Making the Case for Strategic SourcingA strategic sourcing partner supplies expertise, clinical evidence, reliable benchmarking data, advanced analytics, and proven processes to help you significantly reduce costs.
The year 2020 has dealt a brutal blow to the financial health of healthcare organizations in the United States, many of which were already under enormous financial pressure as they struggled with trends such as heightened consumer demand, transitions to value-based care, leaky supply chains, and constant pressure to innovate.
Then COVID-19 hit.
In the interest of protecting their patients and staffs, facilities sacrificed large revenue chunks normally gleaned from routine and elective procedures. In addition, coronavirus-related equipment and services have rarely come cheap, especially with competition forcing difficult negotiations with vendors. For an industry long believed to be recession-proof, the financial pressures are unprecedented. This is so even as the U.S. continues to spend about twice as much per person on healthcare as other countries with comparable wealth but endures the highest burden of chronic disease.
All of this has hospital and health system executives looking to cut costs without sacrificing care quality. Strategic sourcing will be central to their financial recovery.
TractManager’s strategic sourcing solutions are built for this moment. Best-in-class data, technology, and subject matter experts cover every aspect of the care delivery business— resulting in a powerful analytics platform for strategic sourcing, and for contract lifecycle management and provider management.
With the understanding that a clear line of sight to their contract assets holds the key to managing spend, health systems need a strategic sourcing partner with the following characteristics:
- Unbiased advice: TractManager is GPO- and vendor-agnostic.
- Rich data: TractManager benchmarks over $150 billion in quotes annually and leverages the pricing competitiveness with millions of contracts in our database.
- Robust analytics: TractManager’s analytics platform enables us to rigorously analyze existing and prospective contracts, including pricing, terms, and each organization’s unique utilization.
By zeroing in on the vendors and contracts most responsible for unnecessary spend, strategic sourcing can help save millions of dollars—precisely the type of savings for which more than 3,000 hospitals utilize TractManager for one or more of our services. Consider three real-world case studies from across the country.
- A New England client needed to save $26 million in purchased services. TractManager deployed spend analytics, clinical and business-side expertise, and a collaborative approach to create a savings strategy roadmap and line item contract information. The findings empowered the client to negotiate from a position of strength for price and key performance indicators, resulting in $29 million in savings, exceeding the initial goal by more than 10 percent.
- A Midwest client was undertaking a construction project estimated to cost $350 million. Though most construction projects are turnkey arrangements, with no guarantee that the hospital is getting best-in-class pricing and key performance indicators, the client engaged us to be the final check and balance for any and all purchases of capital equipment, point-of-service warranties, and IT. TractManager’s team of analysts and expert negotiators reviewed upwards of $50 million in quotes and was able to identify $3.75 million in savings.
- A five-hospital integrated delivery network (IDN) based in Florida originally implemented TractManager’s MediTract to establish more visibility across departments and to create a centralized and standardized hub for contract management. Initially, this enabled the client to reduce operational costs across its five hospitals. Subsequently, TractManager helped the IDN cut its collective spend almost in half, saving $7 million over a five-year period, or nearly $1.5 million annually.
Strategic sourcing is an ongoing challenge—one that few, if any, hospitals and health systems should undertake alone. As these case studies demonstrate, a valued strategic sourcing partner can supply expertise, clinical evidence, reliable benchmarking data, advanced analytics, and proven processes to help a system significantly reduce costs while continuing to deliver exceptional patient care. This is the path to financial recovery during these very difficult times for our industry. To learn more about accelerating your financial recovery, watch this quick video on how you can cut your spend in half.
Accelerating Financial Recovery
TractManager is focused on helping you reduce the cost of care while delivering better outcomes. This 5-minute video could help you cut your collective spend in half. Watch it to see three real-life case studies.