Your service partners are critical to your success in the market and they can impact your profits client acquisition and client retention. They’re also at the heart of many of your organization’s processes and activities. However, you might not consider how important it is to effectively manage your relationships with them. In the past, procurement was simply the act that brought goods and services to the table. Nothing more, nothing less. But now, procurement should be considered as a part of your overall business strategy. To get the best value for your money, you should be taking a strategic approach to efficiently selecting, then managing your service partners. Doing so will have a myriad of beneficial effects for your organization.
Unfortunately, vendor management isn’t well understood or widely implemented in the middle market of the insurance industry. You might not truly understand the advantages you’ll receive from supplier relationship management. Or more often, you may simply lack the time and resources to get the most out of your service providers. The bigger Insurance Carriers and Third -Party Administrators in our industry understand the importance of vendor management and make a significant investment in internal staffing to manage their Case Management, Bill Review, PPO Network, DME, Legal, and Investigative/SIU spend. In most instances, multiple full-time management-level staff review and manage this spend for these industry leaders. To help you understand its importance, we’ve outlined eight reasons why vendor management should be a top priority in business.
To effectively reduce service provider risk, whether in terms of operations, unforeseen cost implications, or regulatory compliance, you need increased visibility with these providers. Vendor management can track your suppliers and provide the data you need to identify supplier risks so you can take the necessary steps to mitigate them or choose an alternative vendor. You can easily verify supplier information, such as qualifications and certifications, licensure, proper insurance coverage, track performance, and even look into the supplier’s financials to get a broader picture of their risk level in order to protect your organization.
Once you have a service provider active in your vendor management system, you can track and measure performance against the contract to ensure that the company is meeting your needs and complying with your requirements. You can develop Standard Operating Procedures so that all parties understand the expectations, and you can achieve consistency in service delivery. You can also measure outcomes v. industry norms, or internal goals, as well as set year-to-year improvement objectives in costs, results, or both. If you are using multiple suppliers, you can evaluate them comparatively for service, costs, and results. This will enable you to ensure optimal performance. The data you receive from tracking performance can signal challenges before they become problems and identify areas that may need improvements from your vendor, or even from the manner in which your internal staff engages the vendor. Vendor relationships are a two-way street, and you should elicit feedback from your vendor partners on a regular basis as to how your team can be more effective in assignment selection, data provided, and follow-up. You know the old axiom, garbage in, garbage out!
When you have increased visibility, you can see service costs that you can then better control in order to save on expenses. Additionally, having strong relationships with your suppliers, due to effective procedures and processes thanks to vendor management, can help you to negotiate better rates and have access to discounts and incentives that can increase your profit margin. You should also have some ideas as to how volume levels, geographic footprint, and combining multiple services through one supplier can impact your costs and service level. When you openly communicate your standards and expectations, then create the visibility of managing to those expectations you are creating two-way accountability. Accountability will enhance results.
Create Loyal Relationships
Good vendors are hard to come by. If you’re working with excellent service partners, you should be doing everything you can to strengthen your relationship with them in order to build loyalty. With effective supplier management, you can ensure efficiencies that lead to smooth processes, which can help you build the loyalty you need to keep your great service providers as part of your supply chain for the long term. Never forget that any buyer-supplier relationship is a two-way street, so pick suppliers that you like and trust, with an infrastructure that can grow with your needs and cultivate that relationship for the long term. Align yourself with partners who view you as a top 10 revenue opportunity, understand the mutual benefits of reciprocity, and match your geographic size and scope.
Increase Administrative Efficiencies
Your vendor management program can significantly drive administrative efficiencies. As a central hub for vendor master data and record-keeping, this program can cut down on duplication of data, loss of contracts and other information, as well as administrative labor costs and errors. Having one central place for all of your vendor data can help you manage your relationships with heightened efficiency, which your service providers will appreciate. In addition, the sentinel effect of managing your service providers will add a positive impact on performance. You don’t necessarily need one provider per outsourced silo, but I would recommend one portal for intake, processing and reporting. Intrepid Risk Associates can provide a consolidated source of account management including, but not limited to analytics, SOP management, and stewardship reporting. This will streamline the process of managing ROI and results across a broad range of risk mitigation services, saving both time and money while increasing results.
