David explains why SpendMend carries out audits every 90 days, and how the company’s deep expertise delivers results within three weeks. He also outlines the importance of recognizing patterns and trends in data, how a snow accumulator saved tens of thousands of dollars for one hospital, and why every CFO should care about recovery audits.
- Why recovery audits are vital for hospitals
- Insight and visibility: the SpendMend advantage
- SpendMend: Deep expertise and results within three weeks
- A recovery audit case study: snow accumulators
- Why every hospital CFO should care about recovery audits
- Understanding the patterns in your data
02:17 Why recovery audits are vital for hospitals
David said SpendMend offers insight and visibility, carrying out audits every 90 days, versus every other year.
‘’Time is our biggest thief, right. And it doesn’t matter what industry you’re in, what sector you’re in, you’re always going to have financial leakage. And the best way I can describe it is, you take a cookie, and you break that cookie in half, you have two very large profits, but if you take that cookie year over year and break it over the same broken process and clean those up at the end of the year, those crumbs, that’s a significant amount of money. …We audit process, not people. Okay, we’re talking one 1/10th of 1%, so 99.99% of the time, the process is done. But anytime you have human interaction and technology or a handshake in your procure-to-pay process, there’s always a likelihood for financial leakage, right. And in healthcare…it’s very unique. It’s niche. SpendMend offers insight and visibility. In healthcare, they’ve done kind of recovery audits every other year or every third year, where at SpendMend, we do it every 90 days. We kind of stay on a continuous basis. I used to play sports, and when I was a freshman I wasn’t very good with my left hand. So I used to watch film or I used to work on getting my left hand strong. Well, I can assure you, as I progressed my senior year, I didn’t have to watch that same film. There are other things I needed to work on or other things that I saw, and that’s the real value of doing a recovery audit, of having that third party or that best practice and that safety net’s more real time so then we can kind of fix it concurrently than retrospectively.’’
07:23 Insight and visibility: the SpendMend advantage
David said it’s not what you find in a recovery audit, it’s why.
‘’The biggest advantage that I like to call at SpendMend is our insight and visibility. And what I mean by that, anyone can tell you what they found and how they found it’s the why they found it should matter most. Educating upstream or downstream because 9 times out of 10, everything falls on APs lap, but they’re not the single source of truth. You have to go back to what was harboring that control gap to actually implement process improvement. And we provide you with that education. We’re not just giving you the dollars and cents, we understand cash is king and we’re really good at that, but it’s more so understanding what was harboring that control gap. To give you that go forward business intelligence, ’cause you have to understand what happened in the past to give you that education going forward, and that’s the real difference at SpendMend. We’re going to provide you value, not just substance, and we actually back that up. So when we come into engagement, there is no bait and switch. Our team is there from start to finish, starting with our audit manager and audit supervisor, but more importantly, we provide a vice president of strategic accounts. And why that’s important to you is their job to be your eyes and ears outside your four walls ’cause I can assure you the same pain points that you’re having other institutions are having. Right now, everyone’s going to the cloud, whether it’s Lawson or Workday. We understand the nuances in the patterns and trends and the blind spots and that conversion. So having that voice or single source of truth internally to help you navigate that, that’s the real value of SpendMend. The dollars are nice, but there’s so much more that comes out of it and it’s the insight and visibility and understanding how we put data together, because we are matching payments to contracts and that’s the value.’’
12:08 SpendMend: Deep expertise and results within three weeks
David said SpendMend’s expertise means audit plans are built from the outset, with rapid results.
‘’There are only so many suppliers in the healthcare, right. So when we show up, we’re going to have a relationship with probably 98% of your supplier base. We understand what suppliers suppress credits, apply credits, offer credits, write off credits, we understand their invoice cadence, their sequences. One of the things that’s unique about Lawson is, if an invoice number can only be 14 characters and a lot of people read left to right, so if they’re going to truncate, truncate from right to left, not left to because the computer’s reading right to left other than we read left to right. So there’s this unique nuances difference of these ERPs, but we understand what those tendencies are, what those blind spots are, and that’s why when we show up, a lot of our competitors need clients’ data to build your audit plan. Our audit plan’s already built when we show up, we’re backing it into it. We’re just using your data to validate our assumptions because I can assure you, we understand where to look and where to find some of those blind spots. And it’s because our ability to provide more than just the dollars and cents, we’re not looking at your data mechanically, we’re looking at it strategically, putting all the pieces together, connecting the right dots between different departments to give you a different view. Once we’ve received the data in less than three weeks, we’re going to start to see results. We can churn data very, very quickly, but again, we don’t need your data to get started. We need your data to validate where we already have your audit plan already set. So that’s what makes us different is why we can kind of onboard very quickly and we don’t need any on the job training.’’
17:16 A recovery audit case study: snow accumulators
David explained how digging into details resulted in significant savings for a New York based client.
