Outsourcing Success: Managing Vendor Relationships

Author: Ken Kilmer, Sr. Healthcare IT Consultant

There are a lot of reasons a healthcare organization might work with a vendor—even on a single project such as an implementation, they might need strategic advisory services to help plan the process, consultants to build and train end users, or help optimizing and upgrading after the initial work is done. But whatever work might be required, there are a few common threads to every vendor engagement—and one of the most important is managing the relationship. I was thinking about this on a recent project, where I managed legacy support for a healthcare system that was migrating to a new EHR. The client was interested in outsourcing billing for the hospital’s legacy system accounts so internal staff could focus on getting up-to-speed on the new system. My time was spent working with the client to make sure we found the right partner, and it got me thinking about what it takes to establish and maintain a successful relationship with a vendor.

Organizations typically work with an external vendor to do work they don’t have the time, resources, or knowledge to do themselves. While the vendor relationship will not completely absolve an organization of all project involvement, there are things you can do to ensure new partnerships are set to achieve maximum results.

Define expectations.

The first step in establishing a vendor relationship is to clearly define the role you expect them to fill, as well as the deliverables they should provide. The best way to accomplish this is to gather specific requirements and publish those details in a request for proposal (RFP) made available to vendor candidates. Keep the following tips in mind as you develop and field your RFP:

  • Involve internal expertise in the requirement documentation process, including staff and management members who are the most familiar with what is or will be needed.
  • Include timeline expectations for deliverables through each stage of your project.
  • Request expense itemization or explicitly state your budget for anticipated resource needs and service hours to ensure proposals are within range.
  • Insist that each documented requirement is addressed by your prospective partner when reviewing RFP responses.
  • Require client references from potential partners to evaluate customer satisfaction with projects that are similar to your organization’s undertaking.
  • Use the requirement document to score vendor responses so your team has a quantifiable and objective tool for comparing potential partners.

This process of defining and itemizing project requirements is critical regardless of the scope of the work at hand. For smaller projects, even a bullet point agenda that can guide discussion on a vendor interview call can effectively define expectations for your potential partners.

Leverage experience.

One of the major benefits to working with consultants is the opportunity to leverage their time and knowledge. Dedicated, specialized resources often have seen how other organizations met similar needs, and can advise you on how to achieve optimal results. Collaborate to arrive at a partnership arrangement that works for both of you.

Consider it a project.

It can be helpful to think of a vendor relationship in project management terms. You’ll want to apply some basic management skills toward establishing the relationship. While there may be other steps you want to include, the four basics can be summarized pretty easily:

  1. Document expectations.
  2. Plan the work.
  3. Execute the plan.
  4. Monitor the results.

In many cases, the vendor will have a great toolset to summarize information and key performance indicators in ways that align with what you wish to evaluate. Work with your vendor to determine what you will measure, how you will measure it, and the frequency with which it will be evaluated.

Regardless of the nature of the outsourced project, your ability to work and communicate clearly with your consultants is critical to success. Determining expectations early on, sharing those with your vendor, mapping out timelines and deliverables, and then tracking progress along the way should provide a foundation for partnership success.

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