Vendor Credentialing: To the Editor

I’d like to comment on the article “Vendor credentialing: What the dog saw,” by Fred Crans in the March issue of the Journal of Healthcare Contracting.

The facts are simple. No healthcare organization wants to take on the added responsibilities of vendor credentialing, whether outsourced or not. Even outsourcing, this process creates additional work for the healthcare organization. That being said, there are requirements and standards that hospitals must meet that require us to know who is walking our halls and coming in contact with our staff and patients.

If vendor reps were diligent in abiding by the rules and policies of the hospitals they visit, none of this would be necessary. As Mr. Crans himself states, “Often up to 80 percent of vendors completely bypassed the book and the process altogether.” In today’s environment of HIPAA and HITECH, hospitals can’t afford to neglect the fact that vendor reps routinely roam the halls of their organizations and “cold call” physicians and staff alike to sell their wares.

If vendor reps would voluntarily check in and out at hospitals, provide documentation of PPDs [purified protein derivatives, for TB testing] and maybe a Hep B if the hospital requires it, there would not be a “cottage industry” in vendor credentialing. Given hospitals’ constraints from a financial standpoint, funding for additional FTEs to handle the vendor credentialing themselves is not an option. The requirement is still there, but the options are limited by resources. BAM, the third party vendor credentialing industry is born. As a matter of fact, several of the vendor credentialing companies were started by former medical sales vendor reps who saw the reality and the need for this type of service.

In the end, Mr. Crans is correct in his assertion that vendors do not ultimately foot the bill for this third party service, even though it appears that way initially. However, given the choice between having the vendor pay for it initially and then having to ensure I don’t see increases in my pricing to reimburse the vendor for the additional costs, or paying for the service or doing it myself, I’ll take the former every day of the week.

The vast majority of my business with vendors is contracted, and that limits the price increases and how they can be applied. Does that mean that over time, my prices can rise to help compensate the vendor for the outsourced vendor credentialing program? Of course, but it will happen with me kicking and screaming and over time accompanied with contract clauses such as, “All future price increases will be limited to the prior 12 month average of the CPI-U index or 3 percent, whichever is less”.

In summation, I truly believe that the third party vendor credentialing industry is living on borrowed time, and that sooner or later hospitals and vendors will figure out that it would be more effective and less costly to work together to assure hospital needs are met, along with the needs of vendors to have access to staff and physicians in a logical manner. How that shakes out is still to be determined.

Michael Nestlebush, MBA, CMRP
Procurement and Contracting Administrator
Wellspan Health
York, PA

Fred Crans responds
Mr. Nestlebush’s comments are well-taken. As I believe I said in my column, nothing beats doing a good job without paying for outside assistance. Vendor monitoring requires (1) the desire to do it, (2) effective communication among the various departments and (3) the rigor of sticking to the plan.

Fred W. Crans, MBA
Area Vice President, North & West
ECRI Institute
Plymouth Meeting, Pa.

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