How Procurement Lends Expertise to Negotiating Broker Relationships

By being flexible, HR might also see where a hands-on role for procurement can add significant value.

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Every business knows that strong procurement officers are invaluable for their skills at negotiating the best prices for the highest quality parts and supplies. But, how transferable are those skills to human resources and negotiating broker relationships and healthcare contracts? It depends on the expectations.

The idea has been gaining momentum, particularly in the last five years and particularly among larger organizations with 1,000 or more employees. Given unrelenting increases in health plan costs, management can’t be blamed for giving HR an “assist” to minimize benefits costs while optimizing benefits value.

Still, when procurement’s bottom line is cost, that may make it difficult to focus on the nuances that signal whether one broker is more competent than another in delivering strategically based and quality-focused programs that ultimately meet budget requirements while delivering value-added services and resources.

So, how should HR respond, given the mandate to add procurement to the team? Fight it? Or lean in? It’s hard to get around the fact that if procurement is being brought into a process where it is only now gaining traction, something is positive must be happening, and by all means, lean in. Create a collaborative partnership that capitalizes on the joint strength of the partnership. Recognize that the benefits decision is more complex than ever and an extra set of hands with a particular set of skills can be incredibly helpful.

Sometimes procurement will manage at the front end. It may take over the broker RFP process, creating a document that looks more like something intended for office supplies. Instead of 500 pages of fluff, think in terms of a spreadsheet – defining specific requirements with cost as one of the key decision-making filters.

At other times, procurement will be focused on and add tremendous value to the back-end process when the actual contract is being negotiated, signed and executed. Contract requirements must be managed from both a cost and service perspective and procurement is ideally positioned for the job.

By being flexible, HR might also see where a hands-on role for procurement can add significant value. It’s not uncommon to leverage its particular understanding of internal compliance, tech issues, continuity planning, confidentiality in crafting the broker contract. One client’s HR specialists managed the front end of the broker RFP process, including establishing expectations on deliverables and the relationship. But, procurement was part of the team and charged with shaping the financial side of the contract.

Partnering HR and procurement can make sense as healthcare costs continue to climb. It just takes staying open to the possibilities and being willing to develop a best practice model, and with just a little practice, it isn’t difficult to make it work.