Managing the contract between Gelre Ziekenhuizen and their laboratory supplier

Introduction: Gelre Ziekenhuizen wants to integrally privatise their four laboratory services. When looking at existing literature, there is a lack of scientific literature about buyer-supplier relationships in the healthcare sector, while this is a highly relevant topic in the current healthcare sector. Therefore, this thesis aims to add value by offering theoretical and practical insights into how to get started with contract management and a buyer-supplier relationship in the context of outsourcing laboratory services. Purpose: This study aims to investigate how buyer-supplier relationships could improve the relationship between Gelre Ziekenhuizen and its suppliers, specifically focussing on laboratory services. Therefore, the research question of this thesis is: ‘How can Gelre Ziekenhuizen ensure to get the expected results with their partner, after privatising the laboratories, to accomplish their goals? ’ Methodology: In order to answer the research question, both a literature review and a qualitative study are conducted to collect the required information. The theoretical scope is developed through an integration of literature from agency theory, relational view theory and contract management. Fifteen respondents of the case company, Gelre Ziekenhuizen, and four contract managers of the external hospitals participated in a semi-structured interview. Findings: Two theories are used in the literature review to understand and explain various types of relationships in organisations. The agency theory consists of aspects more related to the contract, while the relational view theory consists of aspects more related to the relationship. Furthermore, there are aspects found in literature for the strategic, tactical and operational level which are important to take into account for contract management. It is important to have these three levels because only then a transparent and uniform contract management process can be established. The aspects of a buyer-supplier relationship and contract management are used during the interviews to explore which type of relationship suits best and to explore what elements are most important to take into account when establishing contract management. The results of the interviews show that cost reduction and quality improvement are the most important goals to privatise the laboratory. One of the opportunities is scale enlargement, while a risk is that the privatised laboratory could go bankrupt or that the project could fail. The most important aspects for contract management mentioned by the respondents are strategic goals and desired results; responsibilities and tasks; processes, procedures and policy; process and quality control; and performance management. The most important aspects for a buyer-supplier relationship are trust between members; agreed goals and performance measures; efficient and effective communication; and top management commitment and support according to the respondents. Flexibility and formality are both important to take into account when composing a contract. The respondents also indicated a framework agreement should be developed, where the Service Level Agreement should be a part of. The supplier should proactively watch developments and innovations in the market and adopt an advisory role, while the hospital should facilitate in support services, information and infrastructure. Lastly, sufficient knowledge about the content of the contract could be maintained according to the respondents by hiring an external specialist, someone who has been trained as a clinical chemist or a specialist in-house. Conclusion: The following recommendations are provided for Gelre Ziekenhuizen. First, it is recommended to start a partnership with the supplier, because with a partnership both parties can benefit most from each other. According to the respondents, trust, shared goals, investing in each other and innovation are aspects that are important in the relationship with the supplier. The researcher therefore recommends to have a long-term partnership, as these aspects could be achieved by having a long-term relationship. The contract should be formal and detailed with clear agreements. According to literature, a close, collaborative and long-term relationship could be promoted by having a long-term and detailed contract with clear defined responsibilities, expectations and performance. Furthermore, a basis for a Service Level Agreement is presented, that should be further composed by the hospital and supplier. Thirdly, the researcher advises to develop a limited set of Key Performance Indicators for customer chains, instead of per department. When examining more Key Performance Indicators, there will be a lack of focus and alignment. The indicators should be developed for customer chains, because in this way the indicators could be more effective controlled and are more stimulating than indicators per department. Lastly, the researcher recommends to focus on sustainability after implementing the contract. This would probably be after one or two years, because the respondents indicated that performance management, strategic goals, clear tasks and responsibilities and processes, procedures and policy have more priority than sustainability.