We're hearing a lot of buzz in the supply chain community that the next big challenge (next to utilization management) for supply chain professionals is the management and control of their purchase service contracts.
While this is a commendable undertaking from our point of view, we have a word of caution for those taking this little traveled path to supply chain success: Purchase service contracts aren't the same as buying commodities! They require new skills, tactics and expertise to get it right the first time.
We would all like to think we can cost effectively buy anything and everything through our GPOs, but the truth of the matter is that some contracts are better suited to be customized, bid and then negotiated locally vs. nationally. This is due to the uniqueness of your healthcare organization's service requirements. The operative word here is CUSTOMIZED!
Case in point! One of our client's telecommunications services' cost was $156,932 over our regional benchmarks, which motivated our client to search out new and better ways to provide this mission critical service. After some research our client realized that the answer to this costly challenge wasn't to piggy back one of their GPO's contracts to lower their telecommunication up front cost, but to instead conduct a thorough investigation of their requirements and then to customize a telecommunications service contract to their exact requirements.
Their investigation revealed that they had twice as many phone lines than were needed, and then their old Centrex system required upgrading to provide enhancements and refinements in their telecommunication's technology in order to be more cost effective.
The bottom Line was that this client saved $136,800 annually once they signed a new purchase service contract that customized their new service requirements. Conversely, if our client didn't customize their service requirement prior to bidding and negotiating a new service contract they would have received excellent pricing for their perceived needs, but would have been way off the mark on their utilization or in-use cost.
Our point here is that the price at the pump that you contract for your purchase services is very important, but what is even more important is the utilization cost of each and every purchase service contract that you are buying. So, your job isn't getting the best price for your service contracts, but instead to customize your contracts so they translate into your exact (no more, or no less than you absolutely need) requirements. This way you will always come out ahead!
Filed Under: Purchase Services