5 ways hospitals use RFPs and why you should know them

If your company sells to hospitals, you’re probably familiar with responding to a request for proposal (RFP). But did you know that hospitals issue many kinds of RFPs? 

Here are some facts about healthcare RFPs you might not already know. 

What is a healthcare RFP? 

A request for proposal is a formal document that hospitals and healthcare facilities use when planning to undertake specific projects. When these organizations need to procure third-party goods and services, an RFP helps people with purchasing power collect information about potential contractors and suppliers and evaluate their capabilities.  

Overseeing and writing an RFP is generally regarded as a complex, challenging and time-consuming process. In healthcare, the average RFP takes between nine months to three years to complete, as organizations manage budget cycles, grants and other factors. As a result, most RFPs are formatted as a questionnaire so vendors could be easily compared side-by-side.  

Types of healthcare RFPs 

There are 22 different RFP categories, covering a wide range of products and services from sourcing medical equipment to construction, transportation, food, maintenance and more. According to Definitive Healthcare data, U.S. hospitals and health systems issued more than 17,000 RFPs as of May 2022.  

Most common healthcare RFP categories of 2022

As of May 2022, the top 10 most common healthcare RFP categories are professional services, technology services, construction, medical supplies, consulting, laboratory and blood-related, physician services, maintenance, nonclinical supplies and pharmacy.  

Fig. 1 RFP data is from Definitive Healthcare’s Hospitals & IDNs database. The chart represents the 10 most common RFP categories issued by U.S. hospitals and health systems between January 1, 2022, and April 1, 2022. 

From the pie chart above, we can see that professional services are the most common RFP category. This category includes a wide variety of contracted services, ranging from laundry and janitorial services to employee education and training. 

Technology and facility maintenance are also among the most common types of healthcare RFPs. Technology includes the acquisition of new hardware and software systems, as well as requests to install or repair those systems. 

Some RFP categories aren’t represented on the chart above. These categories include: 

• Anesthesiology 
• Revenue cycle management 
• Electronic health record (EHR) installation 
• Insurance 
• Non-clinical supplies 
• Real estate 
• Transcription services 

If your company sells to hospitals, it’s important to note that not all these RFP categories are relevant to your business and goals. Your challenge is to understand why hospitals and healthcare facilities issue these RFPs and determine where your business fits within these categories.  

Accomplishing this will help your company identify new opportunities faster and, by using the right healthcare commercial intelligence, you’ll be able to arm your salesforce with the info they need to have more effective engagements.  

Top 5 benefits of using a healthcare RFP 

The RFP process can be beneficial to both healthcare organizations and the contractors and suppliers being solicited. Five of the reasons are: 

1. Legal protection 
2. Opportunity to win new business 
3. Achieving the best value 
4. Negotiating power (for hospitals) 
5. Establishing clear contract communication 

1. Legal protection 

In some states, hospitals are required to submit an RFP to solicit any product or service. Those requirements can change depending on the complexity, cost, or category of the request. 

The Sarbanes Oxley (SOX) Act of 2002 may have impacted some regulatory changes in the healthcare RFP process. This law imposes strict recordkeeping requirements to prevent corporate fraud. In the healthcare RFP process, these requirements help protect hospitals from fraudulent service providers and guarantee the authenticity of supplier responses. 

2. Opportunity to win new business 

When a hospital issues an RFP, it opens the bidding process to any qualified supplier. This bidding process allows hospitals to compare every offer and weed out any unqualified or illegitimate suppliers. 

But the bidding process is also advantageous for smaller suppliers. These companies may not always have access to the same opportunities as their larger competitors. The RFP bidding process provides them with an equal opportunity for success and growth. 

3. Achieving the best value  

During the RFP bidding process, suppliers are required to submit a proposed price for their product or service. Comparing these offers helps hospitals identify the most competitive offer. 

Towards the end of the bidding process, suppliers may also be asked to provide a consultation or product demonstration. This helps hospitals assess the value of the product or service and decide whether further negotiations are necessary. 

4. Negotiating power 

Issuing an RFP gives hospitals the authority to negotiate with suppliers. Knowing that other suppliers are bidding for a hospital’s business puts pressure on suppliers to offer the most competitive pricing possible. Still, hospitals can further negotiate bids that don’t fit within their budget or proposed timeline. 

RFPs also create a built-in safety net for both hospitals and suppliers. If any party rescinds a promise or fails to adhere to project guidelines, there is paperwork to hold them accountable. 

5. Establishing clear contract communication 

Submitting an RFP empowers hospital decision-makers to define exactly what they want in a product or service. With such clearly defined guidelines, suppliers know what is expected of them when they respond to that request and can customize their messaging accordingly. 

The process facilitates open, honest, and legitimate negotiations that allow all stakeholders to remain educated on the status of business discussions. 

RFQ vs. RFP 

In the world of sourcing and procurement, you’ll find a whole host of acronyms that sound nearly identical to each other. If you’re a company that works frequently with RFPs, you may also be familiar with another term: the RFQ.  

This acronym stands for “request for quote.” As a healthcare organization’s sourcing team narrows its list of potential vendors who can meet their needs, they may ask for a price quote. This helps the team determine whether the vendor can provide the products or services the organization needs at the price the organization is able to pay.  

An RFQ usually comes in the later stages of the proposal journey, but it may also be helpful to issue one early on to help vet candidates if the price is a critical factor.  

Learn more 

Thousands of RFPs are issued every month. If you don’t know when a hospital issues a new RFP, then you might be late to bid and lose that opportunity. HospitalView helps you keep your finger on the pulse of new RFPs and dig deeper into the organizations using them.  

Don’t have HospitalView? Then start a free trial today to learn more about the organizations issuing RFPs in your area of the healthcare ecosystem.