Diagnose the Sophistication of Your Purchased Services Efforts

Where does your program lie on the maturity scale?

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Before we get started, how would you evaluate your organization's current purchased services operations?

Legacy

It looks like you are beginning your purchased services journey... and we love to see it! Taking that first step can seem daunting, but we're here to help illuminate your path forward. To establish a purchased services strategy, you can start by taking control of your service agreements. Your best bet is to conduct comprehensive spend analytics and a thorough contract overview. From there, you can create justification to garner dedicated staff, management systems, AI-powered analytics, performance tracking, and expand on-demand support.

Experimenting

Following Edison's footsteps, trial by error will lead you to wild success. While your organization has prioritized its purchased services initiatives, your efforts may be limited by an under-staffed department and lack of a centralized system for performance and contract monitoring, categorization, and leadership. We can help you justify growth and scale your savings impact with ease. Stay the course!

Committed

Wow! Your organization is well on its way to optimizing purchased services spend! You have a decent handle on contracts and categorization, with enough dedicated staff to really make a difference. While you benefit from leadership and stakeholder support, you have room to grow your real-time reporting and category prioritization efforts. Keep up the great work!

Advanced

Congratulations! We're quite impressed. Your organization has an advanced purchased services strategy in place - complete with with experienced professionals managing centralized contract database, giving real-time analytics-based insights on spend and usage, systemic performance, and benefiting from executive-level leadership and support.

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Spend & Usage Visibility

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No standardized purchased services overview

Your organization does not have a standard purchased services definition or category taxonomy in place. It cannot define your total annual purchased services spend except by general ledger account. It lacks the ability to define spend by category, supplier, and location. You are also unable to capture spend per contract.

Consultancy based one-time view

You’ve engaged a consultant to define and execute a one-time categorization of purchased services spend using accounts payable files and the consultant's category taxonym. You can generate a static view of spend by category, supplier, and location level. You cannot view spend by contract.

Standardized periodical purchased services tracking

A standard purchased services definition and category taxonomy exists. You can monitor purchased services spend levels at least quarterly at the category, supplier, and location level. You can identify non-standard suppliers and their location. You can also track savings and usage variances.

Dedicated spend & usage categorization and analysis

Your organization has standard purchased services definition and category taxonomy. It knows spend down to category level. There’s a dedicated team of analysts assigned to purchased services spend that apply their own category structure for purchased services. Finance provides their commitment and sign-off to contracts. This approach provides accurate, verifiable results.

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Contract & Terms Visibility

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Contract & Terms Visibility

The location, visibility, and contents of contracts sit with end-users. There is limited knowledge of contract terms by contract, supplier, category, or location. A supplier’s full name and contact information is not available.

No standardized contract definition

At some point, your organization completed a one-time effort to collate third-party contracts, but they do not reside in a centralized, accessible location and contracts remain difficult to locate. Only a contract’s file name and meta data lends itself to retrieval.

Unsustainable contract management system

Your organization uses a central contract management system, but it's not maintained and is becoming more disorganized over time. Few people trust the system without manually verifying information. Manually entered contract header information, file title, and meta information is searchable. However, contracts are missing upon detailed inspection.

Advanced contract management and database

Contracts reside in a central, easily accessible system, which someone regular updates and maintains. Staff trusts the accuracy and integrity of the contract database and its contents. Detailed visibility into contract contents and terms by contract, supplier, category, and location exists, including the ability to conduct text search of contracts. Supplier name and contract master also exists. Contracts are cross-referenceable with supplier profiles and past negotiation documents.

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Leadership, Staff & Skills

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No dedicated specialized personnel

Dedicated individuals or leaders responsible for purchased services contracts, negotiations, vendor relationships, or performance monitoring do not exist. There’s no organization of staff by spend category, resulting in the lack of specialized category knowledge, benchmarks, or templates.

Limited professional pool and capabilities

At least one dedicated employee is responsible for contracts, negotiations and vendor relationships for purchased services. There’s a team of dedicated employees responsible for all categories of spend. Specialized category knowledge, benchmarks, or templates do not exist, but there is a desire to gain such knowledge.

Supervised staff with some level of knowledge

A dedicated team with a leader exists to manage purchased services spend. There’s some degree of specialization within the team by category or department. There is also some level of knowledge of purchased services spend and a high-level understanding of the process.

Executive-level leadership and dedicated staff

A director or above leads the effort to manage purchased services. Expert healthcare sourcing and contracting staff exist, including former end-users in sourcing jobs (e.g. former facilities, IT, administration). Many of those assigned to manage purchased services spend possess advanced business qualifications, including MBAs. The department includes personnel from outside healthcare. Staffing rotation allows for the discovery of new ideas and innovative approaches to business problems.

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Executive Support

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Unguided purchased services process

Supply chain, operations, and finance executives are unaware or unfocused on purchased services. Stakeholders have free rein to negotiate and sign purchased services contracts on their own with no centralization or oversight.

Limited support capabilities

Supply chain brings limited oversight and focus to purchased services but does not have "top-level" support or budget from finance or operations. There’s an effort to secure stakeholder support to actively manage purchased services.

