The 3 main cost challenges hospitals face in their spending

Being in business for over 20 years, VIE Healthcare has performed many cost analysis of hospitals, and we’ve seen patterns where most hospitals face challenges in their spending.

Three primary areas present cost challenges for hospitals:

1. Physician Preference Items (PPIs)

PPIs are preferred supplies, instruments, implants or medical devices that physicians choose to use in patient treatments.

High costs and utilization of PPIs have resulted in an urgent need to ensure physicians are engaged in data-driven financial decisions. 

Price variations make it difficult to streamline the purchase of PPIs.

PPIs can account for between 40-60% of your hospital’s supply costs. 

2. Purchased Services

Purchased services spend is dynamic and diverse, affecting all hospital functions. 

Purchased services account for around 50% of your hospital’s non-labor costs. 

At VIE Healthcare®, we work with six categories of purchased services:

• Clinical

• Facilities/Support Finance

• HR/HIM

• BioMeds/Service and Maintenance

• IT/Telecom/Telehealth

• Administrative

Successful management of your purchased services spend represents the biggest cost savings opportunity for healthcare organizations. 

3. Outsourced physician service agreements

These costs cover areas such as outsourced ER services or outsourced physician service agreements. 

Outsourced physician service agreements are often very complex and can significantly drive up hospital costs.

Due diligence in managing these agreements is essential, whether your hospital is renewing a contract, starting a new one or reassessing its terms. 

If frontline users don’t have access to the detail of your agreements, it can impact costs, as they won’t understand contract terms. 

Outsourced agreements help to protect your hospital from operational and regulatory risks and secure competitive pricing from your vendors. 

At VIE Healthcare® we do a cost analysis of these agreements and map them to essential data, such as reimbursement data, to find cost savings.  

My upcoming videos will take a deep dive into these three primary areas – PPIs, purchased services spend, and outsourced physician services agreements, to explore the complexities and identify opportunities.

Reach out at [email protected] to discuss your cost savings goals and how we can support and accelerate cost savings opportunities in your organization.

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