The 2017 Tax Cuts and Jobs Act takes effect in this 2018 tax season. With many suppliers taking advantage of newly reduced corporate tax rates, their profit margins stand to improve substantially. It begs the question: what do healthcare providers stand to gain from this economic shift?
Low risk, high ROI
Supply chains are in a unique position to push for further savings with their incumbents suppliers. Now is time to leverage supplier relationships to get more from your purchased services contracts. Incumbent negotiations are equally advantageous to suppliers as well – in the form of a market share gain advantage. Re-negotiation serves as a platform to bundle services and deliverables.
Here are some practical steps on how to leverage your supplier relationships this tax season:
Step 1 – Check your contracts before the Automatic Renewal clause kicks in
Search your contracts database for renewal and expiry terms to seek savings on categories that were negotiated before new tax laws were in effect. Search for contracts negotiated more than two years ago with terms like Termination for Convenience that enable you to renegotiate at post-tax cut rates.
Step 2 – Seek competitive insights with Precision Benchmarks
Benchmark your purchased services spend to see how your contracts compare in the market. This approach gives organizations concrete savings targets with reasonably high confidence and detailed data to have a discussion with your incumbent suppliers.
Step 3 – Approach incumbent suppliers to negotiate
Armed with benchmark data, invite suppliers to share in lower cost structure. You can also use this opportunity to improve service level terms or bundle service offerings to your advantage.
With U.S. hospitals overspending an estimated $39 billion every year, it’s more important than ever for organizations to lean on their pre-existing supplier relationships to optimize their savings and negotiate terms that better meet your goals. Healthcare providers are relying more heavily on purchased services competitive intelligence to provide the most affordable patient care.
For organizations in need of solutions that search your contract database in seconds, evaluate the competitiveness of your contracts, or to quickly illuminate savings strategies via predictive planning and artificial intelligence, Medpricer can help.