When organizations seek to drive efficiency and savings through the implementation of an automated procurement system, the impact can often be lost in terms of calculated returns and measurable process improvements. This of course is reflected in the consistently high rate of initiative failures to achieve the expected results in both the private and public sectors.
While less than stellar results are a problem for any business, in no other sector are the ramifications of inefficient procurement practices more detrimental than within the health care industry.
Veterans Health Administration procurement initiatives (which included both a JD Edwards and Oracle implementation) spanning a period of seven years, and costing taxpayers $650 million dollars before being scrapped, provides an example of the negative financial impact of a failed program. However, it was the ramifications on patient care that was most alarming, and ultimately led to a series of hearings. During one such hearing on March 22nd, 2004, then Secretary for Management William H. Campbell acknowledged that he “recognized that there are considerable concerns over the implementation of an automated system and its potential effects on medical care at one of the VHA’S largest facilities, Bay Pines Medical Center in Florida.”
Problems according to an Office of Inspector Generals (OIG) report included “the failed conversion of inventory data,” to the system resulting in the need to cancel procedures (re surgeries) due to a lack of critical medical supplies. While it may be inconvenient to run short of an office supply, it is an entirely different matter when said shortages result in the cancellation of life-saving surgery.
And it is within this context that the approach to automation of the health care industry’s and in particular the VA’s procurement practices must be viewed. This includes making decisions that are based on a combination of engaging vendor’s whose expertise and ability to deliver a viable solution have been clearly demonstrated, the effectiveness of the health care facility’s communication and collaboration mechanisms to ensure maximum levels of compliance, and finally a clearly defined and well established performance response mechanism to ensure that any problems are quickly and effectively addressed before there is a negative impact on the quality of patient care.
Of course, and as alluded to in the previous post, a great deal beyond what I have written above has been documented in a paper that delved into the VA’s challenges with “questionable” decision-making in the past including the strategy to close the central warehousing facilities and establish individual Veterans Integrated Service Network locations or VISNs each with their own CIO and CFO.
Based on confidential interviews with long time senior VA personnel over a 4 month period – confidentiality was the key has many expressed concerns that just by talking with me about the Agency’s ongoing troubles would likely cost them their jobs or worse yet, their being ostracized, the decision to decentralize left regional operations feeling as if they were abandoned.
The only thing that was even more perplexing than the original decision to regionalize operations including the purchasing process, is that after the VISN hierarchy had become firmly entrenched the powers that be then decided to reverse the earlier decision and attempt to once again re-centralize operations.
Obviously, the VA’s brain trust didn’t study case histories in the public sector at any great length, otherwise they would have known that wresting power from departments who are used to calling the shots is a virtual impossibility. In addition to the reasons already stated, Veterans Integrated Service Network (VISN) resistance to the reintroduction of the centralized strategy is one of the main reasons that the two $650 million (combined) initiatives failed.
As was the case with the decentralized/centralized waffle, this latest decision to ignore the reportedly substantial savings that have been achieved through the FedBid platform should also raise serious questions.
However the questions that need to be asked first and foremost is what if any effect will this latest turnabout have on the services delivered to veterans, including those who rely on the Agency for their health care needs?
It seems that the VA leadership has at least historically tended to pursue strategies that are self-serving and politically oriented as opposed to weighing the pros and cons from the standpoint of the essential services it provides.
Within this context, it would be most helpful to demonstrate how the VA’s utilization of the FedBid platform has either helped or conversely hurt its ability to deliver the best possible service to those who have and are making a selfless sacrifice to serve America.
Until this question can be addressed one way or the other, then any move the VA makes will most likely be yet another uninformed excursion that is reflective of Jim Collins’ Doom Loop Cycle.
Here is the link to the previous post in this series “VA’s decision to stop using reverse auctions is surprising . . . right? Not if self-preservation is their main objective.”