Favorable supplier pricing is often the result of long, intense, contract negotiations. Closure of these contracts takes numerous presentations, meetings, phone calls, and approvals. Don’t let yourself fall in the gap of one contract ending and another starting, it can be costly. Plan ahead now.
Due to the complex nature of hospital contract negotiations its best to give yourself plenty of lead time to close the contract here are some tips to help you on your way:
1. Develop and publish a timeline of events. Assign ownership of key milestones and hold those individuals accountable.
2. Get legal involved early. Their approval is often the lengthiest part of closing the contract. Make sure they know a contract is going to expire so they can deliver on time.
3. Give yourself a cushion. Add extra time in the process for the unknown bottlenecks that might occur. Vacations, sick days and emergencies are common and only get worse when facing tight deadlines.
4. Cover the gap. Just like car insurance on a new vehicle, you need to be covered for the unexpected. Add language to the contract that states what type of pricing should be received should a gap occur between one contract ending and the next starting.
5. Apply Penalties. Consider penalties that trigger should there be a delay on the supplier side that actually creates the gap.
6. Stagger the start and end dates. Be mindful of other contracts that are open and pending with different suppliers. You’ll want to avoid 15 contracts that all expire on December 31st.
Contract renewals are complex. Many departments and teams need to coordinate in order to make it a success. This dance of the business world has tricky steps. Rest assured Strategic Audit Solutions has you covered for those times in the past where you may have slipped into the gap. Our expert teams apply industry specific best practices to help you recover your lost profits.
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