Importance of Vendor Relationship and How to Reap its Benefits

May 26, 2023 by Medigroup

Where would healthcare be without healthcare vendors? Healthcare vendors are the lifeblood of the industry. They provide the equipment and products that allow health providers to continue helping patients. That’s why it’s important to maintain accountable, efficient, and strong vendor relationships.

Every healthcare organization must work with vendors. It’s part of their critical daily work, from the largest providers to urgent care and non-acute facilities to solo practice physician’s offices. Too often, healthcare administrators and other non-practicing healthcare professionals view their vendor relationships as purely transactional because they are exchanging goods and services for money.

But purely transactional relationships always leave something to be desired. Your relationships with healthcare vendors should be more than transactional if you want to reap the benefits. Because, without medical supplies and equipment, transportation services, laundry, medical waste disposal, and information technology services, your healthcare organization can’t accomplish anything. Your vendors deliver the materials that keep your business running.

We Need a Different View of Vendor Relationships

First, recognize the importance of your vendor relationships to your organization. The transactional nature of buying and selling only defines the relationship on the surface. However, if you want to focus on the growth and success of your healthcare organization, you should be looking deeper.
Building strong vendor relationships can bring you financial benefits like reducing healthcare supply chain costs and other benefits that might not be readily apparent.

Basing your relationship on mutual benefits, strong ethics, and trust takes it beyond the transactional. That means recognizing that you’re not in an adversarial relationship or sitting on opposite sides of a business deal. When you base vendor relationships on good business, mutual accountability, mutual learning, and growth, you create an abundance mindset.

Vendor Relationships Are Critical to Your Bottom Line

According to “The Economic Impact of Third-Party Risk Management in Healthcare,” a report from Censinet and the Ponemon Institute that looked at vendor relationships and managing risk in the healthcare industry, maximizing vendor relationships is critical to your healthcare organization’s bottom line.

The study found that large healthcare providers average more than 1300 vendors under contract, but only 27% said they evaluate all these relationships annually. The report also stated that vendor risk management costs the healthcare industry $23.7 billion annually.

These numbers tell an important story. Without strong, accountable, mutually beneficial vendor relationships, you’ll waste money, reduce operating efficiency, and expose your organization to greater risk. You also lose the intangible benefits that make your healthcare organization better at serving people–a better place to work for talented employees while cultivating high morale.

Strategies for Maximizing Healthcare Vendor Relationships

You need the right strategies for managing and maximizing your healthcare vendor relationships. These strategies can lead to mutually beneficial long-term and short-term relationships. Although they might not get you to your goals overnight, they’re worth the extra effort. Consider the following strategies for your healthcare vendor management system:

Mutual Education

Invest time in frequent conversations with representatives from your most important vendors. In the ever-changing industry, where everything from healthcare supply chain costs to other supply chain considerations is constantly evolving, you should learn more about each vendor’s company. You should understand where they’re going, their pain points, and their challenges.

Since mutual education cuts both ways, tell the vendor about your organization and how the vendor’s products and services can contribute to your success. Explain how the vendor is helping your healthcare organization function better. In the context of a constructive, mutually respectful conversation, you can safely discuss any area where the vendor could help more.

A Mutually Beneficial Partnership

Your vendor relationship is supposed to be a mutually beneficial partnership. Keep that in mind when you’re communicating about big-picture issues. Your mutual goal is setting and managing expectations within a framework of close collaboration.

Once you’ve opened the lines of communication, keep them open. Research tells us that organizations with effective internal communications can increase their efficiency by up to 25%. Ditto for your vendor relationships. Then measure your progress by setting clear written expectations and establishing key performance indicators (KPIs).

Collaborative Consulting

You and your healthcare vendors are busy people. Finding the time to look for innovative solutions can be challenging for both sides. If your vendor is fulfilling contracts and processing payments, he or she might see your relationship as working just fine.

However, there’s still room for improvement. For example, many vendors have expertise in their services and goods that goes far beyond fulfillment. Ask them about their new products and services that might better serve your healthcare organization.

Technological Solutions

Technology can be your healthcare organization’s best friend. Technological solutions that strengthen and support strong vendor relationships can offer a range of benefits for spending management and invoice automation. Technology can unlock capacity with:

A single, easy-to-use platform that tracks inventory spend with clarity and accountability
Easy vendor onboarding so new relationships don’t get bogged down at the start
Fast payments to keep your vendors’ business office happy and hassle-free
Collaboration and partnership by breaking down technological hurdles
Contract compliance to emphasize accountability and responsibility

If you are interested in learning more about a healthcare vendor management system, vendor relations, healthcare supply chains, working with a group purchasing organization, and saving money for your healthcare organization or practice, contact MediGroup today.