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SSOs create buying power for hospitals, fairness for vendors

The use of shared-service organizations (SSO) for the procurement of goods and services in the health sector can provide better value for money and a more transparent process, Toronto health lawyer Michael Gleeson tells AdvocateDaily.com.

“The more that hospitals or health organizations collaborate — whether it's through SSOs or different SSOs in the province becoming affiliated with each other through contractual arrangements — the more they are increasing efficiencies,” says Gleeson, a partner with DDO Health Law.

An SSO — a not-for-profit organization that consolidates the procurement process for all of its members — handles the securing of goods and services for their member hospitals while increasing their buying power. Gleeson says there are at least eight health-related shared-services organizations in Ontario.

“By joining organizations, it creates greater buying power and bigger opportunities for vendors,” he says. “Rather than having 10 different hospitals each go out and make separate requests for proposal (RFP) for a CT scanner, one organization does it with the others having the ability to join in that request," he says.

Through this collaboration, hospitals also share administrative costs and benefit from increased buying power.

As well, Gleeson says SSOs create greater expertise and faster turnaround times.

“A contract specialist at an SSO is putting out RFPs and going through negotiations all the time,” he says. “As a result, they develop more expertise about how to do procurements efficiently and how to reach an agreement with the vendors in a more timely manner.

"The increased experience also leads to increased familiarity with applicable regulatory requirements and increases the likelihood that a procurement will be carried out in line with regulations and directives set out by the provincial government," Gleeson says. 

“This can make for fairer, more transparent acquisitions, which benefits the vendors as well because they are dealing with people who are experts in their field and are aware of how a process is carried out,” he says. ”Ultimately, this may result in fewer disputes with vendors over fairness or transparency issues.”

In his practice, Gleeson says he works with shared-service organizations that become affiliated with similar SSOs.

“This is a relatively new idea where one SSO leverages the procurement processes that are done by another. When the affiliations are relatively new, each organization has its own ways of doing the same sort of work so there can be growing pains,” he says.

“The SSOs need to have conversations to make sure they understand how the other carries out their procurements,” Gleeson adds.

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