9780511492556.004

    Chapter  Google Scholar 

  58. Herzlinger RE (2006) Why innovation in health care is so hard. Harv Bus Rev 84(5):58

    Google Scholar 

  59. Blair RD, Durrance CP (2013) Group purchasing organizations, monopsony, and antitrust policy in print. Manag Decis Econ. doi:10.1002/mde.2633

    Google Scholar 

  60. Sethi SP (2006) Group purchasing organizations: an evaluation of their effectiveness in providing services to hospitals and their patients. International Center for Corporate Accountability (ICCA), New York

    Google Scholar 

Download references

Acknowledgments

This work is partially financed by the ERDF—European Regional Development Fund, through the COMPETE Programme (operational programme for competitiveness) and by National Funds through FCT—Fundação para a Ciência e a Tecnologia (Portuguese Foundation for Science and Technology) within the project Flexible Design of Networked Engineering Systems (PTDC/SEN-ENR/101802/2008).

Author information

Authors and Affiliations

  1. INESC TEC (formerly INESC Porto)/Escola de Economia e Gestão, Universidade do Minho, Campus de Gualtar, 4710-057, Braga, Portugal

    Nazaré Rego

  2. INESC TEC (formerly INESC Porto) and Faculdade de Engenharia, Universidade do Porto, Rua Dr. Roberto Frias, 378, 4200-465, Porto, Portugal

    João Claro & Jorge Pinho de Sousa

Authors
  1. Nazaré Rego
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. João Claro
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Jorge Pinho de Sousa
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Nazaré Rego.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Rego, N., Claro, J. & Pinho de Sousa, J. A hybrid approach for integrated healthcare cooperative purchasing and supply chain configuration. Health Care Manag Sci 17, 303–320 (2014). https://doi.org/10.1007/s10729-013-9262-y

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10729-013-9262-y

Keywords

Search

Navigation