Contract Management Set-up: Product & Price Alignment

by | Jun 29, 2023 | Best Practices

Person pointing at paper with pen

You’ve worked hard with your vendors and GPO to create accurate contracts and tiers reflecting what you actually buy. But sometimes, it’s a black hole covered with wishful thinking.

When you set up your contracts in Envi, a lot of wheels begin to turn. First, you establish the products that will be there to care for patients coming into your organization, and then importantly, you set the correct prices that will become the foundation of your cost management efforts.

With Envi, you’ll be sure you’re getting the right product at the right price. Here’s how:

  • Set up your current contracts in Envi, including GPO contracts, direct to distributor or manufacturer, and even the ongoing services you buy, like linen services or maintenance agreements with local providers. By setting up your contracts with the correct price and tier, you’re putting the foundation of accurate pricing in place. Let’s build on that.
  • A key step in setting up contracts in Envi is attaching specific details about your organization – this might be attaching contract items to items in your item master, or it could be attaching contracts to specific facilities, which becomes especially useful if you manage centers or clinics with different service lines. It’s also helpful to set the current tier, so later, we can look back at purchase history and see if there’s an opportunity to advance tier pricing based on purchasing.
  • Now, let’s set the expiry dates. This is going to be helpful on throughout the life of the contract and help you lead the way to cost management success. Envi will notify you of contracts that are going to expire, beginning 120 days out. What this means is that you’ll have time to make well-informed decisions: Do you want to put the items on the contract out for bid? Do you want to renegotiate with your current vendor? Is it an option to let the contract auto-renew?                                                                                                                                                                                                                                                                     You may actually want the auto-renew option if it’s available, so you won’t have to worry about items falling off contract, prices and terms expiring, and price increases. For some products, auto-renewed pricing may be the most cost effective option. Having line-of-sight to upcoming contract renewals means you’re a more proactive manager.
  • Each contract you set up in Envi becomes the basis for future reporting. For example, by setting up specific vendors and items, you’ll know what you purchased from your primary distributor, what their mark-up is, and items you may have purchased elsewhere, all of which helps support future contracting decisions. Your reporting tools become smarter and so do your organization’s business decisions, as you see what you’ve purchased, on or off contract, from what vendor, at what price. What a great way to be sure you’re maximizing those prices and tiers you worked hard to obtain.

Finally, a little reminder about contract management and the challenging supply chain environment we’ve been in. Remember that items on contract aren’t equal to secured stock; it’s not a blanket order.  Be sure to use the reporting tools available to you to understand your actual spend and if possible, consumption, so you can make even better contracting and purchasing decisions.

Contract management really does mean right product, right price, and that accuracy leads to greater automation. By being a smart, forward-looking contract manager, you’re streamlining functionality like 3-way price matching, plus powerful analytics for your organization