Beverly Spins Off Purchasing Arm

Edition: March 2002 - Vol 10 Number 03
Article#: 1180
Author: Repertoire

Beverly Enterprises is taking its Web-based procurement system on the road. Beverly (www.beverlynet.com), the Fort Smith, AR-based eldercare services provider, has spun off its procurement management function into a separate subsidiary called CERES Strategies Inc. CERES, in turn, is marketing its services to other, smaller nursing home chains. Lisa Huckelbury, who had been Beverly's senior director of procurement, has been named to head CERES.


Beverly operates 471 skilled nursing facilities, as well as 29 assisted living centers, 56 home care and hospice agencies, and 160 outpatient therapy clinics. Through AEGIS Therapies, it offers rehabilitative services on a contract basis to nursing homes operated by Beverly as well as other care providers.


More Than Group Purchasing
CERES is much more than a group purchasing organization, though it does give smaller providers access to Beverly's (now CERES') contracts, says Huckelbury. Rather, it offers an entire e-commerce platform, including order entry, online reporting, invoicing, price matching and more.


CERES uses Beverly's BEACH system – the Beverly Enterprises Automated Clearinghouse, which was developed by Jim Glensky, Beverly's director of procurement operations, and Bob Hillis, founder and president of Direct Supply in Milwaukee.


The system allows long-term-care facilities to log onto a secure website and order products from multiple vendors. Right now, products from approximately 30 vendors (representing in excess of 100 contracts) are accessible via the system.


Orders are transmitted to DSSI (the software house of Direct Supply), split out by vendor, and transmitted to the appropriate vendor. When the vendor receives the order, it sends an acknowledgement. The vendor then picks, packs and ships the order to the customer. If an item is on back order, the vendor notifies DSSI, who updates the PO online.


When the order is shipped to the customer or facility, the vendor sends an invoice to CERES, which carries the receivables. CERES pays the vendor, then re-bills the customer.


At any point in time, the customer can go into the system and see exactly how much they've spent by expense ledger account, their product usage by line item, the status of all purchase orders and shipments, and a multitude of other reports that help to manage daily operations.


Prior to the creation of CERES, Beverly was processing more than 350,000 invoices a year through BEACH for its own facilities.


CERES is supported by management fees paid by the long-term-care facilities, not by the vendors, says Huckelbury. But even after the fee, “we think we can save a facility anywhere from 10 to 25 percent,” she says. And the savings come from more than just good pricing, she adds.


“People need to be using e-commerce. They don't realize how much money they can save,” says Huckelbury. The average paper invoice costs a facility more than $65 from start to finish, she says. But the average cost of an e-commerce transaction is somewhere around $2.50.


“That's a soft cost,” she says. “But think about the time and expense of processing just one invoice, sending it to a corporate office, mailing it, touching it. We can do it electronically without touching it – plus our customers are assured that the PO price for an item is the price they will see on their invoice.”


The savings are multiplied, she adds, when one considers the number of purchase orders criss-crossing back and forth among a nursing home chain of five to 100 facilities – CERES' target market.


Vendors Buy In
Virtually all of Beverly contract vendors have agreed to roll over their contracts to CERES, says Huckelbury. In fact, several have agreed to help CERES market its services to long-term-care chains.


Huckelbury is proud not only of the electronic aspects of CERES, but of the contract portfolio, which CERES customers will be able to take advantage of.


“Right now we have the best price in the industry for a whole mixture of categories, from band-aids to Xerox copy machines to washing chemicals,” says Huckelbury.


“[Beverly] has been doing product reviews for the past six years,” she continues. “Our clinicians, safety and loss-control people, our therapists – everyone – has been involved in the process of choosing the best products with the best outcomes.


“For all those years that Beverly has been setting up vendor contracts to get the best bang for the buck, now all of our customers can reap those benefits.”



CERES Strategies E-Commerce Vendors
Arjo Briggs Corp. Carroll Healthcare CDW Computer Centers Corporate Express Curbell Electronics Direct Supply Healthcare Equipment Eco Lab Electro Medical Gulf South Medical Supply (representing multiple suppliers) HALO Branded Solutions Harloff Company Hausmann Industries Hewlett Packard Imaginart Instantel Lee's Carpets MMAR Phoenix Textiles Posey Company SFI Graphics and Fulfillment Smith and Nephew Standard Register Strategic Equipment & Supply W.W. Grainger