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Similar to Bolster Your Hospital's Bottom Line: How To Gain Negotiation Leverage in Capital Equipment Purchases and Service Contracts (20)
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Bolster Your Hospital's Bottom Line: How To Gain Negotiation Leverage in Capital Equipment Purchases and Service Contracts
- 1. WELCOME Bolstering Your Hospital’s Bottom Line May 1, 2018
- 2. BOLSTERING YOUR HOSPITAL’S BOTTOM LINE How to Gain Negotiation Leverage in Capital Equipment Purchases and Service Contracts ©2018 Miga Solutions, Inc. All Rights Reserved. May not be copied or circulated without prior permission. 2
- 3. Today’s Presenter ©2018 Miga Solutions, Inc. All Rights Reserved. May not be copied or circulated without prior permission. 3 Peter Robson Founder & CEO, Miga Solutions Inc.
- 4. What We’ll Cover 1. Why capital negotiations are unique? 2. Information and insight to gain leverage 3. “How To”: 3 strategies to boost your bottom line ©2018 Miga Solutions, Inc. All Rights Reserved. May not be copied or circulated without prior permission. 4
- 5. Every Negotiation Requires Different Strategies ©2018 Miga Solutions, Inc. All Rights Reserved. May not be copied or circulated without prior permission. 5
- 6. Hospitals Have Optimized Supply Costs… • Standard products, predictable volumes • Recurring purchases every 5, 7, 10 days • Billable at predictable rates • Good info = informed negotiations • Savings maximized ©2018 Miga Solutions, Inc. All Rights Reserved. May not be copied or circulated without prior permission. 6
- 7. …But Not Capital Equipment • Every quote or contract is unique… and complex • Technology evolves - you buy every 5, 7, 10 yrs. • Every negotiation requires different strategies • Less informed = less effective negotiations • Excess TCO impacts bottom line for years ©2018 Miga Solutions, Inc. All Rights Reserved. May not be copied or circulated without prior permission. 7
- 8. Ever Feel This Way? ©2018 Miga Solutions, Inc. All Rights Reserved. May not be copied or circulated without prior permission. 8
- 9. Negotiation Playing Field Is Not Level • < 3% of quotes reflect optimal pricing • > Half of service contracts contain savings of at least 15% or more • 12-16% untapped savings opportunity - $13,000 per bed/per year • Most hospitals suspect they are overpaying, but don’t know by how much The secret is having the right information and insight. ©2018 Miga Solutions, Inc. All Rights Reserved. May not be copied or circulated without prior permission. 9
- 10. “How To”: 3 Strategies to Gain Negotiation Leverage 1. Competition 2. Communication 3. Commitment ©2018 Miga Solutions, Inc. All Rights Reserved. May not be copied or circulated without prior permission. 10
- 11. 1. (CREATE PLAUSIBLE) COMPETITION ©2018 Miga Solutions, Inc. All Rights Reserved. May not be copied or circulated without prior permission. 11
- 12. 1. Create Plausible Competition • FACT: Single source without competition = $$$ • Legitimate competition, viable manufacturers • Must meet clinical, technical, financial requirements • Be open minded, consider options • Announce selection after best price secured ©2018 Miga Solutions, Inc. All Rights Reserved. May not be copied or circulated without prior permission. 12
- 13. Competition - Hospital Example ©2018 Miga Solutions, Inc. All Rights Reserved. May not be copied or circulated without prior permission. 13 • Renewal of multi-vendor service for 51 imaging systems • Planning to renew w/ existing, hadn’t explored options • $1,200,000 annually, $6,000,000 over 5 years • Market data identified potential savings between 11-29% • Introduced competition, negotiated savings of $220,000 annually (18%), $1,100,000 over 5 years
- 14. 2. COMMUNICATE (EARLY… AND OFTEN) ©2018 Miga Solutions, Inc. All Rights Reserved. May not be copied or circulated without prior permission. 14
- 15. 2. Communicate Early… and Often • Get stakeholder buy in before negotiating • Explain decision process • Establish and communicate realistic timeline • Keep everyone informed • Effective internal and external communications are key to success ©2018 Miga Solutions, Inc. All Rights Reserved. May not be copied or circulated without prior permission. 15
- 16. Communication - Hospital Example • System-wide patient monitor conversion • Common pitfalls delayed final decision • Incumbent vendor assumed they’d won • Project over budget, introduced competition through pre-owned equipment • Negotiated savings of $1.1M (19.7%) ©2018 Miga Solutions, Inc. All Rights Reserved. May not be copied or circulated without prior permission. 16
- 17. 3. (DON’T FEAR) COMMITMENT ©2018 Miga Solutions, Inc. All Rights Reserved. May not be copied or circulated without prior permission. 17
- 18. 3. Don’t Fear Commitment • P.O. as “carrot” to gain final concessions • Be clear and ready to deliver! • Verbal commitments are non-binding • No P.O. = unsettling for vendors • P.O. cements value for all, peace of mind ©2018 Miga Solutions, Inc. All Rights Reserved. May not be copied or circulated without prior permission. 18
- 19. Commitment - Hospital Example • New wing - expanded services, private rooms, $100M • Hard deadline, ribbon cutting planned • IT issues delayed equipment procurement • Vendors skeptical, anticipated ongoing delays • Hospital effectively used promise of P.O. to: • Negotiate better pricing ($3M saved) • Reset expectations for expedited delivery (on time) ©2018 Miga Solutions, Inc. All Rights Reserved. May not be copied or circulated without prior permission. 19
- 20. Use the 3 Cs to Gain Leverage in Your Negotiations 1. Create Plausible Competition 2. Communicate Early… and Often 3. Don’t Fear Commitment Level the playing field, 12-16% savings. ©2018 Miga Solutions, Inc. All Rights Reserved. May not be copied or circulated without prior permission. 20
- 21. Summary – Boost Your Hospital’s Bottom Line • All capital medical equipment purchases are different • Both information and insight are helpful in changing the outcome • The 3 Cs can help level the playing field ©2018 Miga Solutions, Inc. All Rights Reserved. May not be copied or circulated without prior permission. 21
- 22. Q&A ©2018 Miga Solutions, Inc. All Rights Reserved. May not be copied or circulated without prior permission. 22
- 23. THANK YOU Peter Robson | CEO | O: (763) 225-8407 | C: (612) 859-2332 | probson@migasolutions.com ©2018 Miga Solutions, Inc. All Rights Reserved. May not be copied or circulated without prior permission. 23
- 24. REGISTER FOR OUR NEXT WEBINAR
Editor's Notes
- “Don’t make go to grandma’s birthday party!” “Come on, just a little bite of the sandwich!” “But the fence is on my property!”
- David and Goliath – the story of the underdog
- In the absence of information people tend to assume the worst
- Recommunicated, re-established plan