Describes six factors necessary for successfully sourcing purchased services for US healthcare provider based on MedPricer's experience sourcing almost $1 billion of purchased services.

1. SIX “MUST DO”
ACTIVITIES
FOR HEALTHCARE
PURCHASED
SERVICE SUCCESS
James Bouchard
VP Operations
MedPricer
April 2015

2. 1 FACILITIES REPRESENTATION
DEVELOP A COMPLETE FACILITY ROSTER & TEAM
Do you have a complete list of facilities that source the purchased services you intend to bid? The answer may
not be as simple as it seems – particularly in the context of a rapidly-growing organization, or when considering
non-acute care facilities.
AfterAfter compiling this list, identify individuals to represent the needs of the local facility for the category you
intend to source. Recruit user representatives who can serve as stakeholders within a sourcing decision-making
and award team. These individuals should be senior enough to make supplier decisions and tradeoffs to support
system-wide category objectives. Representatives must clearly articulate the facility’s requirements – scope of
work, quality levels, preferred suppliers, etc. Representatives must also know the process for transitioning
suppliers and implementing new programs.
2 AWARD PROCESS
AGREE ON PROCESS PRIOR TO STARTING PROJECT
Prior to starting the project, it is critical to develop an agreed-upon award process championed by either the
corporate supply chain and/or facilities representatives. It must be defined at the beginning of the project who
will be responsible for deciding which suppliers are awarded contract(s) and the criteria behind those award
decisions. Without this key step, the sourcing project is at risk of ending as a “no decision.”
3 INCUMBENT ROSTER
DEVELOP AND ENRICH A COMPLETE INCUMBENT ROSTER
What vendors currently provide the services your organization’s facilities intend to source? While accounts
payable and invoicing data both provide a solid starting point, their accuracy should be confirmed by facilities
representatives. Ultimately, your ability to establish superior rationalization and award structure bundles will
hinge upon your understanding of the capabilities, capacity and geographic coverage of the supplier pool. Enrich
the incumbent roster with new suppliers that can cover greater geographic areas or have additional capabilities,
which can ultimately reduce the number of suppliers and increase potential savings.
Are you about to source healthcare services across your organization?
Based on MedPricer’s experience e-sourcing almost $1 billion dollars over 200
projects, there are six “must-do” activities for purchased services success:
4 ACCURATE DATA
GET ACCURATE PRICING, USAGE AND CONTRACT
INFORMATION INTERNALLY AND FROM INCUMBENTS
Unlike purchased goods, organizations use blanket purchase orders or simple statements of work to procure
purchased services with little detail on each billable task and the associated quantities and prices. Typically, contracts
will outline the task and price, but rarely identify potential quantities.

3. In addition to contracts not having the complete breadth of information required for sourcing, many organizations
cannot locate contracts for purchased services without a herculean effort. MedPricer’s experience, for instance, has
demonstrated that suppliers offer a better source of contract information, helping you identify previous pricing and
delivered work quantities. Facilities representatives can also judge whether supplier provided data appears
accurate. As a rule of thumb, a comparison to accounts payable total amounts to supplier provided total
amounts should not vary by more than 10% in any category.
5 PURSUIT STRATEGY
AGREE ON PROCESS PRIOR TO STARTING PROJECT
Reviewing contracts will provide a global view of the overall variability among existing contract expiration dates
and cancellation clauses. Understanding these contractual milestones will let you know the extent to which
aggregation of volume across your system is feasible and in what timeframe. For example, how do you source a
category with three large incumbents whose contracts expire two, five and seven years from today? One pursuit
strategy would be to offer a supplier the option to buy-out an incumbent’s early termination penalty as a means
for earning more business up-front.
6 AWARD BUNDLING
GROUP SERVICES INTO “AWARD READY” BUNDLES FOR MAXIMIZING
NEGOTIATING POWER AND AWARD OUTCOMES
Based on your pursuit strategy, begin with the end (i.e. your overall goal) in mind. How will you negotiate award
contracts to suppliers to maximize savings while ensuring facilities’ needs are met? MedPricer, for instance,
considers contract expiration dates, facility size, supplier geographic limitations and network vs. local facility
needs when creating our own award bundles.
At 20% of a typical hospital systems’ operating budget, purchased services cannot be
ignored. While challenging to get started, successfully executing a purchased
services sourcing strategy can result in 20% average savings across all categories.
LET US SHOW YOU HOW.
SUMMARY
FOR MORE INFORMATION
To understand how MedPricer’s Purchased Services Program can help you get started, contact
MedPricer today at 203.453.4554 or contact@medpricer.com.
MedPricer, Inc.
2351 Boston Post Road
Guilford, CT 06437
T 203.453.4554
www.medpricer.com

4. MedPricer, Inc.
2351 Boston Post Road
Guilford, CT 06437
T 203.453.4554
E contact@medpricer.com
www.medpricer.com