Healthcare vendors are in many ways the essential lifeblood of the industry. Without strong, accountable, and efficient vendor relationships, the core mission of helping people and families can’t be achieved.
Why Vendor Relationships Matter
Working with vendors is part of the crucial daily work for healthcare organizations large and small, from the largest providers to mid-level urgent care and non-acute facilities to independent physician’s offices. Often administrators and other healthcare professionals look at this relationship as purely transactional. That’s only natural because, of course, goods, services, and money are being exchanged.
There’s another way of looking at these relationships. Yes, the broad range of vendors provide the means and materials that keep healthcare running. Without medical supplies, transportation in all its forms, laundry and waste disposal, and information technology services, nothing gets done. But purely transactional relationships always leave potential on the table.
New Ways of Looking at Vendor Relationships
Recognizing the importance of vendor relationships hinges on knowing:
- While the transactional aspect of buying and selling defines the relationship on the surface, focusing on the growth and success of your healthcare organization can mean looking for more.
- Strong vendor relationships, between healthcare organizations and the people that run them, can yield both financial benefits as well as upsides that might not be immediately apparent.
- A point of view based on mutual benefit and ethical trust takes the vendor relationship beyond the transactional, with a recognition that you’re not in an adversarial relationship or on opposing sides of a business situation.
- Looking at vendor relationships grounded in good business and accountability opens the door for an abundance mindset based on mutual learning and growth.
Healthcare Vendor Relationships: The Bottom Line
A report by Censinet and the Ponemon Institute looks at vendor relationships and managing risk in the healthcare industry. It underscores how crucial these relationships are to healthcare organizations’ bottom line.
Looking at larger organizations, the study found that providers average more than 1300 vendors under contract, but only 27% said they evaluate all these relationships annually. The report also estimated that vendor risk management costs the healthcare industry nearly $24 billion annually.
Scaled down or taken at face value, these numbers tell an important story. A lack of solid, accountable, mutually beneficial vendor relationships costs money, reduces efficiency, and leaves money on the table. And this is even before the intangible benefits that make healthcare organizations better at serving people, and better places to work that retain talent and cultivate high morale.
Healthcare Vendor Relationship Strategies
Managing vendor relationship strategies in the healthcare industry can lead to mutually beneficial relationships both in the long- and short-term. It can be a process and might not get where you want to be overnight, but it’s worth the effort.
A few beneficial points of view for looking at this relationship are:
Take the time to have conversations with representatives from your important vendors. In an ever-changing industry, where everything from costs to supply chain considerations are always evolving, find out about the vendor’s company. Where are they going? What are their pain points and challenges?
Now return the favor. Let the vendor know about your organization and how the vendor’s products and services contribute. Share how your vendor is making your healthcare organization function better. Once you’re having a constructive, mutually respectful conversation, bring up area where the vendor could be helping more.
Healthcare vendors are busy (just like you). You might be challenged in finding the time to look for innovative solutions beyond the “way things are now.” Your vendor might also see your relationship as working if contracts are being fulfilled and payments are being processed.
There’s room for more. Many vendors have a wealth of expertise in their services and goods beyond everyday fulfillment. Let them tell you about new products that might serve your organization better.
Clear Boundaries and Expectations
When you’re communicating about the big picture in your vendor relationship, you can both look at it as a mutually beneficial partnership. Make sure you’re setting and managing expectations within a framework of abundant collaboration.
Once you’re communicating, don’t stop. Just as one report tells us that organizations with effective internal communications see increases in efficiency by up to 25%, the same goes for the vendor relationship. Set clear written expectations and establish key performance indicators (KPIs) to measure your progress.
Technological Solutions for Vendor Relationships
Technological solutions can be a healthcare organization’s best friend in supporting strong vendor relationships. Procurement Partners range of benefits in spend management and invoice automation unlocks capacity in:
- Collaboration and partnership with vendors by breaking down technological hurdles
- A single, easy to use platform that tracks inventory and spend with clarity and accountability
- Easy vendor onboarding so new vendor relationships don’t get bogged down at the starting line
- Quick payments to keep your vendors’ business office happy and hassle-free
- Contract compliance (at 95%) to emphasize accountability and responsibility.
Looking to Reduce Your Annual Spend?
Procurement Partners helps customers reduce their annual spend by 10% or more with an easy-to-use portal where users can place orders and process invoices for all vendors. Procurement Partners is the leading spend management system for Post-Acute Care and Senior Living and has helped companies achieve 40% time savings and 95% contract compliance through automating the procure-to-pay process.