Case Study 1 Pacific Healthcare

Running head: PACIFIC HEALTHCARE 1

CaseStudy 1 Pacific Healthcare

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October18, 2014.

MajorFacts

PacificHealthcare is a large healthcare provider and has been using KodakX-ray film for the past fifteen years. Upon, Mr. Howell death, thehospital corporate director gets an opportunity to change thesupplier of X-ray after realizing that their price is way abovecurrent market price. The current agreement between the Kodak and thehospital is that the firm provides the hospital with all X-ray filmservices as the sole source. The hospital uses specific X-ray film ofdifferent sizes and types and approximately 1500 sheets of X-ray filmare used daily. Kodak has been the industry best standard in thepast. There are four manufacturing companies for X-ray films Agfa,Fuji, Dupont and 3M. The quality of Agfa and Dupont film areconsistent with that of Kodak. Fuji and 3M films are of lower qualitybut meet minimum spec requirements. In the price variation, Kodakfilm is the most expensive followed by Agfa, Dupont, Fuji and 3M. Thehospital supply strategy for medical supplies is obtaining the bestquality, best service at lowest overall cost and finds a singlesource supplier for a year.

MajorProblem

Whatalternatives should the hospital consider in obtaining the highestquality, best service at lowest overall cost from a single sourcesupplier one-year contract?

PossibleSolutions

  1. The hospital needs to change the Kodak film supplier to Dupont that offers quality films that are consistent with Kodak, but at relatively cheaper price.

  2. The hospital could also consider changing the film supplier to Agfa, that also offers quality films but at relatively cheaper price.

  3. Alternatively the hospital could consider Fuji or 3M Film Company, which meets the lowest specification requirement at lowest price.

  4. Choice A. Dupont films is relatively cheaper and has higher quality. The limitation is that it is of lower quality than Kodak that was previously used.

ChoiceB. Agfa film is cheaper and has relatively higher quality but lowerthan that of Kodak. Choice C. Fuji of 3M films is cheap but lowquality films.

Choiceand Rationale

Dupontfilm is the best choice for the hospital according to the facts givenin the case study. In particular, the choice of this film is drivenby the fact that the film’s quality is higher and consistent withthat of Kodak. In addition the film is relatively cheaper. Overallthe film provides the best alternative quality and lower cost whencompared with the rest of the films companies.

Implementation

Thehospital director should change the supply policy that mandate themedical supply director’s prerogative to control sourcingdecisions. The supply policy needs to be undertaken by a committee ofselected supply professionals appointed by the hospital director.Hospital supply sources would then be discussed and implemented bythe committee. All suppliers should have one-year contract to allowfor supply re-evaluation.

Appendixquestions

  1. Alternatives that Barney Rubble should consider in addressing the problem.

Quality,price and source Mr. Barney should consider Dupont, Agfa, Fuji or 3M

  1. Should Pacific’s supply policies allow for any medical staff personnel to control sourcing

Decisions? No. Thesupply policy needs to be undertaken by a committee of selectedsupply professionals appointed by the hospital director.

  1. The advantages and disadvantages of staying with Kodak—or changing suppliers?

Kodakhas high-quality film but expensive. Staying with Kodak would lead tomonopoly and possibly poor quality services as they get accustomedwith the hospital management. Changing supply is effective as thereare other firms like Dupont offering less expensive but high-qualityfilms like Kodak.

  1. What action could Mr. Rubble have taken prior to Mr. Howell’s death to obtain reduced film Prices? Mr. Rubble would have used Mr. Howell to negotiate for cheaper deals as well as investigate the modular of supply agreement. This would have helped in future supply price negotiations.