Let’s face it, every healthcare organization needs to save more money yet doesn’t have much time to work on major initiatives to try to find and drive out these savings opportunities. So, what do organizations do that still need to save big? Well, you use things that are already a set process that happens every week throughout the year and that is contract renewals. Why not use the contract renewal/new contract process as a trigger to find bigger savings within your existing contracts?
Savings Beyond Price on Existing Contracts
Contract renewals and plugging in new contracts to previous are a cost management process but are mostly standardization and price focused. Contract managers are not getting into the search for lower cost alternatives, and you can bet that the vendor representatives are not going to offer up a juicy lower cost savings that is going to cost them in commission. You need to be deliberate with proactively looking for lower cost alternatives before your contract renewal process gets into full swing.
The Value Analysis Functional Approach Can Help You Gain the Next Level of Savings within Your Existing Contracts
All hospitals and health systems now have value analysis programs, and you should bring these contracts to these teams for them to analyze before they auto-renew or change altogether. Have the VA team(s) search for lower cost alternatives that meet your customers’ functional requirements and reliability. The VA functional analysis approach can then help you ensure that you are meeting those customers’ exact requirements even though you may be eliminating feature-rich or wasteful products within your current contracts’ product line. That is the name of the game!
Get Your VA Teams Working on the Next Big Savings Beyond Price
You have powerful VA teams in your organization that if focused properly and given ample time will be able to quickly weed out all the waste, inefficiencies, and unnecessary features in the products and services within your existing contracts. The first step is to formulate a plan and make some agenda time as well as designate project leads to handle these contract renewal reviews. It is as simple as that. Don’t underestimate the diamonds that may be hiding in your own backyard!
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