Healthcare IT: Are There Hidden Savings in Your McKesson Contract?

Spend Matters welcomes another guest post from NPI, a spend management consultancy, focused on delivering savings in the areas of IT, telecom, transportation and energy.

Over the past decade, McKesson has become synonymous with healthcare IT. Its software and hardware technology can be found in more than 70 percent of U.S. 200+ bed hospitals, a quarter of home healthcare agencies, and in 125,000 medical practices.

McKesson's pervasiveness in the healthcare industry, combined with regulatory requirements, has added another layer of complexity to the management and optimization of IT costs. Meaningful Use, ICD-10 and other compliance mandates have made many healthcare IT vendors (including McKesson) more "confident" in their solution pricing, less proactive in discounting and more ambiguous in their contract terms.

If you want to optimize your spend with McKesson, here are a few tips:

  • Maximize discount levels. In the current healthcare IT climate, discounts for new McKesson IT solutions are all over the map. I regularly see deals where discounts are 20-30% below historical levels. Be sure to benchmark your discounts to make sure they're in line with fair market value.
  • Beware of hidden upgrade fees. McKesson's support agreements cover the cost of most upgrades, but that doesn't mean upgrades are free. Many healthcare organizations are unaware that McKesson's routine upgrades often require hefty professional services fees. And, even those that have learned this lesson the hard way are unaware that these fees can be negotiable.
  • Get rid of (or minimize) annual rate increases. Annual rate increases have gotten out of control across all areas of IT, and especially within the healthcare sector. Demand justification for renewal rate increases and negotiate aggressively. You'll be surprised what kind of cost impact this can deliver to the full term of your McKesson contract.

-- Jeff Muscarella, EVP of IT, NPI

Voices (2)

  1. Jeremy Engdahl-Johnson:

    Interested in ICD-10? It’s more than just an implementation deadline. Potential for quality, coding improvements: http://www.healthcaretownhall.com/?p=4764

  2. Craig:

    The best way to buy most effectively from Mckesson is to use a free order placement "RxCherryPick". It is a very Pharmacist friendly and will save 30% on the generic basket and MCK still gets 92% of the order.

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