Funded support management effort

Finance leadership focuses on purchased services to uncover cost savings, with other stakeholders in the process of convincing teams to participate. There is initial funding to increase the supply chain team and focus on managing purchased services.

C-level approved executive support

Purchased services are an integral part of budget planning at the C-level. A budget and dedicated staff exists to manage purchased services. Stakeholder executives play an active role in sourcing and contracting decisions. An executive board exists to govern and adjudicate decisions and build a plan related to purchased services.

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Stakeholder Orientation

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Unchecked stakeholder-led contracting

Stakeholders are free to locally optimize for their own needs and budgets without considering the entire hospital system. Value analysis doesn’t exist, and sourcing has few, if any, relationships with stakeholders.

Large contract supervision only

Incorporation of stakeholder feedback

There is a defined process for soliciting stakeholder feedback and incorporating that feedback into purchased services request for proposals. Some stakeholders do not participate in the consultation process before the organization selects a vendor.

Incorporation of stakeholder feedback

The hospital system employs a value analysis process to ensure all stakeholders have a voice in selecting the most qualified, cost-effective vendor. Purchased services vendor selection takes place via centralized committees.

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Centralization

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No centralized contract supervision

End-users locally negotiate and manage their own purchased services contracts, as well as their own vendor relationships and performance monitoring.

Large contract centralization only

Supply chain only sources the largest contracts. Most contracts are managed and negotiated by departmental stakeholders who have relationships with the suppliers.

Halfway centralization by categories

At least 50% of purchased services categories are managed centrally.

Center-led orientation

Your organization uses a center-led approach, with more than 80% of purchased services categories managed centrally. Local sourcing personnel are responsible to executives.

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New Supplier Implementation

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No standardized process

There’s a lack of individuals dedicated to managing processes. Project management systems or focus on new vendor implementation are also lacking.

Early-stage implementation system

Few resources are available to standardize the approach to new vendor implementation in some select categories.

Committed implementation process

There is one dedicated individual responsible for new vendor implementation. This person uses project management systems and defined processes to implement only the largest suppliers.

Advanced supplier implementation

There is a team dedicated to new vendor implementation. This experienced team uses a variety of tools and processes to ensure new vendor implementations are as quick and efficient as possible.

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Supplier Performance Monitoring

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No performance monitoring

Key performance indicators (KPIs) defined by category do not exist. Systems cannot capture end-user and supplier ratings. Organizations cannot share vendor ratings system-wide.

Decentralized performance tracking

KPIs exist for patient care categories only. There is no central system for tracking KPIs and supplier quality ratings, and they are only requested from suppliers ad hoc.

Category based periodical performance monitoring

There are KPIs defined per category and tracked quarterly. This information, as well as supplier quality ratings from stakeholders, reside within home-grown systems such as SharePoint.

Well defined systemic performance monitoring

KPIs are a standard part of the contracting process. Leadership is aware of Centers for Medicare and Medicaid Services / Joint Commission on Accreditation of Healthcare Organizations regulations regarding the tracking of supplier KPIs. There are systems in place to track KPIs. The organization conducts quarterly business reviews with suppliers, and issues reports annually to the medical executive committee.

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Measurement & Metrics

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No established measurements and goals

Savings targets do not exist. Vendor comparisons not completed internally or externally. Vendor KPIs do not exist.

Non-specific metrics only

A savings target set for the hospital system may exist. Benchmarks are used sparingly for capital equipment and medical/surgical. Vendor KPIs only requested after a demand from a governing body.

Target-oriented measurements and metrics

There is a savings target set for supply chain and it may incorporate purchased services. Benchmarking for a variety of services exists, including physician preference items. The organization prepares and analyzes ratios related to purchased services spend. The organization also monitors vendor KPIs for patient care contracts.

Comprehensive measurements and metrics

There is a defined savings target for purchased services, and executives have a bonus tied to that target. There are systems in place to monitor purchased services spend and track savings related to new initiatives. The organization generates reports on vendor KPIs on quarterly basis and maintains them in a central system. Stakeholders can rate the quality of the service they receive from suppliers. Benchmarks are required for all competitive sourcing.

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Supporting Systems

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No performance management systems

Dedicated analytics, sourcing, contracting, supplier data, contract data, or performance management system do not exist.

Limited internal data-backed analytics

There may be a contract management system, but there are no purchased services analytics outside of those produced in a home-grown system.

Detached supporting systems

There are systems in place for purchased services analytics, sourcing, contracting, and performance management. However, these systems are disparate and not tied together in any manner.

Integrated supporting systems

There are dedicated systems for purchased services analytics, sourcing, contracting, and performance management. These systems are all unified either on a common platform or via integration.

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Scores

Congratulations your level is Advanced!

Your Results

Advanced

Average Score

Your organization has advanced purchased services operation with experienced professionals managing centralized contract database, giving real-time analytics-based insights on spend and usage, systemic performance, and benefiting from executive-level leadership and support.

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