Top 5 Procurement Mistakes Medical Practices Make and How to Avoid Them

November 30, 2025 by Medigroup

For medical offices, physician practices, clinics, surgery centers, and many more, procurement mistakes can cost between 10-30 percent of targeted savings annually. Unlike large hospital systems with dedicated procurement departments, smaller healthcare facilities often handle purchasing without specialized expertise, creating vulnerabilities that impact the bottom line and disrupt patient care.

In this article, we’ll talk about the five most critical procurement mistakes facing healthcare practices and provide actionable strategies to avoid them.

Mistake #1: Operating Without a Structured Procurement Process

The Problem

Many medical practices lack formal procurement protocols. This often leads to staff making purchases using personal credit cards or company cards without proper oversight. This creates “maverick spend”—unauthorized purchasing that happens outside established workflows.

At the end of the day practices face rushed, last-minute purchases, panic-driven buying decisions, and staff bypassing approval processes. Research shows up to 8.5 percent of invoices are duplicates, meaning practices could be paying for the same items multiple times. When practices grow or add services, uncontrolled procurement can cause serious cash flow problems.

The Solution

Establish a clear purchasing process that balances efficiency with control:

• Require purchase orders for purchases above a set threshold
• Implement approval workflows where managers review requests before ordering
• Create fast-track processes for genuine emergencies
• Use centralized tracking to monitor orders and prevent duplicates

The key is making the process accessible enough that staff won’t circumvent it. When employees can submit requests and get fast approvals, they’ll follow established protocols.

Mistake #2: Poor Vendor and Supplier Management

The Problem

Healthcare practices face three interconnected vendor challenges:
Not Using Approved Vendors: Without centralized vendor databases, staff purchase from any supplier who can deliver quickly, often paying higher prices and potentially compromising quality or compliance.
Poor Supplier Performance: Vendors may consistently miss deadlines, deliver incorrect quantities, or provide substandard products. Late shipments of critical medical supplies disrupt patient care, while inferior products compromise service quality.

Failing to Negotiate: Many staff members accept initial prices without negotiation, leaving thousands of dollars on the table annually.

The Solution

Create a Preferred Vendor List: Maintain a centralized catalog of approved vendors, including pre-negotiated pricing, delivery timelines, product specifications, and performance history.

Monitor Supplier Performance: Regularly evaluate vendors on delivery rates, product quality, compliance, pricing competitiveness, and customer service. Be prepared to switch vendors who consistently underperform.
Leverage Contract Negotiation Expertise: Partner with a Group Purchasing Organization (GPO) specializing in healthcare practices. Professional contract negotiation can secure 10-25 percent discounts on medical supplies, pharmaceuticals, office equipment, and facility services.

As a specialized GPO, MediGroup understands the unique needs of medical offices and clinics, negotiating terms that balance cost savings with quality and compliance. By pooling purchasing power, you gain enterprise-level pricing while maintaining personalized service and flexibility.

Mistake #3: Inadequate Budget Visibility and Control

The Problem

Exceeding Budgets Without Realizing It: When staff lacks real-time visibility into budgets, they can’t make informed decisions. They don’t know what’s been spent, what’s approved but unpurchased, or how pending requests will impact budgets, leading to unexpected overruns.

Price Volatility: Healthcare supply costs are volatile, with commodity prices swinging up to 70 percent within a single year. The Federal Reserve estimates 2.5 percent long-term inflation, but medical supplies often face steeper increases, making accurate budgeting difficult.

The Solution

Implement Real-Time Budget Tracking: Use systems that show paid expenses, approved purchases, pending requests, and projected budget impact before approving new purchases.

Protect Against Price Volatility:

• Use fixed-price contracts for frequently purchased items
• Build 5-10 percent buffer room into budgets
• Stock up strategically on non-perishable items when prices are favorable
• Monitor market trends to anticipate changes

Working with procurement services that track healthcare supply trends helps you make strategic purchasing decisions and avoid price spike surprises.

