Zero-Based Budgeting For Your Purchased Services Strategy

How Does Your Health System Budget for Its Purchased Services Spend?

How does your health system budget for its purchased services spend?

Do you accumulate your line item spend and utilization?

In our experience, zero-based budgeting is the most effective strategy.

We introduce best practices from other industries to identify cost savings and improve patient care.

Zero-based budgeting has been extremely successful in other industries.

Hospitals start with zero budget and have to validate every single line item spend.

Every single cost must be justified. This means: not in the aggregate, not on ‘’gut feeling’’, not on budgeting 5% less than last year.

It means you have to pull out those line item details.

It also means you can confidently state, for instance, that you carried out 1300 one-on-one dialysis cases or 5000 specific lab tests last year.

Those details matter in your hospital’s budgeting process.

Where do you look for cost savings if you have a cost management issue and base your projected spend on 5% less than last year?

We estimate that hospitals can reduce costs by 20% to 25% with a zero-based budgeting approach.

At VIE Healthcare®, we offer a zero-based budgeting approach to purchased services spend.  

Zero-based budgeting enables a hospital to review its budgeting process from a different perspective, as opposed to the traditional method of an annual or monthly basis.

We ask six key questions to all our client’s hospitals when it comes to cost management:

  • Is the pricing right?
  • Do you have the right utilization?
  • Do you have systemized data analytics?
  • Is there a culture of cost awareness?
  • Have you adopted cost innovation?
  • Is there a disciplined approach to cost management?

All these areas are critical to identifying cost-savings across your hospital and in your purchased services spend.

I’d love to hear how your hospital budgets for its purchased services spend.

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

Lisa Miller

Lisa Miller

Lisa Miller is a consultant, speaker, and podcast host. Her consulting firm, VIE Healthcare, has provided services to over 1,000 hospitals and organizations since 1999.

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