Healthcare spending in the United States is the stuff of legenda massive expenditure that only grows bigger each and every year. According to the National Health Expenditure Accounts (NHEA), U.S. healthcare spending rose 4.3% in 2016 to $3.3 trillion or $10,348 per person. These figures represent a 17.9% share of Gross Domestic Product. While this money does go to securing some truly great healthcare, there is also much waste hidden in these annual numbers. A report by the National Academy of Medicine estimates that the nations healthcare system wastes $765 billion annually, with $210 billion spent on unnecessary or overpriced care. One way health system leaders can drive leaner operations and reduce wasteful spending is through the use of purchase orders (POs).
If you’re responsible for leading a healthcare system, you already know that numerous vendors are required to ensure operations run smoothly. There are the various medical device suppliers physicians depend on for treating patients, janitorial services that keep facilities clean, landscapers that maintain an immaculate exterior, cafeteria services that make sure people are fed, and many other contractors who contribute to a functioning hospital.
Healthcare is notorious for long, crawling purchase cycles, and no process better demonstrates that than an “RFP.” Used to compare and evaluate vendor products and services, this approach was once the gold standard for vendor diligence, but it has come at a price, specifically limiting organizations’ ability to innovate and see faster returns on their purchases.
Speed Up Your RFP Process to Deliver a Solution More Rapidly
Most organizations use a Request for Proposal (RFP) as part of a selection process to solicit vendors for products or services. Historically, this questionnaire format helped organizations manage the complexity of the products evaluated, ensure that a vendor can fulfill its promises, and document the diligence necessary to purchase goods and services. To assemble an RFP the needs from various departments are included as requirements, usually compiled in a spreadsheet, and are sent to vendors to respond. Vendors document their capability to meet those requirements, from which a project owner or selection committee selects the best vendor for their needs.
To ensure there’s no disruption to patient care or billable services, covering open, or even absent, healthcare positions is critical. According to Select International, a position vacancy for one physician can translate to an annual loss of $250,000 to $1.4 million. Cost efficient staffing strategies must be in place to keep services and revenue flowing. In our previous post, we discussed the opportunities for cost-containment in staffing. This post, however, will focus on a specific part of staffing–locum tenens.
A report by Kaufman, Hall & Associates revealed that the number of hospital mergers and acquisitions increased 55%, from 66 announced in 2010, to 102 in 2016. Last year also saw a flurry of mergers nationwide, from Kansas to New Jersey, with healthcare systems around the country consolidating in order to maintain their financial viability in an era of legislative uncertainty and marketplace volatility. Both independent and newly acquired hospitals are actively seeking areas for cost-containment to strengthen their bottom lines. One way to do this is to closely examine all purchased services expense categories (over 1,200!) for hidden savings opportunities. In this post, we’ll discuss, specifically, the category of staffing and what to look for when researching this category.
I heard a story last week that instantly took me back to my consulting days. Picture this: a fully staffed Command Center. Upwards of 2,000 support tickets logged; over 1,200 closed. Training support onsite for 300 ambulatory locations. A big bang Go Live that was meticulously built and planned for over a year. All 8,000 providers launched into the black hole of a new electronic medical record system.
It’s a big deal and comes with a big price tag. And it should, right? Digitizing the entire medical record for all of an organization’s patients is a necessary evil in today’s world that has far reaching tendrils that impact all integrations, medical devices, third party vendors, providers (internally and externally), and most importantly – patients. You need to be confident you partnered with the right vendor long before Go Live.
Purchased services represents up to 45% of the non-labor expense budget within a health system. As more executives look to purchased services categories for potential expense reduction, 2018 is an important year, and Valify has several important innovations planned to assist clients in controlling and reducing purchased services expense in the year ahead:
I recently read the book Crucial Conversations, when I came across a section that hit me as being very applicable to the purchased services sourcing process. It offered a new way of looking at how decisions are made and what factors are important in determining the best method.
Let’s review the methods for decision making, their strengths, and how to apply each to make the best decisions for you.
Methods of Decision Making
The Command method is when decisions are made without involving others. This can also be called authoritative and is, of course, the fastest option because you aren’t delayed by other people offering their opinions or discussing other solutions.
Conferences are popular ways to connect your healthcare organization’s internal intelligence to the external intelligence that conference speakers, exhibitors, and attendees offer. Educational sessions, keynote addresses, pre-conference events, and a myriad of opportunities to meet with conference speakers, exhibitors, and attendees in both structured and informal settings are very powerful ways to gather the information you need to make smart decisions. But healthcare conferences can have thousands, even tens of thousands of attendees and hundreds of exhibitors. How can you efficiently sort through so many potential opportunities? It’s important to not let the sheer size of these events overwhelm your ability to realize the value they present. Speed-dating vendors at healthcare conferences is one potentially useful approach to conquering the conference crowd.