Working on landing a 6-hospital system in Ohio. They love the concept of a utility bill audit but their procurement department is pushing back hard on contingency fees. They want a flat fee engagement instead. The CFO told me their policy doesn't allow percentage-based fees for consulting services. How do you handle institutional clients who won't do contingency?
Contingency fee pushback from large hospital system
I've dealt with this a few times with government and hospital clients. Their procurement rules often prohibit contingency arrangements. I offer a hybrid: flat fee for the audit itself ($X per account reviewed) plus a reduced contingency (15-20%) on any refunds recovered. The flat fee covers my time and the contingency is the upside. Most procurement departments can approve that structure.
Another option is to quote a flat project fee based on your estimate of the likely findings. If you've done similar hospital audits, you know roughly what to expect. Price it so you make your target margin even if findings are on the low end. You leave some upside on the table but you get the contract signed.