Executive Insights

Purchased services have long been part of healthcare operations, encompassing outsourced activities that support both clinical and non-clinical functions. What’s changing recently is how broadly these services are defined and how strategically they’re managed. Traditionally, purchased services meant on-site support such as environmental services or food service. Today, it covers a much wider range, often extending into indirect spend categories or non-clinical goods and services essential to running an IDN.

Examples include:

Facilities and Operations: Laundry, landscaping, snow removal, waste management, security
Administrative Support: Call centers, transcription, marketing, courier services
IT and Digital: Software support, data hosting, cybersecurity monitoring
Capital-Linked: Equipment maintenance, imaging service agreements
Professional Services: Consulting, legal, recruitment, financial advisory
Clinical Services: Anesthesia, lithotripsy, dialysis, neuromonitoring

Purchased services often represent around 30% of a hospital’s total non-labor spend, making them a major target for optimization.

Healthcare leaders are using strategic management approaches for purchased services with the same discipline as other long-established sourcing categories by:

Category Benchmarking: Comparing pricing and service levels across similar organizations
Contract Consolidation: Reducing vendor count to leverage volume discounts
Service Standardization: Defining consistent deliverables across facilities
GPO Leverage: Tapping into national contracts for better pricing in previously local-only categories
Performance Tracking: Using KPIs to measure vendor quality and reliability

While financial performance is a key motivator, purchased services also affect:

Operational Continuity – Reliable vendors reduce service disruptions
Patient Experience – Call centers, food service, and environmental services directly impact satisfaction
Compliance and Safety – Medical waste handling, security services, and IT vendors can have regulatory implications

The purchased services landscape in healthcare is broadening and so is its strategic importance. By expanding the scope beyond traditional categories, integrating indirect spend, and applying structured sourcing strategies, health systems can unlock savings, enhance quality, and build resilience in an increasingly complex operating environment.