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Pacific Healthcare Case Summary

Decent Essays

Case Name: Pacific Healthcare I. Major Facts A. Pacific Healthcare is the largest health care provider in Santa Barbara County. 1. Institution consists of 3 hospitals, two nursing homes and ten outpatient clinics. Institution has 1,500 beds to serve patients. B. Barney Rubble, corporate director of supply management, is responsible for purchasing supplies for all of Pacific Healthcare’s subsidiaries. 1. The previous head of radiology, Mr. Thurston Howell, had previously made all decisions regarding suppliers for the radiology department. Mr. Howell would only authorize the use of Kodak X ray film. C. The current agreement with Kodak furnishes Pacific Healthcare with X ray equipment as well as maintenance and service at a substantial discount, …show more content…

Given this, Mr. Rubble must consider the total costs and benefits of the existing contracts when addressing the problem (Burt, Petcavage, & Pinkerton, 2010). Without an extensive analysis of the costs and benefits of the existing contracts he will not know if the increased costs of the purchase of x ray film through Kodak isn’t offset by the savings from the service and maintenance contracts and equipment leases. Mr. Rubble should also consider the needs and specifications of the Radiology Department. This requires that he work in a cross-functional team with members of the Radiology Department, as well as facility management to clearly identify the purchasing and procurement needs of the department. Their input will be critical in identifying the “required and desired operating characteristics of the needed equipment” (Burt, et al., 2010, p. 179). The facility management team members will be critical to identifying the repair, maintenance and service needs for the department. 2. Should Pacific’s supply policies allow for any medical staff personnel to control sourcing …show more content…

The first is that there is a longstanding relationship with the company. They are already familiar with Pacific’s unique needs and specifications. There is also no start up costs with continuing to utilize the company. The existing service contract covers providing equipment and also for the maintenance of that equipment. These costs are already factored into the department’s existing budget. This ease of use comes at a cost, which is a higher purchase price for X ray film over other suppliers. A cross-functional team comprised of representatives of purchasing, radiology, and operations should be utilized to evaluate the advantages and disadvantages of either staying with Kodak or changing suppliers. This team can also be utilized to review a detailed study of the cost savings or costs of utilizing the equipment purchasing and servicing contract with

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