Last year, we published a Spend Matters Perspective analysis titled Services Procurement Benchmarking -- Truth in Numbers to Achieve a New Level of Program Results. The research brief considers how best to implement and deploy services procurement benchmarks and KPIs, primarily focused on contingent spending. The perspective also includes a case study analysis of how CareFirst BlueCross BlueShield has defined and managed their overall flexible workforce initiatives based on a set of KPIs and benchmarks that not only correlate with performance to measure activity but also aim to improve future outcomes. While CareFirst is more sophisticated than the typical organization in deploying and using KPIs throughout their contingent program, companies of all levels of services procurement maturity are likely to learn from their experience.
In this post, we'll call attention to some of the highlights from our research looking at how CareFirst uses benchmarks and KPIs. As part of its program, CareFirst has regular review meetings each quarter with suppliers, but also interacts on a more frequent basis as required. Program leadership has found in this self-managed program that suppliers may push back at first on KPIs "with excuses," but they quickly come to realize the program has real teeth behind it because CareFirst will reallocate and rebalance spend based on actual performance, trending and responsiveness. But understanding what metrics and thresholds count in providing the most constructive feedback is even more important than getting suppliers on board at CareFirst.
For example, CareFirst suggests that when considering response rates, it's important to look at the outliers on both sides. Suppliers with a 95-100% response rate are likely to be facing dire straights of one sort or another and conversely, those at the 60% range might be cherry-picking opportunities. In this case, the ideal place for a vendor is "in the middle" rather than at one extreme. CareFirst provides both supplier-facing and program (team) performance report cards at regular intervals. The most important part of the program is "making sure that no one is surprised." Benchmarks allow CareFirst to address quality through metrics. For example, they internally allow the program office to quickly see whether a manager's complaint is based in fact or simply subjective opinion.
Stay tuned as we explore a list of some of the KPIs that CareFirst uses to manage its overall contingent program.