In healthcare supply chain, benchmarking is often treated as the default starting point for purchased services cost reduction: compare your rates to a national dataset, flag the categories where you’re paying more, and then push vendors to match “market pricing.” On paper, this seems logical, but in practice, benchmarking alone often falls short, especially when it comes to the complexity and variability of purchased services.
Why Benchmarking Isn’t Enough
Purchased services are rarely “apples to apples” in any industry, and this is especially true in healthcare. Factors such as regional supplier availability, organizational size and scale, and the quality standards or service levels that leadership expects can all significantly influence pricing. A rate that looks “high” compared to a benchmark might actually be completely reasonable once these, and other, variables are factored in.
We see this challenge play out frequently with our clients. For example, a system that requires quick response times from its clinical engineering services partner, or expanded coverage for rural hospitals, may pay more than peers – and for good reason. These higher costs often reflect intentional leadership choices to protect service quality or operational flexibility. Benchmarking alone doesn’t capture these nuances, and when organizations chase a lower “market rate” without that context, they risk eroding performance or compromising patient care.
In this same example, clinical engineering spend could be evaluated more holistically. While benchmarking offers a snapshot of the market, a stronger approach might involve optimizing service coverage levels, analyzing technician dispatch patterns, or exploring regional partnerships with other rural entities to preserve quality while improving efficiency.
The Problem with a Price-First Mindset
When benchmarking becomes the sole driver of negotiation, the conversation quickly narrows to cost, often at the expense of value. This price-first mindset can obscure bigger opportunities, such as aligning service volumes with actual demand, consolidating fragmented vendors, or updating outdated scopes of work.
In many of our engagements, we’ve seen previous benchmarking efforts deliver short-term “wins” that erode over time, or worse, create downstream effects that impact clinical outcomes and vendor relationships. These downstream effects can take many forms. For instance, locking in a lower maintenance rate without updating scope can lead to costly repairs for newer equipment. Similarly, reducing linen service frequency to save on fees can cause shortages, emergency deliveries, and staff frustration. Ultimately, focusing solely on price can sacrifice long-term value and operational stability for the illusion of quick savings.
A Broader Approach to Unlock Value
Purchased services optimization requires a broader, more strategic approach—one that moves beyond comparing rates to national averages. At Pathstone, we help organizations evaluate a wider set of levers to unlock both financial and operational value. These levers include:
- Standardization – Aligning vendors, terms and scopes across facilities to reduce variation and strengthen organizational negotiating leverage within the vendor relationship.
- Utilization Management – Identifying overuse or inefficiencies by reviewing actual utilization of goods and services.
- Make vs. Buy Decisions – Evaluating when in-house delivery or outsourcing services produce better value and clinical outcomes.
- Revenue Opportunities – Identifying services that can be billed or reimbursed, or areas where revenue potential exists.
- Strategic Supplier Partnerships – Building relationships that foster innovation and long-term value creation.
Each lever has trade-offs and requires alignment across stakeholders, but when applied strategically and thoughtfully, they can deliver far greater, and more sustainable, results than benchmarking alone. For a deeper look at when and how to deploy these value levers, see Unlocking Hidden Value in Healthcare Supply Chain: Insights from AHRMM 2025 Spring Summit.
Putting Context Before Comparison
Every health system is different. What works for a large academic center may not be right for a community hospital or rural network. That’s why we begin each engagement by understanding of organizational goals and operational realities:
- What service levels are truly non-negotiable?
- Where are there redundancies or inefficiencies?
- Are current suppliers structured to scale with future needs?
By pairing operational insight with data analysis, we build a custom roadmap that reflects not just “what others are paying,” but what makes sense for your organization.
Final Thoughts
Benchmarking is a helpful reference point, but it’s not a strategy. In purchased services, context and alignment matter just as much as cost.
At Pathstone, we help healthcare organizations identify the right mix of improvement levers, whether that means quick wins or long-term transformation. If benchmarking is the only tool being used, your organization may be overlooking more meaningful and sustainable value.
Let’s connect to discuss what this could look like for your organization.