5 Ways Hospitals Use RFPs and Why You Should Know Them

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

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

Healthcare RFP categories

How many different types of healthcare RFPs are there? Great question. There are twenty-two different RFP product and service categories. According to Definitive Healthcare data, U.S. hospitals and health systems issued a total of 49,118 RFPs between January 2019 and December 2020. These RFPs covered a wide range of different product and service types.

Most common healthcare RFP categories 2019 - 2020

As of December 2020, the twelve most common healthcare RFP categories are: professional services, medical and surgical equipment, facility maintenance, technology, laboratory and blood-related, consulting, construction, pharmacy, physician services, food services, radiology, and transportation services. 

 

Fig 1 RFP data is from Definitive Healthcare’s Hospitals & IDNs database. Chart represents the twelve most common RFP categories issued by U.S. hospitals and health systems between January 1, 2019 and December 8, 2020. This is the most recent data available. Accessed December 2020.

Professional services is 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, and
  • Transcription services

Obviously, not all of these RFP categories are relevant for your company. Your challenge is to determine where, exactly, your business fits within these types. But the choice isn't always so clear. Say, for instance, that you're a commercial contracting company. Should you be selling into construction or maintenance?

Understanding these different types of RFPs and why hospitals issue them will help your company target new opportunities more effectively.

Top 5 reasons why hospitals use RFPs

1. Legal/regulatory requirements

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. Offers equal access for large and small companies to approach the hospital

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. Allows hospitals to ensure they're getting 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. Gives the hospital 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. Establishes 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.

Why this matters

You've learned about all twenty-two types of healthcare RFPs and why hospitals use them. But why is this important to you? Because if your company uses RFPs to sell into hospitals, you need timely access to these requests.

If you don't know when a hospital issues a new RFP, you can't bid on that opportunity. By keeping your finger on the pulse of new RFPs, your company can win more opportunities.

Learn more

Are you ready to start winning new opportunities with RFPs? Definitive Healthcare provides up-to-date RFP data so that your company can find the right opportunity, right when you want it.

Start a free trial today.

This blog was originally published on August 6, 2018. The content has since been updated to reflect the current state of the healthcare industry. 

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