Pacific Healthcare Case Study Essay

770 Words Jun 22nd, 2012 4 Pages
American Military University

Case Name: Pacific Healthcare I. Major Facts
Pacific Healthcare and its subsidiaries consists of Pacific Memorial, Pacific
Cabrillo, and Pacific Isla Vista. It is the largest provider of healthcare in Santa
Barbara County. The director of supply management is Barney Rubble, who is responsible for procuring supplies. Before passing away, Thurston Howell, director of radiology, made all decisions involving the purchasing of X-ray film. Kodak film has been the sole provider of X-ray film for the last 15 years. Kodak film is of the highest quality, but currently priced well above industry competition. Additionally, Pacific Healthcare has an equipment services
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Additionally, the pre-existing maintenance and services contract with Kodak would be in jeopardy. IV. Choice and rationale
The best choice would be option A, award Kodak with the one year single source contract. By choosing Kodak, Pacific Healthcare can be confident that they would still be providing high quality medical supplies to each of their subsidiaries. Also, the X-ray equipment, maintenance and service agreement would remain in place.
Even though option B and C would save on X-ray film costs, the decision to change suppliers would drive a new requirement for equipment, maintenance and servicing. The acquisition costs to lease or buy equipment, coupled with the purchasing of services could exceed the amount saved in X-ray film costs. V. Implementation
Prior to awarding the contract to Kodak, control systems would have to be set in place to properly outline roles and responsibilities within the organization. Department directors will not have total control over supply chain management decisions. The ultimate decision of supplier selection will reside with Barney Rubble, with the input of cross-functional teams.

Appendix 1. Barney Rubble’s alternatives are to continue to pay Kodak’s prices, which are well above market competition. He could also attempt to negotiate a price closer to that of Kodak’s top competitors. Negotiate a package deal with Kodak that encompasses the equipment, maintenance, service and

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