LeadingAge New York Adviser Winter Vol. 1 | Page 10

Feature
Find Out if Your Group Purchasing
Pricing Is REALLY the Lowest?

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nderstanding the value of your current vendor relationships is critical. Given the
uncertainty in the reimbursement system for senior living providers, organizations
must be sure they are accessing competitive prices for quality goods and services. Even if
you are currently purchasing through a Group Purchasing Organization, you may be able
to save additional money. Value First can help you find savings through free cost studies
in major spend categories including outsourced dining and rehabilitation services, food
products, office supplies, medical supplies and janitorial and sanitation supplies.

Remember that Value First

Finding your savings is really easy. First, let us know that you want to participate in a free
cost study and for what spend category. We will send you information
detailing what specific data you will need to provide. Gather the data
from recent invoices or directly from your distributor and submit it
can often beat
electronically to LeadingAge New York.

any price you can negotiate directly with
the vendor.

You’re probably thinking this is going to be hours and hours of work
and that you just don’t have the time, right? Well, it’s actually not that
complicated or time consuming. Here are a few examples, of how you
can save money on your bottom line.

Value First is the long term care division of MedAssets representing over 9,000 vendor
contracts that can help you save significant money. When purchasing products your final
cost includes the amount charged by the manufacturer in addition to the mark-up from the
distributor and any applicable rebates. So, if the cost from the manufacturer is $100 for a
case of product and the distributor markup is 20 percent, you’re paying $120. Purchasing
500 cases annually would cost you $60,000. Locating the cost savings involves examining
and negotiating prices with both the distributor AND the manufacturers and negotiating
both the actual unit cost and the mark-up.
First, let’s look at the middle man, because it’s always the middle man right? If you negotiate
the markup at 15 percent per case, then your total cost will be $115 and at 500 cases
annually you will pay $57,500. Your total savings will be $2,500 or 4.2 percent.
If we negotiate with the manufacturer to bring the cost down to $80 per case PLUS the
lower 15 percent markup then your total cost per case is $92 for a total annual cost of
$46,000 and a negotiated savings of $14,000 or 23.3 percent.
So, how do you access manufacturer discounts? If you are a small provider or a very large
multi-site provider you can attempt to negotiate directly with manufacturers. However,
the process is labor intensive and leverage is limited to your annual spend in that specific
(See Find Out on page 10)

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Adviser a publication of LeadingAge New York | W