Closing the contracting gap: From fragmented spend to managed opportunity

The contracting gap begins before value is negotiated

Organizations generate substantial value through aggregation, competitive sourcing, and favorable contract terms, but when purchases remain outside managed pathways, health systems miss the opportunity to put those capabilities to work.

The result can extend beyond missed savings. Fragmented spend can mean more suppliers to govern, inconsistent terms across the enterprise, reduced purchasing leverage, and an incomplete picture of where organizational dollars are going.

Recognizing the problem is relatively straightforward but addressing it at scale is much harder.

Why fragmented spend falls below the action threshold

Supply chain teams operate with finite resources. Every potential sourcing opportunity requires some combination of classification, contract review, supplier analysis, stakeholder engagement, and governance.

When purchases are evaluated individually, larger sourcing priorities naturally rise to the top. Lower-value opportunities accumulate below an organization's action threshold, creating an accepted-loss dynamic: The collective opportunity may be meaningful, but the economics of pursuing thousands of purchases individually are difficult to prioritize.

Vizient-commissioned research across 62 C-suite and vice president-level leaders at U.S. hospitals, health systems, integrated delivery networks, and academic medical centers suggests this is fundamentally a prioritization problem.

Seventy-four percent of participants said the size of the potential value determines whether an identified issue receives action. Fifty-eight percent of participants identified prioritization as a barrier to action, and 33% called it the single biggest barrier.

Together, those findings point to a more nuanced challenge than simply finding off-contract spend.

Health systems need a practical way to answer: Is this opportunity large enough, credible enough, and actionable enough to pursue?

That changes the job from finding every small-dollar transaction to determining which fragmented opportunities collectively warrant enterprise attention.

From individual purchases to a portfolio of opportunity

Historically, procurement professionals have had to devote time to finding an unmanaged purchase, understanding what was bought, determining whether an existing contract applies, assessing alternatives, and deciding whether the potential return warrants further work. When the opportunity itself is small, the effort required to investigate it can consume too much of the value at stake.

But AI and intelligent orchestration are beginning to change that equation.

Tasks that previously required teams to manually sift through transactions can increasingly be automated, such as identifying unmanaged suppliers and categories, classifying spend, comparing it against contract intelligence, and prioritizing opportunities based on potential value and actionability.

Instead of asking whether every individual transaction deserves attention, organizations can begin looking at fragmented spend as a portfolio. Some activity may be appropriate for an existing contract or present an opportunity for supplier consolidation, while other spend may justify a new sourcing event or may not warrant intervention at all.

The goal is not to source everything. The goal is to make deliberate decisions about what should be managed and where limited procurement capacity can create the greatest enterprise value.

Human expertise remains essential to that process. Classification alone doesn’t determine strategy. Teams still have to evaluate stakeholder requirements, supplier considerations, existing contractual relationships, and the organizational effort required to turn an identified opportunity into realized value.

Technology can help narrow the field, but procurement expertise still determines what to do next.

The cost of inaction is changing

Leaving fragmented spend can also cost more over time.

Vizient projects prices for indirect spend and purchased services to increase 4.73% in 2027, the highest projected increase among the major supply chain segments included in the summer 2026 Spend Management Outlook analysis. Within those categories, IT hardware and software is projected to increase 6.29%, construction 4.70%, and operational support services 3.81%.

Those projections measure price movement and don’t account for factors such as utilization, product mix, reimbursement, supply availability, or local contract performance. But they add an important dimension to the contracting conversation. When the underlying cost of goods and services is increasing, organizations have even more reason to understand which activity sits outside managed pathways and where sourcing intervention could matter most.

What if continuous management becomes the standard?

Consider what this capability could look like five years from now.

Rather than relying primarily on periodic analysis to uncover unmanaged activity, health systems could continuously identify fragmented spend as it emerges. New suppliers and categories could be classified against enterprise spend and contract intelligence, with higher-value opportunities prioritized for attention before fragmented purchasing becomes more difficult to manage.

Supply chain teams could have a clearer view of where an existing contract provides a pathway, where supplier consolidation warrants consideration, and where a new sourcing event could create value. Procurement professionals could spend less of their capacity searching for opportunities and more of it evaluating and acting on those most likely to matter.

Most importantly, success wouldn’t be defined by putting another category under contract.

The more meaningful measure would be whether an organization has developed a disciplined, repeatable way to decide what should be managed, how it should be managed, and where procurement resources can produce the greatest return.

That’s the opportunity in closing the contracting gap: extending the rigor health systems already apply to strategic sourcing across a much broader portion of enterprise spend.

The contracting gap has persisted in part because managing thousands of fragmented opportunities individually can require considerable time and expertise. As technology changes that equation, health systems have an opportunity to apply sourcing discipline to a broader portion of enterprise spend and focus procurement expertise where it can create the greatest value.