Feature How to Develop an RFP A request for proposal, or RFP, is a tool practices can use to make informed purchasing decisions. By Chris Hayhurst | August 2017 A number of years ago, Robert Latz, PT, DPT, had an important decision to make. As manager of the rehabilitation department at a small hospital in northern Kentucky, he'd been tasked with purchasing relatively expensive equipment that would be the centerpiece of the department's new balance program. Five companies produced competing products that seemed worthy of Latz's consideration, so he started the process by reaching out to all of them—sending each a so-called "request for proposal" (RFP). An RFP, explains Latz, who today is chief information officer of the multistate provider Trinity Rehabilitation Services, is a document that purchasers in companies of any kind can use to tell vendors exactly what they want to buy. In health care settings such as physical therapy practices, RFPs typically are used for big-ticket items such as an electronic medical record (EMR) package that includes support and services, or a full set of weight equipment for an onsite gym. "It's basically a list of specifications and questions designed to determine which vendor can best give you what you need," Latz says. "You use it as a way to compare 'apples to apples,' and to make sure that you're getting the best deal you can." Latz knows RFPs from both sides; the company also has been on the receiving end of RFPs sent by nursing homes inquiring about their services. The RFP that Latz put together as part of his hunt for a balance device included plenty of information about his facility's needs—from the fact that the equipment had to fit in a certain space to his desire for a machine that could send data to a separate computer. The RFP also noted the facility's limited budget, which Latz recalls as having been around $30,000. "The hospital required us to get at least 3 quotes, so I sent it out to 5 different vendors." He and his colleagues reviewed proposals from the 4 vendors that responded and ultimately picked a device that met their key qualifications. "The whole process worked out really well," Latz says. "We got what we wanted, and the price was right." RFP Basics While most purchasers in institutional settings are familiar with RFPs and the reasons for their use, that's not always the case when it comes to physical therapists (PTs) in private practice. More typical, perhaps, when it comes to purchasing is the approach used by clinics such as South Mountain Physical Therapy in Sinking Spring, Pennsylvania. "I do my research and I shop around for a good price from a vendor that I know will treat us well," explains owner Kai Pedersen, PT. He's driven hundreds of miles to buy used equipment from other practices. He's also made purchases following conversations with company reps at professional conferences. "I'll talk to them there and see what they have. If it's exactly what we need and I know they have good service and support—and if we've saved enough money as a practice—I'll buy it." Still, according to Latz and other PTs, as well as many vendors that work with physical therapy practices, an RFP can be a valuable tool for anyone who wants to make an informed purchasing decision. "They're a lot of work to create," Latz concedes, "and you shouldn't use them for every purchase you make. But if it's something that is high-cost or will define the 'look and feel' of your clinic," developing a strong RFP may be worth the effort. Jonathan Miller, director of sales and marketing for physical therapy and occupational therapy products at Akron, Ohio-based Performance Health, agrees. "If you're looking for TheraBands and you only have 3 clinics, don't put out an RFP," Miller says. "But if it's a big purchase that's complex, and you think it will take more than a few phone calls to different vendors, that's where an RFP makes the most sense—if you take the time to do it right." So what does it take to put an RFP together? Here's a primer on the development process and what you can expect in return. Step 1: Assess whether an RFP is appropriate. Miller, who before he came to Performance Health developed dozens of RFPs as the strategic sourcing manager at Procter & Gamble, says 3 conditions beyond size and expense should be met before any business uses an RFP to source an item. First, he says, "you should know exactly what you want to buy" and be able to communicate the specific criteria required. Next, if you work with a group purchasing organization (GPO), check with it first to see if it has a contract for that product or service. A GPO is an entity created to leverage the purchasing power of a group of businesses to obtain discounts from vendors based on the collective buying power of its members. Checking with the GPO first "is important, because if it does have a contract, somebody at that GPO who is trained in conducting RFPs already has done the hard work for you, and you'd be wasting your time doing it again on your own," he explains. Finally, consider an RFP only if your current suppliers either can't provide you with the item or can't do so in a way that adds value to your practice. "Or maybe the relationship that you have with that supplier isn't as good as you hoped it would be," Miller says. "If that's the case, that's another indication you should consider an RFP." Many practices, Miller advises, will submit an RFP for a certain product without first "doing their homework" and seeking input from relevant stakeholders across their organization. "Your clinicians might have different ideas from the front office," he says, "or the PTs in one facility might be looking for something different than those at another location." Brian Shivler, vice president of sales and senior market leader for the ReDoc product line at Net Health, a national rehab-therapy software vendor based in Pittsburgh, agrees. "We get a lot of RFPs that are incomplete, and usually it's not due to a lack of effort but because the purchaser missed the mark in terms of fully articulating its needs." Especially when it comes to complex products such as documentation software and its associated services, Shivler suggests first asking vendors to list their full complement of offerings with an "RFI," or