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Pacific Hospital Essay

MAJOR FACTS:

With the death of Thurston Howell it left Barney Rubble in charge of the purchasing of supplies for Pacific Hospital and their subsidiaries. With this being an important responsibility, Mr. Rubble needs to make sure that he is making the right decisions regarding the suppliers of X-ray film. His main responsibility is to make sure that he is getting the best price for quality X-Ray film. Another major fact is that Kodak has been the sole supplier for Pacific Healthcare for a long time and this was due to Mr. Howell and the agreement in place. As the Director of Radiology it was with in his power to make this decision. The last major fact is that Kodak as part of their pricing deal agreed to maintain equipment and services at the discounted rate. They would not offer the same package if they were not the sole suppliers.

MAJOR PROBLEMS:

Mr. Howell being the sole authority in charge of making buying decisions is a major flaw. Yes he is the Director of the department, but that does not mean that he is the most knowledgeable regarding the best prices for X-ray film. In addition he should not have had the right to refuse the possibility of other suppliers. Reviewing the additional bids provided it appears that Kodak was the highest and cost the hospital additional dollars. As noted in the major facts that Kodak was willing to do the equipment maintenance and there was also the possibility that the other companies may have considered that also, but was never given the option. Kodak films are considerably more expensive than their competitors and this in turn can cost the hospital major dollars fi it is not rectified.

POSSIBLE SOLUTIONS:

a. With the death of Mr. Howell it left Mr. Rubble in charge to freely explore other options regarding the purchase of X-ray film. Reviewing the current contract he can determine whether or not the current contract is the most beneficial. Is what Kodak offering worth the price that they are presently paying? Mr. Rubble could attempt to negotiate a lower price since there is already a relationship in place and this could be an advantage. The downside is the price that Kodak would be currently offering would be more expensive than the competition. b. Other options that can be explored is that Mr. Rubble can go with either Kodak or Agfa. They are offering cheaper prices per sheet and this can be an advantage and he cannot go wrong as long as they stay consistent with their pricing. The only way that this would be a disadvantage is if Mr. Rubble cannot get the same deal with either DuPont or Agfa that Mr. Howell had secured with Kodak.

Kodak was more expensive, but when you add in the other options that Kodak was willing to offer it leveled out the expenses and this could be an advantage. c. As an alternative option Mr. Rubble could open up the contract for bid. In the bidding statement he could include all the services that are presently being offered by Kodak. This includes maintenance, equipment and service at the most affordable price. The lowest bid with all the stipulations will get the contract. d. Advantages speak for themselves. The winner of the contract secures a contract for the length of time specified. The disadvantage could be the length of time that it takes for the bidding process to be completed. In addition it would not have the input of Mr. Howell who has been in charge for some time and has had a reputation.

CHOICE AND RATIONALE:

The ideal situation would be option A. As Mr. Rubble I would stay with Kodak because there are the industry standard and provide a great deal. Kodak also needs to be made aware that there are other suppliers that could possibly offer the same. It should also be pointed out that the price per sheet is also cheaper. Kodak has a long time relationship with Pacific Healthcare and if they wish to maintain the relationship it may benefit Kodak to lower their prices to remain competitive. Kodak should be willing to negotiate lower prices to compete in today’s business and make them competitive. Putting the contract up for competition will add time and energy to the process. If Mr. Rubble remains with Kodak it can save the additional time and energy. It also needs to remind Kodak that there may be other companies that may be willing to offer the same. If the open bidding is implemented who knows how long the process will take and how long the X-ray department will be without services. Sometimes if situations are working and beneficial it is best to leave them alone.

IMPLEMENTATION:

First line of business would be to examine all the companies and compare all their prices to other companies that offer X-ray film. In addition research the other companies and present them with the same option that is presently being offered by Kodak relating to the maintenance, equipment and service option. In negotiating with Kodak, I would mention to them that the other companies are offering similar offers at a lesser price. This may or may not change the current contract that is presently being offered by Kodak. This could force Kodak to change their present contract if they wish to maintain the same relationship with Pacific Healthcare.

APPENDIX:

What alternatives should Barney Rubble consider when addressing the problem? Mr. Rubble can simply continue with the present contract that has been on going with Kodak that was implemented by Mr. Howell and continue the same service at the price agreed upon. He could opt to renegotiate a whole new contract with other companies or one with Kodak that will lower the services that are now being offered. The last choice would be an open offer and the lowest price bid would win with the best package offer.

Should Pacific’s purchasing policy allow for medical staff personnel to control purchasing decisions? The answer to this question is definitely NO. Pacific should by no means allow medical personnel to control purchasing decisions. That is the responsibility of supply chain management and purchasing agents. There are situations where medical staff personnel have the specialized technical expertise on a particular item that is purchased. If this is the case then their input can be valuable and should be considered and supported. Both the purchasing agent and medical staff should work together to get the best possible outcome.

What are the advantages and disadvantages of staying with Kodak or changing suppliers? The advantages of remaining with Kodak are the fact that they are already in familiar territory. They know what to expect from Kodak and there would be no surprises. It also seems that Kodak has been giving Pacific a huge discount for the equipment used along with maintenance and service. This offer is part of the agreement that Kodak is the sole supplier for Pacific Healthcare X-ray suppliers.

An advantage is that the amount time and energy it would save Pacific Healthcare to go through the process all again and come up with nothing. A disadvantage is that they would continue to pay the higher prices instead of opting to explore their options. If the right negotiator is put in charge they may be in a position to get a better deal from another company. This being said will allow Pacific to get from under the thumb of Kodak and save them some money in the bargain. This will not be realized unless steps are taken to see what other deals can be brought into the mix.

What actions could Mr. Rubble have taken prior to Mr. Howell’s death to obtain reduced film prices? Mr. Howell was the Director of radiology and in most cases his decisions were final. After exploring other options and found companies that may be willing to give similar deals, Mr. Rubble could have approached Mr. Howell with his findings. Going directly to Kodak while Mr. Howell was alive could have backed fired. Following the chain of command would have been the best option. If Mr. Howell refused to entertain any of Mr. Rubble’s ideas then Mr. Rubble could have gone to the next person in authority to express his concerns. In such a situation Mr. Howell should not have been the final decision maker.

References:
Pacific Healthcare Case Study. Retrieved from
https://edge.apus.edu/access/content/attachment/215506/assignment/10e59ddi-8f03-44a3-aa6d-61478fa8eef7/case%20study%201%pacific%20health%20care.pdf


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