March 23

Think Strategically About Purchased Services To Save Even More


We often work with hospitals, systems, and IDNs to develop a purchased services strategic plan which enables them to take a holistic approach to their purchased service contract management vs. a transactional approach. These two distinct approaches to purchased service contract management can be the difference between your healthcare organization saving 3% to 5% per contract vs. 11% to 18% per contract. Now, let’s look at how this holistic approach would look from an operations standpoint.

Taking A Holistic View Of Purchased Service Contracts

A transactional approach generally means that a hospital, system, or IDN will look to their GPO for an existing contract offering or bid their contract out themselves. Whereas a holistic approach will start with a value analysis team performing a functional analysis of the proposed or renewal contract along with searching for lower cost alternatives before the contract is bid out. For example, a functional analysis of a laundry/linen contract service could look like this:

This is a pared-down version of an actual value analysis laundry/linen contract study that would examine each functional requirement in detail. The VA study can be the basis for an executive decision or for your purchasing department to write a “statement of work” that would become the foundation of your bid document.

Transactional Approach Is Costing You Money

The reverse of this holistic approach is to continue to jump on a GPO contract or bid your purchased service contracts yourself, without examining the who, what, how, and why the purchased service functions requested are required at all. This is because your customers don’t need everything they say they need in their purchased service contracts, or there is a lower cost alternative that can provide the same required functions reliably. Taking the holistic view vs. transactional to your purchased service contract management can generate even bigger savings year in and year out.

P.S. Don’t miss our “Savings Beyond Price: The Future of Supply Chain Savings” Webinar on April 8, 2021 – 2:00 P.M. (EST) to up your supply chain expense savings game. Here’s the link to learn more about it:

Below are some similar articles that you may find interesting.

Develop A Strategic Purchased Service Plan to Achieve Maximum Results

5 Key Requirements You Must Have In All Of Your Purchased Service Contracts

Manage Your Multi-Million Dollar Purchased Services Spend by Focusing on Contract Utilization, Not Just Price

Request Demo of SVAH’s VA and Utilization Tools


contract management, GPO, GPO contract, hospitals, IDNs, purchased service contracts, purchased service plan, purchased services, supply chain, value analysis

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