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A point to ponder:

Healthcare facilities revolve around delivering exceptional care. As the cost tightens further, it becomes increasingly essential to cut down costs and redefine the budget boundary. When such is the case, every step needs careful planning and integration. The same is true for healthcare vendor management.

Healthcare facilities utilize a range of vendors for various services, from IT service providers to pharmaceutical manufacturers. When the vendor base is this huge, there is a paramount need for adequate management tools and systems.

If you are wondering what is healthcare vendor management system (VMS) is or other terms such as vendor risk management – you have come to the right place. Here, we will discuss all essential reasons to use a healthcare VMS.

Understanding the Terms: Healthcare Vendor Management and Healthcare Vendor Management System

Let’s first clear out the definitions of basic terminologies.

Healthcare facilities use a broad range of healthcare vendors to keep patient care running. Moreover, vendors, from IT service providers, medical equipment suppliers, and pharmaceutical companies to staffing agencies, all occupy a pivotal position. When this list is long, it needs efficient management as well.

Healthcare vendor management is the process of picking, evaluating, and managing vendors who are bound to provide optimal services and products to healthcare firms. Due to the depth of this process, working with top-notch vendors becomes a seamless process.

Vendor Relationship Management

The practice of Vendor Relationship Management (VRM) involves cultivating connections that give out favorable results for the business. Vendor relationship management includes communication and efforts required to establish these relationships and the tools (often software) needed to maintain and oversee these interactions. The main objective of VRM is to foster connections that enable both the business and its suppliers to derive maximum value from the vendor-customer relationship.

Pro tip: Read our blog to learn about the Top 10 Medical Equipment Distributors And Suppliers In The USA.

How Does the Healthcare VMS Work?

  • A healthcare VMS is a unified partner to oversee your interactions with third-party vendors from a centralized hubŪ”
  • It streamlines the oversight of various tasks outsourced to vendors.
  • Additionally, it facilitates the utilization of automation for performance measurement and early detection of undesirable trends.

When considering the selection of a healthcare VMS, you’ll find several options in the market. Some focus on technology-driven vendor management, while others adopt a more hands-on approach. Certain providers offer a comprehensive partnership that extends beyond technology and system infrastructure, providing ongoing guidance for achieving specific performance objectives, such as cost containment.

However, healthcare VMS differs from Managed Services (MSP). In MSP, the partner must oversee all the specific vendor duties. Contrary to this, the VMS will provide you with the management of vendors along with technology-neutral means. These intend to simplify and streamline the management process.

How Does the Healthcare Vendor Management Aid Your Facility? Top Reasons to Use Healthcare Vendor Management System

Before indulging in the features of vendor management, let’s first understand their advantages:

Cutting Down Cost and Driving Efficiency

Primarily, a VMS offers the opportunity to reduce expenses through enhanced operational effectiveness. Maximizing the potential of each task brings facilities closer to operating at their peak efficiency, which can be highly significant. Particularly in wildly competitive markets, it is essential. Whether it involves monitoring electricity consumption or streamlining billing and invoicing processes, a VMS assists in monitoring the expenses and performance of every task.

Vendor Performance Monitoring

VMS provides tools to monitor and assess vendor performance, ensuring vendors meet their contractual obligations and deliver high-quality services and products. Therefore, it can lead to better patient care and outcomes.

Technology and Expertise

Healthcare VMS can be pivotal in ensuring that the most suitable systems or technologies are integrated for each specific task. It is of utmost importance, especially considering various businesses, including healthcare facilities, grapple with integrating electronic health records (EHR). In such instances, a healthcare VMS can provide invaluable support by overseeing the adoption of user-friendly, cutting-edge technology, along with the implementation of industry best practices.

Better Driving Force for Continuous Improvement

VMS solutions can offer valuable insights into trends that may currently go unnoticed. Furthermore, keeping a close watch on essential data leads to an enhanced grasp of clinical and business factors. Consequently, this not only improves efficiency but also contributes to compliance and an improved likelihood of achieving targets related to value-based care reimbursement.

Competitive Advantage

Effective vendor management can lead to better procurement decisions and cost savings, translating into a competitive advantage for healthcare organizations in an increasingly competitive industry.


Furthermore, a VMS equips healthcare organizations with valuable data and analytics regarding vendor performance, expenses, and regulation compliance. As a result, healthcare institutions can enhance their decision-making processes concerning vendor partnerships and pinpoint opportunities for enhancement.

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Top Features that Organizations Should Have in Their Healthcare Vendor Management System

Now that we have figured out that vendor management system is compulsory for healthcare organizations, which is the best option? What are the features to look for in the best vendor management system?

The below-mentioned features are best suited for choosing the right VMS.

Parallel Growth

As the organization grows, so should the VMS. It requires a parallel growth pattern rather than a unified one. It makes sense as the growth of an organization requires additional devices and other accessories. Thus, attracting more vendors needs an updated and innovative VMS.

Certifications For Security

Assuring security is paramount when knowing the extent of VMS usage. As healthcare institutes cater to more sensitive information, the need for security increases further.

A dependable vendor management system should encompass the following aspects:

  • SOC Compliance
  • GDPR/Privacy Shield
  • ISO Certifications
  • Penetration Testing

Robust Compliance Management

Compliance is at the heart of the features of healthcare vendor management. You should check for the compliance and reliability of the VMS you will use for your healthcare facility.

When selecting a vendor management system, it’s essential to look beyond the fundamental compliance management features. Ensure that your chosen tool includes the following capabilities:

  • Monitor: Keep an eye on attachments.
  • Issue: Send timely alerts for expiring compliance requirements.
  • Tailor: Customize requirements to suit specific locations or positions.
  • Streamline: Automate the onboarding process for new vendors.
  • Trace: Keep track of any equipment distributed to your contingent workforce


Before opting for a VMS solution, make your concise and clear. The type of data you need and the credibility you are looking for. Moreover, reporting differs among various healthcare vendor management software and systems.

Furthermore, the optimal choice, with the added benefit, is to locate a technology solution featuring pre-existing standard reports while also permitting the incorporation of customized data. Consequently, this empowers you to generate reports catering to the needs of all user types.

Get to Know About Vendor Risk Management

When dealing with healthcare VMS, it is essential to get to know about vendor risk management.

Healthcare Vendor Risk Management refers to the systematic process of identifying, assessing, mitigating, and monitoring the risks associated with the healthcare vendors or third-party service providers that a healthcare organization engages with. In the healthcare industry, organizations often rely on a wide range of vendors, including medical equipment suppliers, pharmaceutical companies, IT service providers, and more.

Moreover, these vendors play a critical role in the delivery of healthcare services, and their performance and compliance can significantly impact patient care, data security, regulatory compliance, and overall operational effectiveness.


To conclude, vendor management is a sensitive issue for the healthcare industry. The sensitivity of this industry demands efficient monitoring of every step and requires efficient management. Therefore, when it comes to healthcare vendor management, there are outgrown demands for the essential feature requirements and benefits.

It streamlines vendor relationships, ensures compliance with regulations, and drives cost savings. Implementing and managing a VMS effectively requires focusing on vendor selection, contract management, performance monitoring, and adherence to best practices. This blog guides you through the essentials of an effective healthcare VMS and the reasons to use one.

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