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those damn vendors

Insurance companies, employers, and TPAs rely on vendors to process bills, build and operate networks, manage prescriptions and PT, support litigation, and provide expert advice on problematic medical issues. In many instances the vendors are selected thru a competitive bidding process, wherein the lowest bidder gets the deal, or at the least has a much better chance of landing the business than their more costly competitors.
But in others, the selection process goes on seemingly without end.

I’ve come across many instances where a large payer publishes an RFP for managed care services – networks, PBM, case management, physician adviser services, or some combination of the above. And in far too many, the selection process appears to be arbitrary, biased, or designed to find a lower price to use in negotiations with the incumbent.
In others, the decison is never made. After the RFP responders spend countless hours putting together presentations, submitting financials, designing programs and staffing models, analyzing data and flying to meetings (often in Chicago in February), the process appears to just fade away, with no decision made and no justification given.
I’ve been on both ends of this process, working on behalf of clients who could not get to a decision, and for vendors doing their level best to win the business on the basis of their hard work and creativity.
The non-decisions, the endless rounds of Q&A, “evolving” criteria, frequent changes in personnel involved in the decision process, and often dictatorial tone employed by the “customer” can be enormously damaging, all the more so because the customer does not even realize the damage they are doing to their own cause.
This behavior leads many vendors to avoid the RFP process, or to minimize the amount of effort they put forth when responding, or to back out of these processes when they start to drag out. The result is the “customer” ends up selecting from the vendors with the intestinal fortitude, or outright desperation, required to see the process through. Then the customer is often frustrated with the result – the vendor can’t deliver for the agreed-upon price, or there are costs that “pop up” after the deal is done, or the level of service is unsatisfactory.

The customer now believes all vendors are liars or cheaters
, out to “get” the customer.
What does this mean for you?
It doesn’t have to be that way. But until and unless “customers” treat “vendors” with respect, honesty, and openness, it will be.

6 thoughts on “those damn vendors”

  1. From (of course) Florida, 2 cases on point.
    The City of Jacksonville recently closed an RFP for case management in which, because of RFP language, there were only 2 possible winners – the incumbent and the network with whom the incumbent is affiliated.
    In its haste to change from its current vendor, the State of Florida is working on its FOURTH iteration of an RFP for case management. These reissues were due to unclear program objectives, evolving criteria, botched RFP handling, lack of knowledge on the part of the state agency about how many & what type claims it had, changes in the rules for who can bid, extremely short notice of deadlines, etc. This has been going on for over one year. Needless to say, vendors have put in a tremendous number of hours to prepare responses.
    Then there are those “fishing expedition” RFPs in which the proposal goes out so that the purchasing entity can try to figure out how to do the project on its own. Thousands of dollars in free consulting work, and the alleged purchaser almost never gets it right because of lack of internal expertise to get the job done properly.

  2. Joe,
    First, great topic. I too have been involved from both a vendor and a consulting perspective for the last 20 years and have the following observations.
    1. Data manipulation, and exclusion is far too common among consultants and raises costs ultimately.
    2. Focus on fee’s and premium versus ultimate costs is very expensive.
    3. Transaction driven intermediaries produce outcomes more focused on future projects than a permanent solution just as a surgeon sees future surgery as the ultimate cure.
    4. Employers who are simply civil and open with vendors can anticipate the RFP Process actually achieving meaningful solutions which form the basis for cost effective and long term relationships rooted in trust and respect.
    5. If things are ugly while you are dating imagine how painful the marriage will be

  3. Joe,
    Amen! Although mostly vendors read your blog, I will be sure to send this information out to all of the Towns and Board of Education groups we represent (Union side) in Connecticut, (Including your town). Hopefully, these employers will start to understand the process and outcomes a little better.
    Thanks again for your insight.

  4. Here is another example of the vendor problems with RFP’s
    E-mail []
    Sent: Tuesday, April 03, 2007 7:18 AM
    To: Jody Ball
    To obtain a copy of this RFP there is a non-refundable service charge of $15.00. Send your request and a check or money order for the service charge payable to Board of County Commissioners, Palm Beach County to: Palm Beach County Purchasing Department, Attn: Copy/Mail Room, 50 South Military Trail, West Palm Beach, FL 33415-3199. Please be sure to specify the RFP # you are requesting. Please allow sufficient processing time for your request. You can personally pick up this RFP at the above location after paying the required service charge by check – no cash will be accepted via mail or in person. For additional information you can contact the buyer responsible for this RFP – Dennis Leaf @ 561-616-6816.
    >>> “Jody Ball” 04-02-07
    Do you charge to email a copy of the rfp above, if not please email to Jody Ball at email:
    The only way to get a copy is to buy it, plus we already pay for a service to locate the RFP’s.
    You guys are not using good sense, charging 15.00 for an rfp…what’s up with that creating jobs or just wasting natural resources such as copy paper when everyone else in the country sends them out via email. I think you folks need to revisit your procedures; I guess nobody has any common sense anymore. What a waste! FYI: It does not cost anything to email it. Wow!
    (Of course they did not respond to this or explain why they charge the fee. It not the money it is the principle.

  5. We are new to the process of marketing to Medicare Advantage health plans our rather unique service. Is there an RFP location service specific to MA plans? Thanks!

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Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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