request for information. "When you get the RFI back, you can evaluate all of the options that are being offered," he explains. "Then, later, if you decide to do an RFP, you can clearly focus on the features that you're interested in" and only send it to the vendors who have exactly what you want. Step 2: Create the RFP. The RFP itself, Miller says, "needs to be one of the most detailed documents you've probably ever put together." He suggests looking at RFP templates online for ideas on how to organize your request, then creating your own document from scratch. "The first thing is, you need to make sure you have rules and instructions in place," Miller emphasizes. "Vendors want to know the timeline of your purchasing: Are you going to do multiple rounds of evaluations and negotiations, in which you look at their proposals and then return to them with feedback and ask for improvements? Is it a sole-source RFP, or is it possible that one company might get part of the pie, while another might get another slice? How long will the award be for? Will it be a 3-year term, or a 5-year term, or is this just a 1-time capital purchase? When will you make your final decision, and how will you inform the vendors of your choice?" All of this information should be included up front because it will save you time down the road, Miller says. "You're going to be fielding fewer phone calls and emails from vendors asking you the same questions over and over again." Next up come the specifications around the item(s) you want to purchase, Miller says. "The more information you can provide regarding exactly what will and won't work for your clinic, the better response you'll get from your vendors, and the better job you can do on your analysis of the submissions you receive." Brian Shivler agrees: "Give us as much information as you can, so that we can be sure to provide an accurate, comprehensive quote that meets your needs, as well as a full return-on-investment analysis and [proposed] contract." Toward that end, Shivler recommends including details about your practice in the RFP. "It helps us, and I'd assume it would help other [record-keeping software] vendors, to understand your clinical operations. Facility 'pain points,' data related to current staffing models, patients seen per month, and number of clinics—they're all important details to know." And the final major part of a strong RFP? According to both Shivler and Miller, it's important to request information about each vendor. "You want to know, if you choose a certain company, what you can expect," Shivler explains. If you're buying software, for example, "you want to understand the transition process and be sure the company is willing to stand behind the product through implementation and therapist workflow transition. This is the best way to ensure that your clinic will get the anticipated results and reach the expected return on investment." Miller, for his part, suggests asking about the makeup and character of the vendor itself. "Where's your corporate office? How big are you, and what's your annual shipping volume? If I ever have an issue with your product, who am I going to speak to in order to resolve it? Will it be a local rep, or will it be somebody at a call center on the other side of the world?" Ask questions like these, Miller says, and you'll give the vendor a chance to tell its story. "And you can get an idea what this potential relationship will be like if you execute the award." Step 3: Send it out. Once your RFP is ready, either mail or email it to your shortlist of potential vendors—but be sure to do so with a clear timeline in mind. In the case of an EMR software package, for example, Latz recommends working back from the day you'd like to eventually get it up and running to determine exactly when your RFP should go out. Hoping to launch during the first week of November? Considering that you'll need time for implementation and prep work, you probably should make your decision by September 1, Latz says. "So, if you give your vendors 2 weeks to receive, complete, and return the RFPs, and you expect to need 2 weeks to review and make your decision, then you need to send it out by August 1." (Latz notes that this timeline is for illustration purposes only and may be too short, depending on the complexity of the installation.) Step 4: Wait for the returns and evaluate the results. The last phase of the RFP process entails gathering all submitted proposals and deciding which, if any, best fits your practice's needs. Latz, who recently used an RFP to buy a new digital communication system for Trinity Rehab, recommends including an odd number of people on any decision-making committee to ensure that you don't wind up with a tie between 2 vendors. Each member of the committee should score each RFP, as well as any important subcategories within it, and write down any comments they might have, he says. "This way, when the group comes together, the decision process will be a little easier and the discussion will be more focused." Jonathan Miller also suggests designating a leader from your practice as the single point of contact. "The vendors you contact might start reaching out to see if you've made up your mind, or to try to convince you to choose them, so it helps to have 1 person to handle that communication." That individual, he recommends, also should head up the overall RFP analysis. "So," Miller notes, "it's very important to pick the right person for the job. It shouldn't be somebody who also has to see patients 12 hours a day, because the person is going to need time to devote to this." That person also shouldn't have any personal brand preferences, Miller says, because that could corrupt the analysis. "You have to keep your emotions out of it if you really want to do it right." In the end, Latz agrees, the RFP must be viewed like a business transaction—a means for physical therapy practices to make smart purchases in order to thrive and grow. Nevertheless, he says, when it comes time to make your final decision, remember that there are people behind the companies you didn't choose who deserve to be informed and thanked for their submissions. "You never know when you might need to work with them again," Latz notes. Chris Hayhurst is a freelance writer.