Mistake #4: Inventory Management Failures

The Problem

Purchasing Duplicates or Excess Items: Without visibility into existing inventory and pending orders, staff purchase already-ordered items or buy excess quantities. Duplicate invoices are a reason for significant waste.
Paying for Damaged or Missing Goods: Approximately 90,000 packages disappear daily, and 11 percent of items arrive damaged. For practices receiving time-sensitive supplies like refrigerated vaccines or sterile instruments, this creates financial losses and care disruptions.

The Solution

Prevent Duplicate Orders:

• Implement multi-person approval workflows
• Use procurement software to track inventory, pending orders, and pipeline purchases
• Conduct regular inventory audits
• Create reorder point systems triggering purchases at optimal levels

If duplicates occur, immediately contact the supplier. Established relationships often allow returns or cancellations.
Handle Damaged or Missing Goods Properly:

1. Document immediately with photos and detailed notes
2. Refuse delivery when damage is obvious
3. Notify courier and supplier immediately
4. Keep all documentation, including invoices, receipts, and correspondence
5. Understand freight terms to determine liability

Establish clear receiving protocols, including inspection procedures and documentation requirements, to protect your practice financially.

Mistake #5: Fraud Prevention and Compliance Control Issues

The Problem

Procurement fraud can cost healthcare organizations up to five percent of revenue annually, yet takes an average of 12 months to detect. Common schemes include fake invoices, price markup schemes, vendor kickbacks, and awarding contracts to employee-owned shell companies.

Smaller healthcare facilities’ decentralized procurement, limited oversight, and personal staff-vendor relationships create environments where fraud flourishes undetected.

The Solution

Implement Three-Way Matching: Before payment, verify that purchase orders, receiving reports, and vendor invoices align. This catches most fraudulent schemes and honest errors.

Separate Key Responsibilities: Different people should handle requesting, approving, receiving, and paying for purchases. This separation makes fraud require collusion, significantly reducing risk.

Train Staff to Identify Red Flags:

• Multiple invoices for identical items
• Prices significantly above market rates
• Unusual payment methods
• Missing documentation
• Resistance to competitive bidding

Use Centralized Procurement Systems: Modern software creates audit trails documenting every purchasing step, making anomalies easier to detect and fraudulent transactions traceable.

Conduct Regular Audits: Periodically review vendor relationships, pricing versus market rates, and purchasing patterns. Random audits demonstrate oversight and deter fraud.

Building a Sustainable Procurement Strategy

To avoid these procurement mistakes you need systematic approaches supported by proper tools, processes, and partnerships. Successful medical practices recognize that an effective procurement strategy ensures healthy cash flow, uninterrupted patient care, and regulatory compliance, which allows staff to focus on clinical excellence.

Taking Action

Assess Your Current State: Evaluate your procurement process against these mistakes. Where are your greatest vulnerabilities?
Prioritize Improvements: Focus first on areas causing the most significant pain or financial impact.

Leverage Expertise: Consider partnering with healthcare-specialized procurement services or GPOs that bring negotiated pricing, best-practice processes, vendor management systems, and compliance expertise.

Invest in Tools: Cloud-based procurement solutions designed for small to mid-sized healthcare practices provide budget visibility, approval workflows, vendor management, and fraud controls at accessible prices.

Train Your Team: Ensure all purchasing staff understand your protocols, why they matter, and how to follow them efficiently.

Conclusion

These procurement mistakes cost healthcare practices thousands annually. It creates additional stress for both business owners and staff. Yet each is preventable with the right procurement strategy.

By implementing solutions we discussed in this guide, your practice can transform procurement from a financial drain into a strategic advantage.

Effective procurement isn’t about tricks or luck. It’s about getting quality supplies and services while optimizing costs and reducing administrative burden. We provided you with 5 of the most popular yet serious mistakes we see medical practices making. Now it’s up to you: become proactive and make informed decisions. Contact MediGroup and protect your bottom line while partnering with leading vendors in your field.