Creatively Reduce Costs in Healthcare Construction Projects

Timothy Mazzei-Williams
Vizient Associate Principal, Facilities and Construction Solutions

Construction projects are essential for expanding and maintaining healthcare facilities to meet the growing needs of communities — but they often come with significant, budget-straining costs.

To overcome these financial challenges, healthcare organizations are increasingly turning to creative cost-reduction strategies. One such strategy involves leveraging performance improvement Group Purchasing Organizations (GPOs), such as Vizient’s facilities and construction solutions, to optimize procurement and reduce project expenses.

Performance improvement GPOs aggregate the purchasing power of multiple healthcare providers to negotiate favorable terms and pricing with suppliers. GPOs have been instrumental in helping healthcare organizations reduce costs while maintaining the quality of goods and services. When applied to healthcare construction projects, GPOs can yield substantial savings in various areas including materials, equipment and services, and provide insights into creative cost-reduction techniques such as:

• Competitive bidding: Utilizing spend management solutions, including GPOs, can help healthcare facilities organize competitive bidding processes for construction materials and services. By pooling the purchasing power of multiple organizations, GPOs can secure better deals with suppliers. This approach ensures that healthcare construction projects benefit from competitive pricing while maintaining the highest quality standards.
• Standardization: Standardizing materials and equipment across multiple projects can streamline procurement processes, decrease costs and potentially reduce lead times. Subject matter experts and GPO best practices can assist healthcare organizations in identifying standardization opportunities that optimize inventory management and decrease waste. For example, standardizing furniture, plumbing fixtures or HVAC systems can lead to significant savings over time.
• Bulk purchasing: GPO best practices excel at negotiating bulk purchase agreements with suppliers. Healthcare construction projects can take advantage of these agreements to buy large quantities of materials or equipment at discounted rates. Bulk purchasing not only reduces per-unit costs but also minimizes the need for frequent reordering, simplifying project logistics.
• Vendor consolidation: GPOs often work with a network of prequalified vendors. Consolidating vendors can simplify procurement, reduce administrative overhead and enhance cost control. By consolidating suppliers, healthcare organizations can negotiate more favorable contracts and ensure compliance with cost-savings initiatives.
• Technology integration: Leveraging spend management technology platforms can improve procurement efficiency. These platforms offer features like e-catalogs, spend analytics and contract management tools that help healthcare organizations make informed purchasing decisions. By embracing technology, healthcare construction projects can enhance transparency, reduce errors and optimize their supply chains.
• Cost transparency and benchmarking: Spend management strategies such as optimizing GPOs can provide healthcare organizations with insights into industry benchmarks and best practices. By comparing their costs to industry standards, healthcare construction project managers can identify areas to cut expenses or negotiate better terms with suppliers. This data-driven approach ensures that cost-reduction efforts are based on objective metrics.

By leveraging a performance improvement GPO, healthcare construction projects can benefit from competitive bidding, standardization, bulk purchasing, vendor consolidation, technology integration and cost transparency. These strategies empower healthcare organizations to make informed decisions, maximize their budgets, and deliver healthcare facilities that meet the needs of their communities in an efficient, and cost-effective, way.

Learn more about Vizient’s facilities and construction solutions.

Author

Timothy Mazzei-Williams brings more than 12 years of experience in the healthcare industry. He works as an associate principal on the facilities and construction indirect spend and purchased services team where he manages the eastern region facilities and construction group responsible for leading provider engagements focused on driving standardization, reducing costs, and optimizing spend in the facilities and construction healthcare space. Prior to joining Vizient, Mazzei-Williams worked for more than 13 years for the U.S. Department of State (DOS), the Bureau of Diplomatic Security (DS), and briefly as a principal for the strategy and technology consulting firm Booz / Allen / Hamilton. He was responsible for overseeing all aspects of technical security construction projects to include estimating and negotiating costs, managing budgets, assessing risk, negotiating contracts, and reporting on performance.