You know what equipment your hospital needs. And the make and model your doctors prefer. Now you need to figure out how to negotiate the best price, service coverage and terms. Don’t overlook competition as a key lever that moves suppliers in negotiations. If suppliers believe they risk losing a sale, they are more motivated to get you better prices and terms.
Create (legitimate) competition. Legitimate means a product or supplier that your doctors might actually consider as an alternative to their first choice. Without competitive pressure, suppliers can hold the line on price and you have no real leverage to use to your advantage. And never let one supplier know they’ve won the business until you are confident you’ve got the best possible deal on the cost of the product, as well as ongoing service and support that is often needed.
Recently, a hospital was buying a surgical navigation system selected by providers. After several rounds of unsuccessful negotiation, the supplier indicated they had “no more room to discount”. The hospital then solicited a very compelling proposal from another supplier for a different system. As soon as the preferred supplier got wind of the competition, they were suddenly able to reduce the cost by another 13% ($20,000) plus add an extra year of warranty at no cost. Are you using competition to your fullest advantage?
Stay tuned for Part 2 where we explore another angle for creating (legitimate) competition…