Five Strategies for Savings During and After the PandemicHow healthcare organizations can recover or sustain their financial health
In a prior post, we analyzed the many potential spending pitfalls that healthcare organizations face as they work to recover from the financial hit the COVID-19 pandemic has delivered. As any healthcare executive knows, managing spending without compromising care is tricky, but necessary. That’s never been truer than now, with the pandemic exacerbating industry trends that were already straining margins.
In this post, we offer five strategies that healthcare organizations can use to avoid spending pitfalls and get their financial houses in order.
1. Break down purchasing silos. Lack of consistency and visibility across supply chain teams complicates a CFO’s efforts to get a firm grasp on enterprise spend. While extreme rigidity is unnecessary, when supply chain teams achieve consensus around how they decide on and track expenditures, it can be a boon to spend management. For purchasing decisions, we suggest making rigorous value analysis the standard and clearly delineating exceptions where physician preference can take precedence. You should also standardize how teams report and track expenditures to eliminate or at least make visible duplicate or unnecessary contracts, off-contract and rogue spend, and failures to attribute spending to the right cost center. This approach is especially important in a crisis like today’s, when purchasers, under enormous pressure, need clear guidelines to stay true to standard operating procedures.
2. Set and enforce clear data policies. In addition to standardizing purchasing and expense tracking, companies should also develop a standardized method for capturing all necessary data, ensuring it flows to the right place and is categorized in a way that enables ongoing monitoring and analysis. A consistent flow and line of sight to all spending data creates a comprehensive picture that allows you to, for example, compare what you’ve spent with agreed-upon contract terms and catch potential spending problems early. Beyond identifying areas of concern, confident, data-driven decisions empower you to close deals at the right price, at the right time.
3. Develop a process for vetting new vendors. The chaos of COVID-19 has increased non-negotiated and maverick spend, leaving organizations vulnerable to fraud and price gouging that has been a consistent problem during the pandemic. A clearly defined and communicated process for vetting and approving vendors prevents ad-hoc deals with non-approved suppliers, and acts as an effective deterrent to unsupervised spend.
4. Mature your reporting and analytics capabilities. Powerful reporting and analytic tools exist today that render spreadsheets and other first-generation software obsolete by making it easier, faster, and more reliable to measure spending across all categories. Easily customizable reports enable you to quickly identify spending outliers and reveal cost-cutting and savings opportunities. For example, TractManager analytics tools:
- Look across more than 1,500 categories of healthcare purchased services so you can assess spend, reconcile contracts with invoices, and minimize overcharging
- Automate the distribution of financial, clinical, and comparative effectiveness data to support better purchasing decisions
- Configure new workflows for new product requests and replacements
5. Strengthen your negotiating skills. Effective negotiation contains two key elements. The first is relevant information so you are properly armed. The second is experienced, industry-specific expertise in real-world negotiations. At TractManager, our quote transparency tools deliver reliable, regional benchmarking so you can identify and compare pricing differences in your area, for your specific needs, over time. Our unbiased analyses include component-level and service contract details and pricing recommendations. In addition to our subscription platform solution, we offer deeply experienced service contract negotiation experts to augment your teams’ capacity with at-risk and gain share models. Our industry experts have a demonstrated ability to deliver savings.
As a longtime industry leader, TractManager maintains data stores that are both deep and broad. We invite you to tap into our expertise so we can help you make the best purchasing and cost saving decisions, and fight back against the financial threats of this ongoing pandemic.
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