Purchased Services Cost Management Strategy
Invoice reconciliation is one of the key elements of a successful purchased services cost management strategy.
I say this over and over to the hospitals I work with.
You cannot run a report in your ERP system to understand your purchased services costs.
Under the terms of your agreements, services are performed and then invoiced.
All the line item details of your utilization are on your invoices.
All too often, cost savings are missed because hospitals don’t have visibility into their line item spend. They can only identify different patterns of utilization.
That utilization isn’t identified in real-time.
As a result, it can take up to two years for a hospital to recognize these patterns.
Without the line item details of your purchased services spend, hospitals don’t know if:
- The price you are paying is at the agreed rate.
- Hourly rates are consistent with the previous month.
- All the items are covered by a contract with your vendor.
In some cases, we have found that up to 30% of hospital purchased spend is either off contract or has pricing errors.
In other words, your hospital must have an invoice reconciliation process.
Whatever strategy you deploy, whether manual or automated, it is critical that you have visibility into your costs.
I can’t tell you how many times we request 12 months of invoices for analysis when working with clients.
The usual response is ‘’So you need 12 months of invoices?’’
If we’re going to identify all available cost savings in your hospital’s purchased services spend, we have to carry out a historical review of 12 months of utilization.
That is to say, we take those details and carry out the reconciliation looking at past and current costs.
It is one of the key factors in successful cost management.
Our patented Invoice ROI™ technology identifies the cost-cutting opportunities in the line item details of your purchased services spend.
Reach out at email@example.com to discuss your cost savings goals and how we can support and accelerate cost savings opportunities in your organization.