As membership in Health First Health Plans (HFHP) grew exponentially, successful vendor management became more critical to HFHP’s mission of providing quality care and also more difficult to attain. Growth stressed existing vendor management practices, which were decentralized and had been mostly created on an ad-hoc basis across the organization. Russ Bradley became Vice President of Operations at HFHP, and he quickly uncovered concerns with some vendor contracts. After only two weeks on the job he learned about problems with vendors related to overbillings, performance and contracting.
He reached out to vendor management consultants Vendor Centric for help in creating an enterprise- wide vendor management office (VMO) to centralize and streamline activities.
The Vendor Centric team worked on and off-site with HFHP to create client-specific policies and procedures that would support all six stages of the Vendor Management Lifecycle: sourcing, contracting, onboarding, purchasing, payment and ongoing oversight and optimization.
Together, they built the health plan’s VMO from ideation to blueprint to implementation in less than six months. Much of the work was done in a small room at the HFHP headquarters in Central Florida, with both teams surrounded on all four sides with whiteboard.
The teams met consistently over a period of three months, workshopping the vendor management fundamentals to design workflow and create HFHP’s unique VMO blueprint. The workshops helped to isolate pain points in HFHP’s current vendor management activities and brainstorm solutions. They also addressed issues unique to HFHP such as nuanced contractual standards and regulatory issues specific to health plans.
The blueprint ultimately developed by the team provided a roadmap for rolling out the VMO.
- The VMO has brought discipline and much needed visibility to the vendor management process. Roles and responsibilities are now defined, processes are documented and a system is in place to manage activities and provide visibility to all stakeholders involved.
- Within the first six months of its launch, the VMO identified opportunities for significant cost savings and renegotiated a couple of different contracts that saved money and cleaned up some risk related issues. Future cost savings will come from different activities — collecting on penalties, renegotiating contracts, catching accidental overbilling, and leveraging certain vendor relationships in lieu of others.
- Third-party risk management activities have been automated (using VendorRisk, a cloud-based vendor management system). Now, information has been centralized and time consuming manual tasks have been eliminated (such as performing excel based risk assessments and due diligence reviews).