Use Purchase Power to Cut Costs
state of Michigan
is partnering with public universities to explore joint purchasing
opportunities that may help reduce rates for products and services.
The idea that pooled buying power can drive down costs is certainly
not unique or new. But Michigan
’s economic woes and related
decreases in state support for universities, combined with skyrocketing
increases in costs related to such thing as health care and utilities,
have prompted schools to be more aggressive in their search for
and Planning) said an existing example of the joint purchase advantage
relates to Internet service. For several years, all 15 public universities
have managed and run their Internet services through the statewide
if you have 15 institutions that need the same thing, they will
be able to negotiate a lower price for the product or service by
pursuing it in a cooperative manner,” he said.
same logic is being applied to a recent effort in which universities
have issued a request for proposals to utility companies, asking
them to submit bids for providing natural gas to the group.
have already been extremely aggressive in this area, but we are
willing to participate to see if there are additional savings,”
he added. “We have a staff position dedicated to energy management,
and that has saved us a significant amount of money over the years.
are also exploring the possibility of future joint requests for
proposals regarding health care, as well as other areas we could
save – life, dental and optical insurance, for example, and financial
processes such as credit card fees.”
to the Presidents Council for State Universities of Michigan
, increasing health care costs
are the fastest-growing expenditure area for the state’s universities.
The PCSUM fall newsletter reported that the Michigan Universities
Coalition on Health (MUCH) recently discussed the feasibility of
having all universities’ health care needs delivered by a single
third-party administrator to generate savings while preserving access
to quality health care services.
main challenge is blending the interests of 15 universities because
they administer their benefits programs in different ways,” Leach
said. “But it is worthwhile to explore a partnership in this area,
because there is potential for additional savings.
the universities are exploring a variety of new opportunities to
cut costs on goods and services because they have run out of other
places to cut. We are willing to consider any joint venture that
has the potential to save money.”