Revolutionising healthcare supply chains by tackling indirect spend challenges

For many health systems, the biggest gains in supply chain performance are not in the most visible categories, but in the sprawling, harder-to-manage areas of indirect spend and purchased services.

Tom Swapp, senior vice-president of indirect spend and purchased services at Vizient, argues that these categories can account for 20% or more of a health system’s operating expense, yet they are still often managed with far less scrutiny than med/surg or pharmacy. He says the prob...

lem is not simply one of scale, but of structure: services such as IT, facilities, food, environmental services, linen, human resources and marketing are frequently bought, billed and reconciled in ways that sit outside traditional supply chain processes.

That makes control difficult. In a conventional supply model, there is usually an item, a purchase order and a contract. Purchased services are often arranged department by department, with invoices arriving after the work is done and limited ability to match what was bought to what was agreed. Vizient says that complexity is compounded by the long tail of suppliers, with a single health system transacting with more than 10,000 supplier entities a year on average.

Swapp said that fragmentation creates a significant opportunity to improve visibility, expand contract coverage and bring more spend under management. Vizient has built its indirect spend approach around that premise, combining enterprise visibility, contract intelligence and healthcare-specific expertise to help systems coordinate activity that has traditionally been scattered across departments.

His perspective has been shaped by experience early in his career, when he moved into a management role expecting to focus on sourcing and negotiations, only to find himself responsible for procurement operations as well. That, he said, changed how he viewed contracts: they matter only if they connect to the way an organisation buys, pays and works with suppliers.

Swapp also points to a broader shift in how health systems should think about technology. He believes analytics alone are no longer enough if they simply produce more reports for teams to sift through. The more useful tools, he says, are those that surface actionable insights inside the workflow, whether that means identifying a missed contract opportunity, triggering a supplier discussion or prompting a request for proposal.

That emphasis on action rather than information is reflected in Vizient’s wider messaging on indirect spend. The company says purposeful supplier engagement, stronger governance and closer alignment between transactional and operational data are essential if health systems want to move from isolated savings wins to a more mature category management model. A Vizient blog by Swapp also points to the sheer scale of the issue, noting that over five years there have been more than 5.5 million unique vendors linked to more than $2 trillion in spend.

For Swapp, the real measure of success is not just lower prices, but broader influence. He says the goal is to help supply chain leaders extend their reach across the organisation, strengthening their role as financial and operational partners rather than limiting them to traditional procurement work. That, in his view, is where indirect spend becomes more than a cost category: it becomes a lever for resilience, capacity and better execution across the whole health system.

The work is also personal. Swapp says he is motivated by the team around him and by the chance to help providers reduce the cost of care, improve operations and free up more capacity for patients and communities. In a sector under constant financial pressure, he sees that as both a practical challenge and a meaningful one.

Source: Noah Wire Services