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When to Use a National, Regional, or Local Purchased Services Vendor

Posted by Chris Heckler on Feb 3, 2015 8:00:00 AM
Chris Heckler

One of the key differentiators within purchased services categories is the ability for many of the services to be fulfilled by local, regional, and national vendors. Just think about it, you rarely have this option when sourcing medical/surgical, pharmaceutical, capital equipment and physician preference products, and your choice can have dramatic impacts on both pricing and service quality.

So let’s dive in and see which contract types make sense for different purchased services categories.

national regional or local contracts

Nationally Sourced Categories

The categories that should most likely be sourced with national vendors are the typical categories you will find covered on your national GPO’s portfolio. This is due to the fact that most of the large GPOs require their vendors to be able to offer their services to all of their members across the US. There are exceptions to this now that the GPOs are finally realizing the value that regional vendors can add, but their contract portfolios are still overwhelmingly made up of national vendors.

So which categories fall into this bucket? There are too many to list but here are some of the primary ones:

1. Any Managed Service:

    • Foodservice Management
    • EVS/Housekeeping Management
    • Biomed/Clinical Engineering Services
    • Laundry and Linen Services

2. Most Revenue Cycle Services:

    • Collections
    • Patient Billing/Statements
    • Claims Management
    • Reimbursements
    • Compliance Services

3. Some IT/Telecom Categories:

    • IT Reseller
    • EMR
    • Phone Service (wireless, etc.)

4. A Few HR Categories:

    • Staffing (not always)
    • Patient Satisfaction Surveys
    • Clinical Education Software/Services (CME, etc.)

5. Several Ancillary/Support Services:

    • Courier Services
    • Interpretation Services
    • Freight Management
    • Reprocessing

6. One Clinical Service:

    • Reference Lab Services

Before I get a bunch of hate mail for recommending some of these categories to be sourced nationally, I do want to say that there are plenty of local and regional vendors that play in these categories. I’m strictly pointing out that these are the categories that have national vendors as options and that most likely aggregate so much volume that their prices tend to be more competitive.

On the other hand, there are categories where the price differential is so large that you really should lean towards a national vendor. For example, if you are not using national vendors for courier services or freight management then you are most likely leaving 10%-20% on the table. Look for future posts about these categories.

Texas regional purchased service contracts

Regionally Sourced Categories

I’m sure you have heard of the big increase in regional purchasing coalitions (RPCs) over the past five years and many providers are probably part of one. This is primarily due to the massive consolidation within the provider side of the health care industry. Many hospitals are either trying to compete against (or fend off) the for-profits that are growing larger and larger in their markets, so they have been forced to partner with other hospitals to aggregate their volume and reduce their costs.

RPCs are basically regional GPOs that have the ability to commit volume (usually) from their members so that in some categories they actually receive better pricing (usually) than the national GPOs. National GPOs also have committed volume programs but most of them do not offer these for purchased services categories.

As a definition, let’s assume that regional vendors do not serve the entire United States. Their primary coverage area is greater than just a city or county.

In order to get the biggest bang for the buck, here are some of the categories that you should look at contracting for at the regional level.

1. Facility Support Services

    • HVAC Services
    • Waste Management
    • Utilities
      • Electricity
      • Natural Gas
      • Water
    • Distribution
      • Food (if possible)
      • EVS
    • Printing Services (sometimes)

2. IT/Telecom Services

    • Cabling Services
    • Phone System Services

3. Outsourced Clinical Services

    • Dialysis Services
    • Imaging Services
    • Radiology Services
    • Ambulance Services
    • And many more

4. HR Services

    • Advertising (sometimes)
    • Some Staffing
    • Relocation Services

5. Ancillary Services

    • Document Management
      • Storage
      • Shredding
      • Scanning
    • Transportation Services
      • Patient Transport
      • Shuttle Service
      • Parking/Valet
      • Taxis

Again, these categories have corresponding local and national vendors, too. However, it’s been my experience that aggregating your volume to a mid-level, regional vendor will help you realize the most savings. At a minimum, you should be including these vendors in any RFP that you send out to help benchmark their proposals versus the national and local vendors.

austin texas local purchased service contract

Locally Sourced Categories

These most likely are very obvious but you should probably not look at your GPOs for help in categories that are typically sourced at a “micro local” level within your city or county. These will be highly customized to your specific situation.

Here are some of the locally sourced categories:

1. Food Products

    • Dairy
    • Bread
    • Most fruits and vegetables

2. Facility Support Services

    • Landscaping/Lawn Services
    • Snow Removal Services
    • Electricians, Painters, Plumbers
    • Cleaning Services
    • Repairs and Maintenance

3. Outsourced Clinical Services

    • Physicians
      • Anesthesia
      • Emergency
      • Specialty
      • And so on

4. HR Services

    • Counseling Services
    • Realty Services
    • Child Care Services

5. Ancillary Services

    • Armored Transportation
    • Photography Services
    • Aquarium and Pool Cleaning
    • Towing Services

Conclusion

Hopefully knowing where you should be looking for some of your purchased services categories is helpful. It will at least help your contracting managers know where to start looking when certain categories show up on their work plan. Again, it’s important to note that these are not the only available options to you. Almost any service can be sourced at either the local, regional, or national level. However, you will most likely find the best results using the outline above.

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Topics: Purchased Services

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