Cost Savings Through Spend Control: The General Contract Policy

Limiting Contract Execution to Key Staff

Content Areas: Finance | Tags: Capital Equipment, Contracting, Purchased Services | Formats: Event
Member Price: Free | Non-Member Price: $99 | CPE Credit: 1

Discussions arise in large numbers about uncontrolled and unchanneled spend throughout a healthcare organization from purchase order requests, P-Card use, or petty cash. Gaining control and reducing expenses starts by limiting who can authorize spending on behalf of a healthcare organization and ensure suppliers adhere contractual obligations and purchases. Working with the C-Suite, supply chain executives can effectively help channel almost all purchases to a single source, giving the organization increased control and transparency to what is being spent, how it is being spent, and why it is being spent. 

Learn how to limit contractual authority for the procurement of goods, services, and capital within your organization through the development of a General Contract policy that controls and channels almost every purchase through the purchasing department. This session will discuss the key elements of a policy, how to gain approval and recognition of the policy, and the ramifications of bypassing the policy itself.  This process has been successfully approved, launched and implemented in a number of hospitals, with lessons that are transferable to any size organization, from a small hospital to a large health care system.

How this Session Relates to the Cost, Quality, and Outcomes (CQO) Movement: With the use of the General Contract Policy, costs may be reduced as contracts are centralized, negotiated and managed by the appropriate staff, and product standardization is improved. Consistent processes lead to reduced time spent on contracts, reduction in errors, and standardized contract terms and conditions. Purchases made by authorized staff can ensure that products are appropriately procured and approved.

Learning Objectives

  • List at least two areas where spend can be significantly reduced by controlling contractual authority.
  • Explain the critical importance of senior C-suite backing when implementing and enforcing the General Contract Policy.
  • Identify the key points to focus when making a presentation to senior management about implementing the General Contract Policy.
  • Describe how the General Contract Policy becomes the foundation for capital equipment, services and service contracting.

Presenter: John Strong , MBA, Independent Supply Chain Consultant