I don’t think there is a healthcare supply chain leader that doesn’t want to optimize their contracts to the enth degree. The only question then is how to do it? Here are three surefire ways to turn your contract optimization into a high-performance machine:
- Benchmark All of Your New and Renewal Contracts: It should become a habit to benchmark all new or renewal contracts (GPO or otherwise) to ensure you have the best pricing available for your size healthcare organization. To ignore this best practice will cost you thousands of dollars annually.
- Optimize Your Standardization: Best price is a function of scale. Meaning, the more volume you have in the same commodity to offer your vendors the better pricing you can obtain from them. However, to optimize your standardization you need to standardize on the commodities with the best in-use cost across your supply chain. This will provide you with best total cost, which should be your goal.
- Rein in Your Supply Utilization Misalignments: When you are writing a new or renewal contract you will need to make sure you are obtaining the best price, and will also have the lowest utilization cost in the products, services and technologies you are buying. This is because what is the rationale of having the best pricing, if your healthcare organization is utilizing 3x the number of widgets being contracted for than your peers?
If you haven’t noticed already, it’s getting harder and harder to obtain even lower pricing for the commodities you buy, so you need to search out new strategies, tactics and techniques to optimize the contracts you have now. These three tactics are a good starting point to optimize the contracts you are signing.