My proposed Master's Level Industrial Engineering Management Project intends to investigate the purchase and procurement behavior of two major Boston-based health care facilities, Massachusetts General Hospital (MGH) and Children's Hospital Medical Center (CHMC). The nature and types of purchase-contracts for medical supplies and equipment will be examined and analyzed to determine if previously established health industry patterns (e.g. degree of "product sophistication" in relation to "purchase contract type") are being followed and, if so, to what extent, as well as to assess the efficiency and cost-effectiveness of policies currently in effect at MGH and CHMC. Recommendations, based on these Harvard Affiliates' experience, will be offered to the health industry at large.

A brief review of existing literature will be offered with special reference to journal articles focusing on purchasing contracts and buying patterns in both the health industry and in other industrial sectors.

The proposed project will then present data pertaining to specific types of medical supplies typically and routinely purchased by both MGH and CHMC. These products and equipment items will be divided into clearly delineated categories, based primarily on degree of manufacturing technology, and will be graphed against types of purchase contracts under which they were, or are, usually bought. Kindly refer to Appended Figure I (subject to change as the analytical model for this Project is further perfected) for an elementary presentation of the initial concept envisioned.

In part, the product categories will be determined by data made available to the researcher, and by data currently available through public or semi-public sources. Two such charts will be prepared, one for each hospital under analysis. Initial examination will generate two to four hypotheses based on internal comparison of 'purchase contract type in relation to product sophistication' between these two hospitals. Known practices in other hospitals, as published in the literature, may also be considered in formulation of hypotheses.

Data, displayed on basic charts similar to Appended Figure I, will be succinctly presented. Methodology will be described in some detail, but will (a) essentially involve assigning quantitative values to the amounts expended and/or quantities purchased per product category, and will (b) define and delineate what objectives the study intends to pursue in an attempt to prove or disprove one or more of the hypotheses advanced, such as (i) determining relative levels of cost effectiveness per purchase contract type, calculated over a range of products, or (ii) how degree of product sophistication will be measured to generate a discernable relationship between that parameter and purchase contract type. Reference, under Methodology, will also be made, of course, to the statistical tools and models to be used.

Results of data analysis will be presented, keeping in mind the objectives sought which, at this stage of the Proposal, are not defined with great precision, although they do involve cost-effectiveness and degree of product sophistication in relation to contract type.

A discussion of findings will further elucidate where the most efficient and economical patterns seem to exist and will explore the relationship of degree of manufacturing technology to the best contract type, as determined by CHMC and MGH data available.

In a broadly defined sense, hospitals are both order-based companies and purchasing companies. Within the context of the discussion section, this distinction will be pin-pointed and applied to MGH and CHMC, with implications for the industry as a whole.

Some reference will be made to Transaction Cost Analysis (TCA) and to Contingency Theory, both of which affect purchasing behavior within the health industry. If enough insight is available through personal contacts, journal articles, and/or the Internet, this portion of the Project would be expanded to include a qualitative discussion of how CHMC policies differ from those of MGH, with broader implications for streamlining procurement procedures industry-wide. The Project's concluding section will, of course, address these issues in some detail, keeping in mind the results and analysis presented earlier.

Type of       Item          Quantity per   Total Cost   Technology     Contract     
Merchandise   Description   Unit of Time    per Item     Quotient      Type          


Standardized                                                                        
Assembly                                                                            

Custom                                                                              
Ordered                                                                             

Lo-Tech                                                                             
Domestic                                                                            

Lo-Tech                                                                             
Foreign                                                                             

High Tech                                                                           
Domestic                                                                            

High Tech                                                                           
Foreign                                                                             

Pharmaceutical                                                                                  

Experimental/                                                                       
Temporary