Four Steps to Effectively Manage Your Purchased Services Spend

Chris Gormley, MedpricerMarshal Busko

Four Steps to Effectively Manage Your Purchased Services Spend

By Chris Gormley, CEO, Medpricer, and Marshall Busko, Senior Director, Information Technology Solutions, Intalere

Purchased Services represent 40-50 percent of a health system’s non-labor spend making it a significant untapped opportunity to help healthcare providers meet their budgets in an era of declining reimbursements. But how can you effectively manage your Purchased Services spend?

Let’s take a look at four areas that you need to cover to make sure you are maximizing your Purchased Services spend.

Spend Data: Collect and Characterize Your Purchased Services Spend Data

The first step in getting the most from your Purchased Services spend is to understand it. At a minimum, you need to determine:

  • Overall Purchased Services spend.
  • Spend by Purchased Service category.
  • Spend by supplier.
  • Spend by location/stakeholder group.


After compiling the above information, identify individuals who can represent the needs of the local facility or stakeholder group for the category you intend to source. They’ll serve as stakeholders and decision makers on an award team for that category. Each of these individuals should:

  • Be senior enough to make supplier decisions and tradeoff to support system-wide category objectives.
  • Be able to clearly articulate the facility or stakeholder group requirements – scope of work, quality levels, preferred suppliers, etc.
  • Know the process for transitioning suppliers and implementing new programs.


By now, you’ve been able to determine more specifically what your sourcing needs are. You have also examined and taken into account the varying needs of each facility and the particulars of each project, and you’re ready to begin the sourcing process.

For the purposes of our discussion, we will assume that you are using a competitive bidding process.

  • Award bundling.
  • Clear and complete request for proposal (RFP).
  • Supplier communications.
  • Negotiation methods.


Make sure your well-negotiated contracts are adhered to in order to realize expected savings. In terms of “follow through,” make sure that these three steps are part of the process.

  • Implementation.
  • Monitor contract use.
  • Report and measure.

Selecting, negotiating and controlling Purchased Services at your facility can be a daunting task, but it can pay significant dividends in terms of cost savings and efficiencies.

Download the white paper How to Get the Most from Your Purchased Services Spend from Intalere partner Medpricer to learn all the details of implementing a successful Purchased Services program.

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