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Management

Optimising a practice's supply of services

27/10/2017
By Karen Crouch
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Managing external service arrangements might not be the most exciting task but it is essential to a successful practice. KAREN CROUCH discusses how to gain better control of third-party services.

The beginning of a new year is the ideal time to review a range of business matters, especially services that the practice receives from external suppliers. 

While performance management of internal resources – clinical and administrative – is within the control of owners, externally sourced products and services are less manageable and will often deserve greater scrutiny. 

There is a wide range of external services that are essential to the smooth operation of the practice, with some even being critical to delivery of ongoing healthcare.  The first few months of the year can be the perfect time to review services such as cleaning, telecommunications, technology, medical and office supplies, premises maintenance and security. 

Mission critical 

"While supplier management is an administrative task and can sometimes be tedious, it is undoubtedly an essential contributor to successful management of practice operations."

Other important areas include waste disposal, insurance, legal, pest control, air conditioning and accountancy. 

Control of these services is a vital element in the practice manager’s armory of management tools but unfortunately only some managers undertake this mission critical-function in a structured, disciplined and documented fashion. 

There are basically two forms of supplier arrangements: contract based and informal.  Cleaning, laundry and office supplies, for example, may be based on a verbal agreement supported by submission of formal tax invoices and regular payments; however, other services or products such as insurance, medical supplies and accountancy may be acquired on a more formal basis. 

Regardless of the supplier arrangement type, the duration and terms of each ‘deal’ will mean that they need to be reviewed on varying dates, which can often expose the practice to the risk of the area being overlooked. 

Hopefully that does not occur with a critical supplier agreement such as insurance policy renewal. 

Advance notice 

Admittedly, many suppliers highlight renewals with an advance notification or invoice and major suppliers often assign an account manager who invariably highlights an upcoming contract expiry in advance. 

However, reliance on external ‘alerts’ is a reactive approach to supply management and not the most desirable. 

Review service agreemenst in the New Year
Review service agreemenst in the New Year

What if the renewal alert notification arrives while staff are on leave or when it’s nearly too late to consider an alternative quote from another supplier? 

Prodesign
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A relatively simple yet structured solution is to address the aforementioned risks by employing a documented Supplier Management Program. 

This could be as simple as a spreadsheet or ‘ready reckoner’ that details the following:

  • Supplier’s name/company

  • Service/products provided

  • Formal or informal agreement

  • Contract renewal dates

  • Date/s on which each contract should be reviewed (renegotiated, alternative quote sought etc) prior to renewals. 

Naturally, the reminder ‘alert’ should be diarised in a manner that is not prone to being overlooked – an example could be adding it to Microsoft Outlook or another system calendar – so the action is reliably highlighted. 

Don't forget 

In addition, once formal contracts are renewed, a further diary note should be logged for the next review or renewal date. 

While supplier management is an administrative task and can sometimes be tedious, it is undoubtedly an essential contributor to successful management of practice operations. 

This program format may also be employed for other important, periodically recurring events like staff appraisals. 

How best to manage supplier agreements

  • Ensure renewals are diarised so that advance assessments may be undertaken to determine whether alternative quotes should be sought for comparison

  • Ensure contracts are renewed on time, particularly critical agreements such as business insurance and IT support

  • Assess value of the services or products received, including contract terms – do they represent value or provide any form of competitive advantage?

  • Examine depth of relationship and promptness of service delivery, particularly those on which the practice is vitally dependent such as technology and telecommunications

  • Negotiate the most cost-effective deals, seeking discounts and other concessions for regularly renewed contracts.

 

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