The State of Healthcare Spend and The Importance of Purchased Services Cost Management

GUILFORD, Conn., Sept. 21, 2018 /PRNewswire-PRWeb/ — Healthcare organizations are facing growing operating expenses; however, provider margins continue to shrink despite exceeding their revenue goals. Medpricer, the leading purchased services cost management solution for the healthcare industry, understands the industry is ripe for change and is striving to revolutionize healthcare purchased services acquisitions, helping customers achieve sourcing independence, personalized outcomes and improved financial health.

CFOs surveyed by Healthcare Financial Management Association (HFMA) and Navigant identified their top three areas of focus for cost management initiatives: labor costs, purchased services and the supply chain expenses. For many organizations, solutions come in the form of productivity improvements and workflow redesign.

When analyzing the biggest areas of category spend within the supply chain, Medpricer has found that purchased services account for a significant portion, although they are widely unmanaged. Purchased services spend equates to approximately the same cost of supplies and capital equipment combined. To help healthcare providers get a handle on their purchased services contracts, Medpricer has identified the three benefits of implementing a technology platform to drive strategies forward:

Automate Categorization for Smarter, Faster Analysis
By using an analytics and e-sourcing software, like Medpricer’s mSource® platform, machine learning technology removes the manual effort of classifying spend by category. By understanding trends and consolidation opportunities, categorization enables providers to tailor contract prices and service level terms to fit their unique needs. With spend transparency that spans beyond the limited visibility of ERP systems, CFOs and supply chain leaders alike can help their organization reduce purchased services costs and improve the quality of their service-level agreements.

Unite Financial Departments and Supply Chain Teams
By streamlining a smart cost management platform across the organization, CFOs can align their savings targets with the purchasing organization. By understanding clinical needs and analyzing contract value, leadership can use technological forums to unite stakeholders with processes to move contracts through the evaluation and negotiation pipeline more quickly.

Transform Provider-Supplier Relationships
Thanks to workflow automation, the RFP and negotiation platforms facilitate supplier interactions and nurture relationships. Purchasers can optimize their sourcing efforts via a supplier management interface that standardizes and records every aspect of the contracting process. For hospitals with thousands of local contracts with varying service-level terms, finding consolidation opportunities can help you get more value in partnership with service providers.

“Mergers and acquisitions are taking the provider space by storm. Regional hospitals are forming steadfast systems to gain a competitive edge in the market,” Medpricer CEO Chris Gormley explains. “However, where revenue streams double, so do costs. Merging organizations need to balance to their books – and consolidating purchased services spend is a great place to start.”

By leveraging sourcing strategies within purchased services categories, healthcare providers are alleviating some of the financial pressures they face. The only way to determine if a provider is overspending on their service contracts is to pinpoint category spend trends with accuracy. With leadership’s support and cross-functional engagement, significant savings on services can be redistributed to cover labor costs. By making smarter, money-saving decisions, healthcare leaders can continuously improve their quality of patient care.

For more information, please visit https://www.medpricer.com.