The Ups and Downs of Negotiating Elevator Services ContractsWhen most people think of going to a hospital, the last thing on their mind is whether the elevators are properly maintained.
The Ups and Downs of Negotiating Elevator Services Contracts
When most people think of going to a hospital, the last thing on their mind is whether the elevators are properly maintained.
Truth be told, though, keeping your elevators running smoothly is crucial for the safety of patients, staff, and visitors, as well as for protecting your reputation and avoiding lawsuits. Elevator maintenance has become more complicated as technology has evolved. Many elevators are now on the hospital networks and report back when preventative maintenance is needed and when an issue may arise due to failing hardware. To help you traverse this increasingly complex landscape, and so you don’t have to feel like you are on an elevator ride with your vendor, we’ve compiled some tips and tricks to give you a lift in your negotiations!
Gearing up to Know Your Needs
Some hospitals will buy too much coverage, and others not enough. It is common for hospitals to create a “blanket” agreement with full service 24×7 for all of their elevators. One important tool is assessing the coverage that your hospital needs. For example, a critical elevator that transports patients to and from surgery should probably have platinum coverage, while an elevator that is used less frequently and only by staff may need basic coverage. Here are some key points to help you determine your needs:
Level of Service. You may not need platinum service. Service needs are based on the elevator, not the location.
Service Hours. Do you need 24×7 service? Is 8am – 5pm sufficient, or do you need evening service? Vendors offer different levels of overtime and rates, so be sure you spell out the definition of overtime.
Give Your Contract Clauses a Lift Up:
Contract Term Length. Contract term length is typically 3–5 years. Ideally, your service contract term length should be around 3 years, but it’s more important to negotiate the out–clause to be sure you can get out of the agreement.
Insurance. Your service provider should limit your liability by having strong insurance coverage.
Service–level agreements (SLAs) & Penalties:
- Response Time for Callback. This should vary depending on whether someone is trapped (urban: 30 minutes, rural: 1.5 hours).
- Uptime Guarantee: 99% is optimum!
- Mean Time Between Callback (MTBCB): This holds the vendor responsible if the elevator goes down again after having just been fixed. Typically, you don’t want this to be under 60 days.
Most penalties for violating the above SLAs range between $100 and $500 per occurrence.
Next Stop: Negotiating to Success!
Allow plenty of time. Start negotiating at least one year before your contract expires. If you’re already within the one-year window, extend your contract for a year to give yourself time to build leverage and negotiate.
Evaluate your current vendor. Is your relationship with your current provider good or bad? Is the vendor meeting your SLAs? How often are your elevators having issues?
Create Competition. Vendors can service all types of elevators, not just the ones they installed. Obtain competing bids. Consider having more than one vendor service your elevators to create healthy competition.
RFPs are your friend! An RFP can help provide the leverage needed to ensure you are selecting the right partner for your elevator maintenance contract.
Want to get the best deal on your elevator service contracts? TractManager’s negotiation experts typically identify average savings between $69K and $102K, or 17% and 26% of the annual contract value, for elevator services.
TractManager’s experts shared these elevator services contract negotiation tips during a recent Table Talk—an informal discussion about Strategic Sourcing strategies. Please join us for the next Table Talk session to discover additional best practices.
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Top 10 Negotiating Strategies
Skilled negotiators are like musical virtuosos. They have an extensive repertoire of tactics from which to draw, and they know when and how to make them a part of their performance. But negotiating healthcare contracts for capital, purchased services, and IT services can test the artistry of even the most masterful negotiator.