The New Request For Proposal Process
By Ibby Smith Stofer
Having spent many long hours working with the sales group, I wanted to take a look at how healthcare providers (hospitals and integrated delivery networks) are currently interacting with both manufacturers and representatives in selecting products or services. What has changed in the selection process with all the emphasis on healthcare spending and technology?
Just a decade or so ago, the healthcare systems relied on the company’s representatives to introduce new technology, provide them with both features, benefits, and of course costs. They had little objective evidence to assist them in validating the difference in quality, outcomes, or costs and often were unaware of any competitive products or services. Often they simply sent out either a request for information or a request for proposal if there was an interest in upgrading or acquiring new technology. Clinicians usually spearheaded the initiative and were the sales person’s champions.
Then the Internet became a prescreen tool used by many, if not all, individuals charged with selecting technology solutions. Here they can find not only which companies make competing products, but also what ratings or rankings the product and company have received by independent third parties. Searches such as top rated respiratory or infusion device manufacturers result in potentially thousands of hits.
Today when the representative approaches the customer he or she will likely meet someone who has taken the time to educate themselves before any discussions on upgrade or purchase has started.
Sites like ECRI, KLAS, and MD Buylines as well as the major group purchasing organizations are tools used to both select and eliminate companies from consideration. They provide comparative price points as well as product and service performance insight and references.
All this preparation can and is often done well in advance of any request for information or proposal being submitted to the local sales representative or corporate offices of the manufacturers or suppliers.
Another recent tool that has changed the selection and RFP (request for proposal) process is an electronic request for proposal that enables all companies under consideration to electronically respond to qualifying questions following submitting the company’s response to a written request for information and specifications. This information is compiled and a teleconference hosted by a third party who directs questions to the suppliers to allow the purchaser to ask clarifying questions. All parties are generally on the same call but cannot see the competitor’s responses. This process was both cumbersome and time consuming for both parties. Often the responses were cut and paste of the companies’ websites. Then the customer would have to develop a comparative tool to see how the different companies had responded. Following their internal review the art of negotiation would begin.
With the advancement of technology and the desire to reduce the amount of time spent on this tedious but necessary process, E-sourcing has come to the forefront. A leader in this initiative is Johns Hopkins in Baltimore. They have reduced the time required to source from 3 months to 3 to 4 weeks and they have saved on average 20+% on items ranging from construction to coffee and just about everything in between.
Another approach that seems to be appealing to some facilities is a takeoff of the traditional group buy that is sometimes extended to group purchasing organizations. Here, the companies agree to aggregate the purchase commitments that the members make to provide lower costs.
Today, there are companies seeking to identify providers seeking the same product or services within a 3 to 6 month period and they are willing to find providers that will offer a deeper discount for capturing the sale sooner and without relying on the local rep to find the opportunity. Healthcare providers use this as yet another tool to lower costs, remove resource requirements and eliminate the search and comparison traditionally associated with the selection process.
Healthcare in America has certainly come to a new level when one thinks about the procurement process. What will be next? If only we had the ability to foresee the future, but we don’t so just be prepared that what was or is today will likely be different tomorrow.