Increase Onboarding Speed
The time and resources it takes to onboard new vendors can slow down your productivity and cost you money. But with service provider management, it’s a breeze to obtain all relevant vendor information, such as bank details, capability information, regulatory data, insurance information, licensure, and capacity details, and input it into the system in a fast and error-free way for approval. The quicker you can onboard and vet your vendors, the quicker you can move through the procurement process and receive your goods or services so you can put them to use. Utilizing the correct vendor management partner not only increases onboarding speed but also reduces the expenses associated with the onboarding process.
Protect Your Brand
Your company’s brand has significant value. You do not want to tarnish it due to the actions of an unprofessional or unethical vendor. A vendor management program can provide you with the information you need, such as a supplier’s service standards, to reduce your risk of a serious incident stemming from a vendor’s actions. In addition, as part of the vetting process, your vendor management partner can aggressively check solicited and unsolicited references as well as general industry reputation.
Internalization of Strategic Services
With the thin margins in the claims management industry and the impact some of these services have on the total claims expenditure, some claims organizations may wish to internalize some of the outsourced services. This could not only add to their revenues and earnings, but a stronger internal program on key areas of risk mitigation may also enhance client retention and acquisition. A strong vendor management program allows a claims organization to better analyze those individual silos to evaluate those which may strengthen their strategic offerings if internalized. Further, it may put them in a position to acquire that ability with one of their partners, which would act like somewhat of an audition for that provider. Dependent upon the volume given to a potential service provider identified as an acquisitive target, leverage is also potentially created for the claims organization in the acquisition process.
As noted, there are a lot of moving parts to select, vetting, on-boarding, managing, and maximizing vendors and vendor relationships. With all of the moving parts tied to the responsibilities of running a claims organization, it is easy to see how “middle-market” Insurance Carriers, Third Party Administrators, and Self-Insured Employers can become a little complacent in the tasks of maximizing vendor relationships and results while minimizing the expenses and down-sizing the risks tied to those vendor relations. Those companies who lack an internal resource with the time and experience to specialize in this endeavor will miss out on the opportunity to maximize the value proposition of the client-vendor relationship.
I started Intrepid Risk Associates for two primary reasons. The first is managing the aforementioned risks for middle-market clients. I have aligned myself with a team that culminates in 200 years of experience in sales, operational management, strategic planning, business start-ups, auditing, claims management, legal administration, and network development. These experiences allow me the unique perspectives with which to assist middle-market clients to minimize their spending, reduce risk and maximize results. Collectively, we can
help our clients build a vendor management program across any line of outsourced risk mitigation services that can serve them for the long term. The second reason is that Intrepid Risk Associates is aligned with who we call the best of breed partners. They are regionally-based service providers with national capabilities and superior service models. We are all linked together with a technology platform that allows for fast and efficient referrals, ease of reporting, and automated workflows to help serve your business. The three general categories of service providers include:
Managed Care Services
- Medical Bill Review/PPO/Mailroom
- Specialty Networks/Diagnostics/DME/Ancillary
- Pharmacy Benefit Management
- First Report of Injury
- Telephonic and Field Case Management
- Specialty Vocational Services
- IME/Peer Review
- Transportation Services
- Translation Services
- Hospital Bill Audits
- Social Media Investigations
- Background Investigations
- Medical and Lifestyle Canvasses
- Claims Investigations
- Scene Investigations
- Unmanned Remote Surveillance
- Special Investigations Unit
- Reporting and Compliance
Litigation Support Services
- Records Procurement
- Managed Care Services
- Investigative Services
- Forensic Data Recovery
- Jury Panel Selection