‘’When you get into, what sets us apart too is since we take data down to its rawest format, as I said before, many times you see new opportunities. So this one was a client in New York. They had a unique request. They asked us to look at their maintenance agreement and they wanted to really dig into their snow removal and their salt. So as we were going through, again, we have all of the data right, so we had to get the contracts. Some of it was PO, some of it was non-PO, so we had to normalize it and get on it. And there was a clause in there that they would pay a snow accumulator based off of the amount of snow within their county, right. So we saw that, we went through it and we started to do it, it was like, we understand last year, because I lived in kind of the area, so I kind of had a leg up on knowing that it didn’t snow that much, but over the past three years, what they were doing to calculate their accumulator, they were taking the entire state of New York, not just the county, and using that as a multiplier, okay. And they couldn’t believe the significance. And it wasn’t just about the trucks plowing the snow, it was also the salt, okay? Which the salt was very, very expensive. It was a huge savings because there was just a small clause and it wasn’t for the entire state, it was just for that county right. And while we were doing that, they had all these facilities and they started to acquire other physical locations outside of the state of New York. They had a facility in Charleston, South Carolina that they were charging snow removal and it hadn’t snowed there in three years.’’
23:59 Why every hospital CFO should care about recovery audits
David explained why working with SpendMend isn’t only about the recovery audit.
‘’So again, going back to the misperception of recovery audit, there are so many more departments that actually touches this is the ecosystem that runs the hospital, your entire procure to pay process, right. There’s so many other things that can come out it. Again, when you start talking about utilization of variation, that’s when the CFO quirks up. But that is a byproduct of recovery audit. That’s what I always tell you, at the end of the day, we’re all looking at the same subset of data, we’re just looking at it through a different lens. I’m looking at it retrospectively. You’re looking at it prospectively. There’s real value of getting both sides of the coin of looking at that contract, and that’s why the CFO should care, because the best way I can put it’s right now we’re coming into January. What does that mean? Everyone’s wanting to go to the gym, everyone’s going to want to lose weight, everyone want to get in shape. So you do your research and you go to a fitness coach, okay. “Fitness coach, I want to get in shape.” Okay. He’s going to give you an entire program how to get in shape. He’s not just going to give you an arm workout. The analogy is we’re not just here to give you a recovery audit. We’re here to give you the entire, because the data’s coming for pharmacy, it’s coming for purchase services, it’s coming for recovery audit, it’s coming for our medical device. It all comes together. It’s all the same data, but we’ve just viewed it very siloed. Now that spend has branched out and acquired these companies, we can give you the entire program. ..That’s why CFOs should care because this isn’t procuring one-time credits. This is putting a plan in place and ensuring your entire house is cleaned up and we have the data to do it. That’s why I’m so excited about our trajectory at SpendMend, because we’re not recovery audit anymore. We are that fitness coach to give you that program for financial fitness.’’
27:02 Understanding the patterns in your data
David explained how the patterns and trends in data, empower SpendMend’s strategic approach.
‘’This is actually something I’m very passionate about because at the end of the day, knowledge is key, but knowledge without insight isn’t much of an advantage. And what I mean by that is when we show up, we’re not going to show up with hypotheticals, right. We’re going to show up with your data, and that’s why there’s so much value of putting both sides of the coin together. We’re going to use the pattern and trends in your data to make those recommendations going forward. It’s not just benchmarking, right. There’s so much more strategic that comes out of that, but you have to get down to that line out of detail, and there’s value in that. But putting those together, that’s the real value of doing the entire program, of not just looking at it, of showing up, “Hey, this is hypothetical based off of a hospital in your area, you should be paying this,” or… It’s none of that. There’s so much more to that. So now we can use real life examples to arm you with that education. And the best way I can put it, we’re not just going to empower you with this information, we’re actually going to guide you along the way. ….It’s connecting not only the dots, it’s the right dots between departments because you have different behaviors, different initiatives, different goals going into 2024, but how we can put that to bring it back to the CFO, that’s the real power to impact multiple different departments other than just AP.’’
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You’ll also hear:
Ripping off the bandaid: Carrying out recovery audits every 90 days: ‘’…if you’re paying a recovery audit firm to find the same stuff over and over, what’s the real value? Again, we’re just providing substance, not value…..Once we rip off the bandaid, give you that clean bill of health every 90 days, we should see your financial leakages curve go down.’’
The importance of analytics at SpendMend: ‘’Since we take data down to its rawest format for our clients, we can look at it through a different lens and many times you see new opportunities. That’s what brings us into the purchased services. We’re all looking at the same subset of data, we’re just looking at it through a different lens. But that’s the real value of SpendMend, having that person that can take that data and drive incremental revenue or different revenue streams by not having to go back to the well on multiple different times.’’
Getting to the details, the SpendMend difference: ‘’In the beginning, cash is king. We understand that the hospitals need it, so do suppliers. So they’ve gotten very creative of how they’re suppressing these credits or offering these rebates or putting these fuel charges or all of these miscellaneous charges onto an invoice. Until you actually go through that line of detail.’’
Providing value over substance for CFOs: ‘’There are lots of unique things that we do at SpendMend, because again, we need to continually provide value other than just substance. It’s not about the overpayments and the duplicate payments, it’s about the things that they don’t have visibility into. It’s matching, is the price negotiated the price that you paid?’’
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