Solutions For Strategic Purchasing In Healthcare
Management of purchased services healthcare is the largest cost savings opportunity for hospitals today. VIE helps hospitals to:
- Automate processes to find cost savings in real-time.
- Perform a strategic audit to identify pricing errors.
- Carry out accurate analysis of purchasing data.
Call VIE at 1-888-484-3332 to discover available cost savings today!
Table of Contents
- What Are Purchased Services In Healthcare?
- Is Your Medical Purchasing Budget Too High?
- 3 Barriers to Successful Strategic Purchasing
- Uncover the Cost Savings In Your Health System Data
- Invoice ROI™ from VIE Healthcare
- 6 Steps To A Healthcare Purchasing Audit
- Frequently Asked Questions About Purchasing in Healthcare
What Are Purchased Services In Healthcare?
When hospitals lack in-house resources or essential skills, these services and supplies are sourced through third-party service agreements. Outsourced providers are also used when significant capital or technology investment is required. Nearly 97 percent of hospitals work with at least one purchasing consortium such as a Group Purchasing Organization (GPO) (1).
Purchased services healthcare agreements address those issues for hospitals but can be highly complex.
Is Your Medical Purchasing Budget Too High?
The move to value-based reimbursement, coupled with spiraling costs and rising inflation means a robust cost management structure is essential for healthcare organizations.
At VIE, we often work with hospitals that have a sense that they are paying too much for purchased services healthcare but cannot pinpoint exactly where overpayments are being made.
Challenges arise when hospitals cannot gain clarity around pricing and utilization in their data. Historically, healthcare has found it easier to gather data than to analyze or use it (2).
Understanding the line-item details of your invoices identifies cost savings and controls spend.
Two of the biggest challenges to gaining access to your line-item details are:
- A lack of understanding of your invoices.
- Recognizing the critical difference between supplies and purchased services.
Remember, the services covered by outsourced agreements are first performed then invoiced, unlike supplies where you have a record of exactly what your hospital has purchased and pay only for those items.
Due to the nature of these agreements, there must be a degree of confidence in vendor relationships, namely, that hospitals are only billed for services performed.
We estimate that in excess of 30% of all purchased services healthcare invoices are priced incorrectly, are off-contract or include additional fees.
Your health system is overpaying at minimum, tens of thousands of dollars due to invoice errors. Tap into the savings in your purchased services healthcare agreements.
3 Barriers To Successful Strategic Purchasing In Healthcare
Effective strategic purchasing in healthcare is difficult to achieve (3) due to challenges including:
- Lack of automated processes to gain line-item visibility. The line-item details are contained in your invoices, making it difficult to validate utilization.
- Complex agreements, with multiple moving parts. Under pressure, hospitals lack the resources to monitor agreements.
- New services are regularly added to third party-service agreements, making it difficult or impossible for hospitals to evaluate invoice accuracy.
Healthcare purchasing data empowers your hospital to optimize spend.
Uncover the Cost Savings In Your Health System Data
The volume of monthly spend requiring validation is too overwhelming for hospital employees when faced with hundreds of pages requiring manual analysis. In our experience, the best they can achieve is to make a judgment compared to the previous month.
Line-item analysis confirms whether:
- The price you are being invoiced is at the agreed rate.
- The hourly rates charged are consistent with the previous month.
- All the items your hospital is paying for are covered by vendor contracts.
How does your hospital identify items that are on or off-contract, or where the pricing is wrong?
Our patented Invoice ROI™ technology identifies the cost-cutting opportunities in the line-item details of your purchasing data, achieving unprecedented cost savings.
Accurate data analysis means:
- Reduced reliance on vendors: Line-item analysis reduces your organization’s need to rely on vendors or a purchasing consortium such as a GPO. Vendors often provide incorrect information by overlooking key accounts or failing to include all fees. This is a problem for larger health systems due to invoice volume.
- Review your cost control initiatives: Our patented system Invoice ROI™ offers guaranteed margin improvement by rapidly extracting invoice data.
- Utilize market intelligence: Make informed decisions on critical cost management strategies
Your roadmap to cost savings begins with the contracts and invoices covering your third-party service agreements.
Invoice ROI™ from VIE Healthcare
We analyze 12-18 months of your invoice data and reconcile agreements to your invoices. This line-item analysis identifies hidden costs due to errors or off-contract spend, utilization trends, purchased services healthcare patterns, and outliers.
To begin, we recommend the analysis of one area, for example, dietary as follows:
- Is this item on credit spend?
- Examine rebates, credits or incentives included in the agreement.
- Is there a variation in the fee?
- Do opportunities exist for standardization?
- Visit the facilities of your current provider to understand how their operating system works.
- Review the gaps and the potential service issues to understand where your costs lie.
- Combines line details with other data inputs that identify trends, variations, quality and utilization improvement opportunities.
- Customizes your data based on vendor agreements.
- Ensures line-items match contract pricing.
- Reconciles thousands of line-item details instantly.
- Eliminate manual processes so your team can work on strategic initiatives.
Health system purchasing data saves your hospital money. VIE was able to help one client save over $10,000 from just one invoice from one vendor in one month.
VIE delivers spend analytics to combine deep line-item forensic analysis of historical spending with benchmarking, categorization, and contracting to optimize your purchased services spend.
This complete healthcare purchasing audit would take weeks or months to do manually, but our software allows us to do it in days, at a very high level of accuracy to deliver strategy purchasing in healthcare.
Six Steps To A Healthcare Purchasing Audit
Implement an effective healthcare purchasing audit with the following steps;
- Obtain the line-item details from your invoices.
- Carry out an in-depth review of your contracts from an operational, financial, and clinical viewpoint.
- Benchmarking.
- Cost analysis and strategic purchasing delivered to CFO.
- Vendor negotiations.
- Assess the performance of third-party service agreements to optimize spending.
Key takeaways
- Hospitals are paying too much for their outsourced services.
- Line-item analysis of your invoices is the only way to identify pricing errors and implement successful strategic purchasing in healthcare.
- Reliance on manual processes makes it impossible to find hidden cost savings.
- Automated data analysis with Invoice ROI™ can potentially save your hospital millions of dollars in a healthcare purchasing audit.
Since 1999, VIE has specialized in analyzing spend related to purchased services to provide strategic purchasing in healthcare.
Our highly experienced analysts know precisely where to look for cost savings.
Eliminate Errors, Manage Purchasing Data In Real-Time & Save $ with VIE Healthcare®.
Get started with our Purchasing Experts today. Call VIE at 1-888-484-3332
More Resources from VIE
- 3 Purchasing Myths – Discover the three myths preventing your hospital from carrying out a successful healthcare purchasing audit
Frequently Asked Questions About Purchasing In Healthcare
In healthcare, strategic purchasing is designed to ensure the flow and supply of goods and services to align with the health system’s goals. Strategic purchasing also aims to reduce risk and disruption within the hospital supply chain. When carried out successfully, strategic purchasing ensures efficient use of resources, reduces overall spend and enhances patient care.