December 5

Top 5 Tips for Smart Purchased Services Decisions


Making smart purchased services buying decisions is crucial for any healthcare organization, as it can have a significant impact on your bottom line. Whether you are purchasing goods or services, it is essential to have a strategic approach to ensure that you are getting the best value for your money.

In this article, we will discuss the top 5 tips for making smart purchased services decisions that will help you save time, money, and resources.

5 Tips for Making Smart Purchased Services Decisions

Tip 1: Have a Clear Understanding of Your Needs

Before making any purchase, it is crucial to have a clear understanding of your functional (primary, secondary, and aesthetic) requirements. This includes identifying the specific services you require, including a statement of work, expectations, performance guarantees, and penalties for not meeting minimum standards.

Having a clear understanding of your needs will help you avoid overspending on unnecessary items or services. It will also prevent you from being swayed by sales pitches for services that do not align with your exact requirements.

Tip 2: Research and Compare Vendors

When it comes to purchasing services, it is crucial to research and compare different vendors to find the best fit for your needs. This includes looking at their experience, reputation, and pricing. The best way to do so, I have found, is to bid on your requirements instead of just accepting your GPOs contractor(s) as being a best-in-class competitor in our industry. Don’t forget to look outside our industry for bids, too. Based on my own experience, I have always found that bidding services has given me insight into the services that I’m buying that I never thought of, such as, discovering that my square footage estimates were wrong for areas to be covered in an environmental services contract.

Tip 3: Consider the Total Cost of Ownership

When making a purchase decision, it is essential to consider the total cost of ownership. This includes not just the initial cost of the services, but also any ongoing costs, such as maintenance, repairs, or upgrades that may or may not be mentioned in your bids. This just happened to me personally, when I signed an annual HVAC maintenance contract for my home and then found, after the fact, that my new contract didn’t cover my water heater that was covered in prior years.

Tip 4: Bid and Then Negotiate for Better Terms

Don’t be afraid to negotiate with vendors for better terms. This can include negotiating for a lower price, extended payment terms, or additional services.

Before entering into negotiations, be sure to have a clear understanding of your needs and the market value of the services you are purchasing through benchmarking. This will give you leverage in the negotiation process and help you secure a better deal. This was the case with one of our clients who asked us to benchmark his copy expenses only to find he was $100,000+ higher than his peers. This then gave him an edge in negotiation with his copier vendor.

Tip 5: Have a Purchase Authorization Process in Place

Having a purchase authorization process in place is crucial for making smart purchase decisions. This process should outline the steps and approvals required for making a purchase, ensuring that all purchases are necessary and within budget.

For example, if you receive a request to purchase construction services, the purchase authorization process may require approval from the project manager, finance department, and senior management before proceeding with the purchase.  And don’t forget to have your Value Analysis Committee or Team value justify all purchased services with a value of over $25,000 annually.

Having a purchase authorization process in place also helps prevent unauthorized purchases and ensures that all purchases are properly documented for accounting and auditing purposes.

Smart Purchased Services Decisions are Essential for Success

Making smart purchased services decisions is essential for the success of your healthcare organization. By following these top 5 tips, you can ensure that you are getting the best value for your money and making informed decisions that will benefit your hospital, system, or IDN in the long run.

Remember to have a clear understanding of your needs, research and compare vendors, consider the total cost of ownership, bid and then negotiate for better terms, and have a purchase authorization process in place. With these strategies in place, you can make smart purchased services decisions that will help your healthcare organization thrive.

Below are some similar articles that you may find interesting.

Podcast 85 – When is the Right Time to Evaluate a Major Product or Service Category?

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How To Simplify the Value Analysis Process

Request Demo of SVAH’s Value Analysis and Utilization Tools


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