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Getting the Most from Your Foodservice Agreements

Peter CayanBy Peter Cayan, MA, RD, CDN, LDN – Vice President, Supply Chain and Nutrition Consulting, Intalere

Purchased services make up roughly 40 percent of the average health system’s supply chain costs. However, when it comes time to managing contractors, including foodservice, many healthcare facilities fall into the habit of allowing their agreement to roll over year after year without any type of competitive bid or meaningful review that could identify areas for improvement.

In order to optimize your contracted foodservice management agreement, it is probably a worthwhile initiative to undertake a thorough review of your current agreement. To ensure your needs and expectations are fully met, you should be taking into account factors such as contractor costs compared to national benchmarks, a legal review of the terms and conditions of the agreement, and goals and objectives aligned with the strategic direction of your organization.

As part of the nutrition contract audit and analysis, at a minimum, a market-focused review of a client’s current business and legal foodservice management contract terms to determine where those terms stand compared to the market should be performed on a regular basis. To provide more detailed, comprehensive knowledge, it is also important to examine invoices to confirm that a client’s current foodservice management contractor is billing in accordance with the terms of the client’s current agreement. To maximize the review process and findings, a formalized report that includes recommendations on ways to optimize the business and legal terms in the facility’s current foodservice management agreement should be a conclusive step.

Because patients’ perceptions of food and foodservice play a large role in the overall satisfaction with a facility, in addition to the benchmarking and cost reduction benefits, the audit process can be a vital tool in assisting facilities to aligning foodservice management operational performance objectives to patient satisfaction, quality and other key performance indicators.

As a final note, providers can use the results to renegotiate existing foodservice management agreements with their current contractors even before they are up for renewal or create a request for proposal (RFP). Most foodservice contractors will negotiate improved terms in exchange for an extension of an existing agreement so that they do not need to go out to bid. Alternatively, you may want to use the results of an audit to put your contract out to bid if you want to maximize your opportunity to increase your savings with your current vendor through a competitive bidding process or if you have been thinking about changing foodservice vendors.

Ask Intalere about our Nutrition Contract Audit and Analysis Service designed to help optimize your contracted foodservice management agreement. Our service includes a review your current contractor costs compared to national benchmarks, a legal review the terms and conditions of the agreement, and strategic direction to ensure your needs and expectations are fully met.