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Monday, June 15, 2015

Creating Competition to Save Money

After briefly introducing some saving practices in our last post, we here at Miga wanted to dive deeper into how hospitals follow these tips to drive savings results.

All too often, hospitals miss out on savings because in the rush to get new equipment approved and bought, they inadvertently fail to thoroughly leverage all the competitive supplier offerings that exist in the marketplace. And as Miga has learned during our over ten years of helping leading hospitals save millions annually on capital equipment and service contract purchases, a missed opportunity to create competition means you're paying 12-16% more than what your competitors are.

Here are three great ways to create competition when negotiating capital equipment purchases:

1. Get proposals from at least two viable Suppliers- Even if your hospital is committed to a certain Supplier's product, it still makes sense to get a quote from a Supplier with a competitive product. This way, you can use the competitive quote as leverage when asking for a lower price.

2. Don't commit to a specific Supplier until you validate you have the best possible price and terms - It is important to leave your Supplier in doubt until you finally get the price and terms you desire. Prematurely committing to a Supplier removes any competitive pressure, which ultimately takes away any negotiating power that might have existed earlier in the process.

3. Leverage pricing of pre-owned options in negotiations with new equipment Supplier - Instead of creating competition with other new equipment Suppliers, you can create competition by researching how much pre-owned equipment of the same model costs. The new equipment Supplier, in fear of losing the business, will typically drop the price or find a demo unit that you can purchase for a lot less!

Let us know how your hospital creates competition in its negotiations!  It would be great to hear from you.

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