Multi-Facility, Long-Term, Acute Healthcare Organization
Spend Analysis – Sourcing Cost Reduction / Process Improvement and Transformation
A long-term, acute healthcare organization required an assessment of their current Purchased Services contracts and spend. A substantial portion of their core spend categories were outsourced to a third party procurement provider. Significant spend was not being addressed, however, and Client wanted a full understanding of the number of contracts across total spend and with how many suppliers.
A key objective was to benchmark contract terms against best-in-class, in order to understand how to aggregate spend across all facilities. To ensure the analysis would lead to optimized contracting, the Client identified project goals related to their spend for 14 facilities. The goals required:
We assembled a team of Supply Chain professionals, including a Project Manager, to focus on category plan and benchmarking initiatives and a Data Analyst/subject-matter expert (with healthcare expertise) to focus on existing contract reviews and spend pull/analysis. Using a number of tools, including our proprietary Category Excellence frameworks (Category Approach, Category Segmentation, Spend Analytics), we worked with the Client to conduct:
RGP uncovered significant process improvement opportunities in Contract Management and Tracking, Sourcing Events/Price Benchmarking, and Supplier Performance Management. Additionally, we identified key activities and protocols which were causing the Client significant contract leakage and non-compliance. We developed recommendations to help improve compliance and bring spend under better control.
Through our detailed and comprehensive value analysis, we estimated potential savings of $900K on $15MM in spend, to be captured via sourcing events (spend consolidation) and contract term repositioning with suppliers and providers.