The blanket call for proposals generates a massive amount of information (usually canned, boilerplate answers reserved for just this occasion), but little insight into the specific capacities and orientation of potential vendors. In fact, the typical RFP forces decision-makers to assess candidates based on a single, and not always accurate, factor: price.
Hospitals would be better served by narrowing the field themselves, issuing tailored and limited requests for proposals to only the three most promising candidates. By putting more effort into the early steps of the process, hospitals can avoid the pointless information overload and variable results of the blanket RFP.
What are the main steps of conducting a more focused, informed search?
Step 1: Identify who will lead the search.
This is a two-part step — first, identify all of the stakeholders for the decision, then whittle that group down into a recommending committee who will take care of steps two through four. The larger body will reassemble to make the final call in step five.
Taking one representative from each of these groups (in a nonprofit hospital, for instance, those groups might include the board, the CFO’s team, physician leadership, and another executive such as the CMO or COO), the committee should consist of no more than five people. This group will need to work nimbly and cooperatively to perform a pre-search, vet the candidates and ultimately recommend a small slate of the best options to the larger decision-making body.
The committee should be armed with specifics about the objectives of the search, including a list of the key and technical components of the work or service needed, but they also should be armed with an acquisition mindset, evaluating the candidates not simply as service providers or vendors but as potential partners. By vetting more than each candidate’s services — think: processes, financial health, technology infrastructure, etc. — the committee will not only gain a much more thorough understanding of the candidates but also how well each might meet your hospital’s needs now and into the future.
Step 2: Do the legwork.
In this step, the committee should seek referrals, including detailed pro-and-con accountings, from professional associates and similar size institutions. Obtaining referrals from other institutions familiar with your set of constraints is invaluable, as it enables an apples-to-apples comparison of the different candidates — just the piece that’s missing from an indiscriminate RFP approach.
Step 3: Conduct due diligence.
After step 2, the committee can select a handful of the best-appearing candidates to contact personally and investigate. It may seem excessive at such an early stage, but again, approaching this step like an acquisition, not just a simple contract, will almost certainly yield dividends down the road.
This step is when the committee should research matters from the company’s financial statements to its information systems, seeking evidence of its financial sustainability and staying power as well as its mechanisms for customer support and assistance.
Another important topic for the personal interview is the vendor’s business philosophy, which often goes unexamined in the blanket RFP process. Does the vendor’s values match those of your institution? How might their philosophy affect a typical patient experience? Such questions often loom large in hindsight; asking them at the outset of a relationship is a smarter choice.
Step 4: Now is the time for the RFP.
Only after a robust vetting process is an RFP actually of use to the modern hospital. In this step, the committee determines which three or four top contenders should be invited to respond with their own informed, focused proposal.
The time that the candidates have already devoted to answering questions should give them valuable insight into what you want, and their proposals should be tailored accordingly. If the committee does recognize the telltale boilerplate, however, they should follow up with demands for specifics.
For instance, most any revenue cycle management organization will promise an “executive dashboard.” It’s up to the committee to drill down further, asking questions like:
- What metrics appear on that dashboard?
- Are the metrics compared to some standards? (National, industry, region or targets.)
- Do we have any say over which ones appear?
- How often are the metrics updated?
- How are they assessed, or corrected?
- Whom do we contact if we have trouble operating the dashboard, and when will that support be unavailable?
Step 5: Bring together the larger stakeholder group to discuss the alternatives and make a selection.
This step is naturally easier to describe than it is to do. But steps two, three and four should equip the committee with specific explanations for the slate, and the clarity of needs determined in step one should keep decision-makers on task.
Today, hospital contracts have consequences that reverberate down to bills sent to patients and payers. With greater scrutiny of these costs, providers must be prepared to justify their partnership choices knowledgeably, with concrete reasons for the relationship. In other words, hospitals no longer have the luxury of trial and error with a series of over-promising vendors; they need to form lasting, valuable partnerships.
Refiguring the RFP process is the first step toward that goal.
About the author
Randy Howell, MBA, CMA, is chief administrative officer of ECI Healthcare Partners, which offers a network of professional coordinated-care services—physician staffing and management, billing and coding solutions and software, consulting and more — to support emergency, urgent, hospitalist and telemedicine care in healthcare facilities around the nation. Randy can be reached at rhowell@ecihp.com
