It’s no surprise that reviewing purchased services contract categories like laundry, medical waste or language interpretation can seem like a daunting task—almost like trying to climb Mount Everest. How you and the group view the mountain is critical. Looking from the foot of the mountain, it might seem impossible. Conversely, looking from a higher vantage point, you would get a different perspective and see how to move around the mountain. It’s all about perspective.
I can’t stress enough the impact of having the right people and the right perspective when reviewing purchased services contracts; and as the supply chain lead, you can and must work to understand each of your stakeholder’s varied perspectives. Supply chain must act as the group’s Sherpa guide. It’s their job to lead the rest of the team successfully around and up the mountain.
As the Sherpa, you have to factor in the previous year’s perspective into purchased services negotiations as well as understand which direction the regulatory wind is blowing in 2017. With CMS continuing to cut reimbursement levels and hospitals expected to do more with less, there is a desperate need to get internal stakeholders onboard and tackling the tough purchased services categories to achieve more savings.
I have seen multiple examples where hospitals, in well-intended efforts to roll out cost-reduction initiatives, have sometimes increased costs rather than reduced them because stakeholders weren’t on the same page. You can negotiate a great price for service, but if you can’t create a solid process for the stakeholders to get behind, then all that time and energy is a loss. I believe it starts with a vital question: who do you invite to the table when reviewing purchased services contracts?
Creating stakeholder committees for purchased services
Supply chain leadership usually is the overarching stakeholder for purchasing but in some purchased services categories they may have little or no understanding of historical relationships, critical factors or the associated spend. For example, supply chain may be unfamiliar with finance and administrative services because the contracts in this space range from revenue cycle and collections to banking and payroll. Supply chain leaders would not have awareness of their contracts or how they work, but are still a stakeholder from a negotiation and purchasing perspective. In that respect, they are still the Sherpa guiding the rest of the stakeholders.
The key is to start off by setting up an executive steering committee and project delivery team to review the purchased services categories for the year.
The executive steering committee is responsible for providing executive guidance, resolution of any barriers, approval of sensitive initiatives, relaying organizational communication and creating accountability; and should consist of the following:
- Client project lead (in most cases, supply chain)
- COO and/or CFO sponsor
- HR executive
- Representation from additional hospitals
- Physician leader (if applicable)
The responsibilities of the project delivery team include approval of initiatives, making introductions to additional relevant stakeholders, removal of barriers and providing guidance on organizational culture. They are also responsible for timely project delivery at or above intended targets. This group should consist of:
- Client project lead (in most cases, supply chain)
- Department leads (depending on service category)
- Other potentially relevant leaders such as sourcing managers, nursing, risk, quality and/or contracting
It’s important for supply chain to act as the Sherpa and lead by setting the cadence with stakeholders to ensure success of these initiatives. Without a courageous supply chain leader to guide both the hospitals and the consultants that assist in cost-savings initiatives, 2017 will waste away and there’s no reason for that, because we are just getting started.
Like Marvin Gaye sang, “ain’t no mountain high enough, ain’t no valley low enough, ain’t no river wide enough” to keep you from savings! I challenge you in 2017 to spend more time getting to know your stakeholders and how you can lead them to rally behind the harder initiatives. Building solid stakeholder groups will spread the heavy lifting and make these initiatives easier.
To learn more about getting started, check out my previous post, “In Purchased Services, Understand What You’re Negotiating.”
To learn more about how outside resources can support your purchased services efforts, contact us at firstname.lastname@example.org.
About the author. Throughout her career, Serina Seward has routinely interfaced and collaborated with legal, senior leadership and key stakeholders in clinical and non-clinical settings, coordinating and facilitating purchased services contracts for multiple hospitals and clinics throughout the Southwest. She has also provided analytical support and guidance related to service contracts to establish business needs, financial and operational impact, and to ensure compliance with all regulatory agencies. In her position, she has renegotiated 50 different categories, achieving millions in savings.