Five Main Areas for Cost Savings
There are five main areas for cost savings opportunities in hospital purchased services spend.
1. Line item details on your invoices.
It’s not possible to benchmark or understand pricing from the contract alone.
Hospitals must analyze the invoice line item details from a historical perspective.
Analysis reveals details that matter for cost savings, such as pricing errors and variation changes,
2. Understanding your purchased services spend agreements.
In my experience, just one or two sentences in your agreements can greatly impact hospital cost savings.
This can be a financial change or impact in an RFP, renegotiation, or even an escalator.
Purchased services agreements are complex documents.
It is worth hospitals spending the time to identify nuances and hidden opportunities for cost savings.
3. Accurate benchmarking
Benchmarking offers an accurate understanding of the competitive marketplace.
Healthcare organizations often approach VIE Healthcare® after failing to find cost savings through an alternative benchmarking resource.
You may need to benchmark from two or three sources to optimize potential cost savings in your purchased services spend.
4. Educating supply chain and other functions about purchased services spend.
It’s important to educate people in the supply chain, operations, and other parts of a health system that are part of the negotiation process of these agreements.
It can be difficult to understand the complexity or requirements for agreements in departments such as revenue cycle or IT.
Building internal awareness and knowledge across a hospital helps in the challenging vendor negotiation process.
5. Agreements that sit in the department
Hospitals need to open up purchased services agreements in every department to achieve the best pricing and terms.
Departments rely on outsourced providers to support their work and are often reluctant to open up these agreements.
Opening up purchased services agreements enables supply chain, finance, and analytics functions to support each department and maximize cost savings.
Reach out at lmiller@spendmend.com to discuss your cost savings goals and how we can support and accelerate cost savings opportunities in your organization.
