This article was written by Lisa Miller.
Significant potential for cost cutting opportunities exists in your hospital’s line item details. But managing your purchased services spend isn’t the same as running regular medical/surgical discrepancy reports in your hospital.
In recent years, there has been a renewed focus on cost saving initiatives in purchased services, but for many health systems identifying those savings is a challenge.
What’s preventing your health system from identifying the cost saving potential in your line item details?
The lack of visibility into the line item details of purchased services invoices leaves most hospitals with no way of managing that spend. In contrast to medical/surgical spend, it is not possible to run a discrepancy report to confirm that the correct amount is being invoiced for purchased services.
Furthermore, the trend towards value-based reimbursement, shrinking hospital margins and spiraling healthcare costs has resulted in more mergers as healthcare organizations partner with other institutions.
In other words, health systems are getting larger and larger.
As a result, the amount of monthly spend requiring validation is too overwhelming for hospital employees to manage when faced with a couple of hundred pages of invoices to manually analyze.
In our experience, the best they can achieve is to make a judgment on how it compares to the previous month, which has obvious, inherent issues.
Without the line item details of your purchased services spend hospitals can’t accurately assess whether:
- The price you are being invoiced is at the agreed rate.
- The hourly rates charged are consistent with the previous month.
- All of the items your hospital is paying for are covered by a contract with your vendor.
How does your hospital identify items that are on or off contract, or where the pricing is wrong?
First of all, you must ensure you’re paying the agreed price for items invoiced but how is that possible without a discrepancy report?
Our patented Invoice ROI™ technology identifies the cost cutting opportunities in the line item details of your purchased services spend, achieving unparalleled savings for your organization.
We recently discovered one of our clients was paying for three identical agreements for patient accounts under a large IT contract. Identifying those monthly overpayments had been impossible for the hospital due to the high volume of invoices it manages and the sheer size of the contract itself.
It was identified because we managed and monitored their purchased services spend with our revolutionary, automated technology Invoice ROI™.
We begin by analyzing the line item details of the past 12-18 months of your invoice data to identify hidden costs in your invoices. This is often the result of pricing errors and off contract spend which I mentioned above. Utilization trends are also highlighted at this stage.
For this client, we now provide a monthly analysis of their line item details and analytics across all of their IT purchased services spend.
In this example alone, we reduced their costs for one service by two thirds by negotiating with the vendor to pay once for the same service, rather than three times.
Reduced reliance on vendors
An added advantage of the ability to analyze line item details of your purchased services spend is that it eliminates your organization’s need to rely on vendors.
At VIE Healthcare, we frequently see situations where information requested from the vendors is incorrect because they fail to include all the fees or have overlooked a key account. We see this more often in larger health systems due to the volume of purchased services invoices.
If you have the power of the line item details of your purchased services spend at your fingertips, your health system is in control. Click To Tweet
Review your cost control initiatives
Health systems are reviewing cost control initiatives and looking for cost saving opportunities to improve their margins. Invoice ROI™ offers guaranteed margin improvement and is saving hospitals hundreds of thousands of dollars when they use our patented technology.
Discover the cost cutting opportunities in your line item details with the power of Invoice ROI™.
For proven strategies to increase your hospital’s financial and operational performance—and to rapidly reduce your non-labor costs, schedule a call with Lisa Miller.