The Case for Cross-Industry Procurement Intelligence

This article was originally published in the Journal of Healthcare Contracting.

In an era of tightening margins and escalating operational costs, healthcare executives must look beyond traditional cost-containment strategies to ensure long-term financial sustainability. Many health systems have achieved high levels of maturity in managing clinical supplies. However, non-clinical goods and services, including information technology, marketing, facilities management, and professional services, remain an untapped opportunity for significant savings. 

At WellSpan Health, an integrated health system with 250 locations across central Pennsylvania and northern Maryland, our leadership team identified nonclinical procurement as a vital component of our 2025 strategic vision. By treating non-clinical spend as a sophisticated business function rather than a decentralized administrative task, we realized more than $35 million in annualized savings over a three-year period. This transformation offers a blueprint for senior leaders to leverage cross-industry expertise that bolsters the bottom line. 

The Challenge of Fragmented Indirect Spend

A common operational hurdle in large health systems is the isolation of procurement functions. While the central supply chain typically manages medical-surgical commodities, the budgets and contracts for service-based categories often reside within individual departments. IT leaders manage software licensing, marketing executives oversee agency contracts, and HR directors handle temporary staffing agreements. 

This fragmentation often leads to missed opportunities for scale, inconsistent contract terms, and a lack of competitive benchmarking. In 2022, WellSpan Health recognized that while internal teams possessed deep healthcare knowledge, they lacked the capacity and the specialized market insights required to benchmark non-clinical categories against sectors outside of healthcare. To bridge this gap, we moved toward a partnership model that provided access to cross-industry data and domain experts to support contract negotiations and procurement operations.

Stronger Procurement Strategy Starts with Cross-Industry Intelligence

One of the most effective ways to improve procurement performance is to look beyond the healthcare sector. Vendors providing IT services, facilities maintenance, or marketing support operate across multiple industries, including retail, finance, and manufacturing. However, healthcare organizations often pay a premium when comparing costs only to other hospitals. 

WellSpan Health adopted a strategy of using cross-industry benchmarks to evaluate vendor proposals. If a global logistics firm or a major financial institution pays a specific rate for enterprise software or professional services, that data point becomes a powerful lever in negotiations. By applying these broader market insights, we ensured WellSpan Health was receiving the best possible value.  

Tactical execution: the integrated expertise model 

To execute that shift without a significant increase in administrative headcount, WellSpan Health integrated specialized procurement resources directly into existing operations. This model differs from traditional consulting or Group Purchasing Organization (GPO) arrangements. Instead of a percentage-of-savings model, which can misalign incentives, a fee-for-service approach positioned us to focus purely on reaching specific savings targets and operational goals. Embedded specialists managed time-consuming tasks such as Market Research and Request for Proposal (RFP) management. This allowed internal staff to remain focused on high-level strategic initiatives while ensuring that every non-clinical contract underwent rigorous, data-backed scrutiny. Additionally, the team sought new opportunities for savings by evaluating contracts and proposing improvements in previously untapped areas.

LogicSource’s Execution Model: Embedded Expertise without Headcount Growth

To implement the strategy without expanding administrative headcount, LogicSource integrated specialized procurement resources directly into WellSpan’s existing operations. This approach differs from traditional consulting or Group Purchasing Organization (GPO) models. Instead of using a percentage-of-savings structure, which can misalign incentives, a fee-for-service approach positioned WellSpan to focus purely on reaching specific savings targets and operational goals.

Embedded LogicSource specialists handled time-consuming tasks such as market research and Request for Proposal (RFP) management. This allowed internal teams to concentrate on high-level strategic priorities while LogicSource ensured that every non-clinical contract underwent rigorous, data-backed scrutiny. Additionally, LogicSource identified new opportunities for savings by evaluating existing contracts and proposing improvements in previously unoptimized categories.

Learn more about the impact of GPOs in the healthcare supply chain in our past article.

Building Internal Alignment and Overcoming Silos

Reimagining non-clinical procurement is a challenge. Success requires deliberate focus on change management, executive buy-in, and building internal trust and alignment. Our team prioritized three steps to ensure organizational buy-in: 

1. Secure Early Success: Leadership targeted the IT category early in the process. By optimizing a system-wide enterprise resource planning (ERP) agreement, the team secured $2.4 million in savings. This early achievement demonstrated the tangible value of the new procurement model and built confidence among other department heads. 
2. Maintain DecisionMaking Abilities: A critical component of the model was ensuring that department leaders retained final decision-making authority regarding vendor selection. The procurement team provided the data, managed the negotiations and presented options, but department owners remained in control of their specific functional areas. 
3. Reducing Negotiation Friction: With third-party experts leading negotiations, department leaders were able to maintain positive, collaborative relationships with vendors. The “hard” conversations regarding pricing and terms were managed by the procurement specialists, preserving the positive relationship between the department and the vendor. 

Measurable Results and Long-Term Value

The shift toward a more proactive and datadriven non-clinical procurement model yielded substantial financial and operational benefits. Within the first year of the partnership, WellSpan Health realized over $7 million in savings, a figure that grew to an annualized $35 million by the third year. 

Beyond the immediate financial impact, the organization achieved three strategic advancements: 

1. Operational Productivity: Integrated procurement specialists boosted procurement operations without an extensive recruitment and hiring process for specialized roles 
2. Administrative Efficiency: Simplified contract management and improved sourcing processes reduced the administrative burden on internal leadership 
3. Risk Mitigation: The use of specialized sourcing experts allowed the organization to better anticipate and mitigate supply chain disruptions caused by geopolitical challenges and market volatility. 

Recommendations for Healthcare Executives

For senior leaders seeking to optimize their non-clinical spend, the following steps are recommended: 

• Prioritize Non-clinical Categories: Conduct a comprehensive audit of non-clinical spend to identify areas where contracts have not been competitively bid or benchmarked in the last three years. 
• Use Cross-Industry Data: Move beyond “healthcare-only” benchmarks. Require procurement teams to provide data points from other industries to ensure competitive pricing in categories such as IT, facilities and professional services. 
• Foster C-Suite Collaboration: Successful spend management requires alignment between C-suite leaders and department heads. When the executive team views non-clinical procurement as a unified strategic lever, silos are more easily dismantled. 

Conclusion

In the complex healthcare environment, operational excellence and financial stability must work hand in hand. By rethinking procurement strategies and embracing cross-industry insights, healthcare organizations can uncover significant capital hidden in non-clinical spend. The transition from a reactive, decentralized model to a proactive, integrated approach strengthens the balance sheet and builds resilience required to navigate a rapidly changing industry. For WellSpan Health, this journey shows that smarter spend management is a critical tool in the pursuit of high-quality, cost-effective patient care.