Inflation and persistently tangled supply chains have created a difficult landscape for healthcare providers today, and the quality of patient care depends on how well providers navigate these challenges. Unfortunately, many providers lack true financial oversight of their facilities and departments, which makes it even more difficult to deal with external pressures. As operating margins shrink, healthcare providers are increasingly analyzing their spending habits, aiming to find efficiencies within their organization.
Reducing spend for healthcare providers is a difficult proposition: While the financial health of the organization is important, it’s critical that any changes in business spend not affect patient care. Fortunately, most organizations have the capacity to lower operational costs while maintaining standards of care—or even spending smarter in ways that benefit patients. We’ve found three specific approaches that help you thread the needle:
1. Standardization across medical facilities
How often are individual purchasing decisions pushed down to the lowest level, leading to minimum oversight? While giving staff on the ground the leeway to make their own purchasing decisions sometimes has benefits, usually a team member left to their own devices to make purchases will be more likely to make a mistake—buying the wrong product or the wrong amount of product for their needs, buying something substandard to save money, or spending too much.
Standardized products and services across the various teams and facilities an organization manages reduces these risks, minimizes wasted spend, and brings consistency to the patient experience. By identifying a single type of sterile gauze pads to buy, for example, an organization can reduce the number of necessary decisions to stock the facility and benefit from economies of scale by purchasing in greater bulk. Purchasers will also often appreciate that there’s no set of tradeoffs to be made, and that they can get what they need with a minimum of headache.
With the right spend management system, organizations can analyze how to get the best product for their money, identify preferred vendors, and set permissions to ensure all purchases are in line with organizational standards. As a result, individuals responsible for purchasing can quickly buy what they need, confident that they’re getting the best deal and that they’re working with an approved vendor.
Though there’s no “one-size-fits-all” for patient care, a uniform set of tools and equipment can also be beneficial for patients. Keeping costs down has obvious benefits, but so does the guarantee that customers are getting a quality product at each stage of care. And with caregivers worrying less about their tools, patients will also receive more focused attention, ensuring better care overall.
2. Simplified Contract Management
Contracts are another area where organizations can streamline unnecessarily complex tasks, save money, and improve operational performance all at once. This is an area of proven complexity: According to HIT Infrastructure, healthcare providers spend an average of $157 billion each year managing contracts manually. Institutions in group purchasing organizations and integrated delivery networks (GPOs and IDNs) must manage even more difficult contracts.
On top of that, the average contract in the space is itself becoming increasingly complicated due to strict compliance standards, such as HITECH, and other state/federal regulations, requiring not only more complex contracts but also more elaborate processes for developing and approving them. These processes can often complicate basic business functions, and it’s likely that your organization is spending more than necessary to manage things that should be effortless, like agreements with vendors, leases, and more.
Automating contract management, or even using an updated contract repository, helps healthcare providers reduce inefficiencies, improve compliance, and provide increased visibility into network spend. This visibility helps companies analyze spending, renegotiate contracts, forecast needs, and identify opportunities to streamline. In addition, having one source of truth for your contracting saves time and resources, allowing you time to focus on activities that drive patient outcomes.
3. Identify Opportunities via Spend Analytics
How much are you spending per week on supplies that don’t get used? Where are you paying above the organization-wide average for laundry services? While all healthcare providers have questions like this, most of them lack the resources to answer them. In large, complex healthcare institutions, too much data is siloed or inaccessible to the leaders who could use it. As a result, many organizations are left in the dark about what’s currently being spent within their organization, let alone where they could improve performance.
With a dedicated spend management tool, providers can find untapped opportunities to improve their bottom line. Leaders need a comprehensive view of where they’re spending their resources to make better decisions, and a best-practices spend management system can put all of that information in an easy-to-read format. Take the laundry services example: While a disconnected system could let a single branch of a major system overspend on something like this for years without it being detected, good spend management can automatically highlight places where costs are coming in above average, letting leaders address issues early. And in organizations that are already trying to manage spend, a connected system will allow employees to make smart decisions quicker, with a minimum of manual processes.
Spend management isn’t just about costs either.
According to the U.S. Department of Health and Human Services (HHS) HIPAA Audits Industry Report, only 2% of healthcare organizations fully met HIPAA’s “Notice of Privacy Practices Requirements” within the contract management process. With a procurement tool, requisitions and purchase orders can be tied to associated contracts allowing for a smoother regulatory compliance process. This increases regulatory reliability while also streamlining operations for end users across business units.
Spaulding Ridge Can Help Healthcare Companies Better Manage Spend
By pairing industry experience with technical expertise and unique solutions, Spaulding Ridge can implement a real-time view into spend that provides leadership with the intelligence they need to make informed decisions. With various challenges coming from every direction, leveraging business spend management software with a trusted implementation partner provides the tools and insights necessary to overcome obstacles and impactfully transform the state of the business.
Coupa is a business spend management software that allows for greater visibility into spend management categories and smoother supplier management processes. By incorporating all aspects of the source-to-pay cycle in Coupa, companies gain control of spend and create more opportunities for innovation and resourcefulness as industry initiatives evolve. Coupa connects hundreds of organizations around the world, leveraging a supplier and customer community that brings visibility of the process to everyone who transacts in the system.
Spaulding Ridge is a Coupa implementation partner experienced in assisting many clinics and hospitals tasked with implementation to address the forces that drive internal healthcare operations. Our team partners with you to bring the advancement in business management technology that organizations across the healthcare industry continue to adopt.
Contact [email protected] and [email protected] if you are interested in learning more about the importance of business spend management within the healthcare industry.