7 Key Purchase Services Cost Savings Strategies
Every hospital needs a roadmap and starting point for purchased services cost savings opportunities.
1. Contract expiration date
Do not allow your purchased services contracts to auto-renew.
If your contract is expiring in the next 9-12 months, carry out an in-depth review to understand your hospital’s needs, the marketplace, and overall cost structure.
2. Category grouping
Start to group your IT costs, telecommunication spend, or outsourced laboratory services to understand your spending.
At VIE Healthcare®, we group purchased services into six categories
3. Spend volume.
This is a difficult area as hospitals analyze bigger spend volume to capture the bigger savings.
We like spend volume, but we recommend you carry out an analysis in the middle or lower spend areas.
Often these sections realize a larger percentage of cost savings because they’ve not been reviewed before.
4. Impact of cost savings
If you’ve already begun to identify specific cost savings areas, that’s a great place to start to reduce your purchased services costs.
5. Urgent issues
Urgent issues can often realize cost savings, such as an issue with growth, or a new strategic initiative that requires additional services.
Not everything works in a uniform or organized way.
6. Net new
Net news are important.
For instance, you might have introduced a brand new telehealth offer and need to analyze the marketplace and benchmarking to ensure you’re paying the right price.
7. Year on year price increases
This is an area we encourage our clients to prioritize.
If your hospital is paying more than a 5% increase in year-on-year pricing you must address this.
You can review month by month or quarter by quarter, but we recommend starting with a year-on-year review.
I’d love to hear how your organization approaches cost savings in purchased services spend.
Reach out at lmiller@spendmend.com to discuss your cost savings goals and how we can support and accelerate cost savings opportunities in your organization.
