A community hospital's procurement team suspected they were overpaying for surgical linens but didn't have time for a line-by-line review.
Hospital procurement runs lean and they had not formally audited their linen contract since 2019. Anecdotal reports from the laundry coordinator suggested damaged-item replacement charges had skyrocketed and minimum weekly billing was being applied even on low-census weeks. The contract was up for renewal in 9 months.
We reviewed the agreement against 36 months of invoices. Three structural issues surfaced: (1) the loss-and-damage charge schedule was using the vendor's 'published replacement rates' which had grown 4× since the contract was signed without notification, (2) minimum weekly billing was being applied even when actual usage was well below the minimum, with no end-of-year reconciliation provision, and (3) a fuel surcharge had been added in 2022 with no contractual right to do so. We built a negotiation package for the renewal.
The renewed contract: capped replacement rates at 1.5× actual cost, eliminated the unauthorized fuel surcharge, and added a reconciliation clause for under-utilization. Combined with retroactive credits, the hospital saved $214,000 in the first 12 months. The procurement team estimates the contract is now $1M+ better over its 5-year term.
"The cleaner-than-clean version is — we had no idea how much room we had to negotiate until someone actually read the contract front-to-back and showed us the math."
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