Purchased Services Analytics

Purchased services involve non-labor expenses, either contracted, outsourced, or purchased from a third-party vendor instead of using in-house employees. These services may include laundry, facility support, pharmacy services, IT and telecommunications, energy services, and more. Purchased services management procures, oversees, and optimizes services acquired from outsourced or third-party providers. Effective management of these services is vital because procurement impacts many aspects of overall operations. For example, management of purchased services impacts an organization’s operational costs, risk mitigation, and ability to provide effective services. Acquiring purchased services involves entering into a customer agreement with each vendor or source. Services established with purchase service agreements can account for a large portion of a healthcare facility’s overall non-labor spending. Often these numbers are hidden amongst various purchased service agreements. Implementing analytics in procurement helps healthcare organizations categorize all purchased services. Categorizing spending allows for detailed analytics and finding significant savings.

Strategic decision-making is enhanced with the role of analytics in purchased services management. Analytics in purchased services can help healthcare executives with cost-optimization, risk management and improve operational efficiencies. Using established, well-defined metrics for purchased services analytics and providing an overall picture of vendor performance and service utilization. Obtaining this valuable information through purchased services analytics empowers organizations to minimize risk impact on operations, identify opportunities for performance improvement and make data-driven decisions and strategic choices.

Thorough analytics involves key metrics. Examples of some critical metrics for purchased services analytics include:

• Spend per vendor
• Cost savings
• Contract Compliance
• Vendor Diversity
• Service utilization rates
• Service cost per unit
• Service demand forecasting accuracy
• Compliance risk index

These are some common key performance metrics for purchased services analytics. When setting key performance indicators KPIs for purchased services analytics, it is vital to use a systematic approach to ensure selected metrics are appropriately aligned with a facility’s culture and objectives.

The role of analytics in purchased services management includes more than impacting procurement decisions. Procurement analytics adds value to the entire organization, including marketing, finance, acquisition of services, and more. Value from data analytics includes added value from timely, actionable business insights. Another benefit of purchased services analytics is using data in resource management, strategic planning, market research, and business development. Using analytics gathered from spend data, invoice data, purchase order data, payment terms, supplier analytics, and more offer healthcare organizations a comprehensive view of their purchased services performance and cost-effectiveness. Purchased services analytics is about more than spend analysis. It offers valuable data that helps identify opportunities for improvement and growth.

Purchased Services Analytics Software For Healthcare

Purchased services present several challenges for the healthcare industry. Procuring services directly impacts the ability to deliver patient care and can lead to overspending when not managed properly. Total healthcare spending is significantly affected by overspending on outsourced services. Purchased service analytics is critical to reducing waste, increasing cost efficiency, and overall cost management of products and services.

Most healthcare organizations face procurement challenges such as:

• Outdated, manual paper-based processes.
• Expecting individual clinicians or facilities within an organization to procure products and services individually.
• Inefficiencies in the distribution or delivery of products and services.
• Ineffective or inefficient use of third-party labor.
• Inventory issues across locations and/or departments.
• Fraud or theft.

Approaching purchased services by implementing purchased services analytics software helps healthcare organizations apply a data-driven approach to purchased services management. Purchase services analytics software for healthcare providers offers a centralized data management platform with a comprehensive view of all the moving parts involved with procurement. Simplifying and streamlining procurement data using metrics such as pricing, cost-volume profits, utilization data, and supply chain invoice management helps eliminate many procurement challenges.

The healthcare analytics market is booming thanks to analytics advancements impacting healthcare operations, including procurement. Selecting purchased services analytics software requires careful consideration involving understanding the organization’s goals and objectives and the timeframe necessary for results. When considering options for purchased services analytics software for healthcare, reviewing a company’s experience, customizable applications, integrations, maintenance, security, training, customer support, and warehousing capabilities is vital. Some purchased services examples of analytics software include Arcadia, VIE Healthcare Analytics, Vizient Spend Management Suite, Syft Analytics, and Valify.

Choosing purchased services analytics software designed explicitly for purchased services in healthcare is critical for healthcare organizations. Working with a software company designed for healthcare organizations offers vital advantages such as upholding proper data privacy and security standards, industry-specific metrics and KPIs, and understanding regulatory compliance requirements. Hospital spend analysis is a data skill necessary in purchased services management. Choosing the right purchased services analytics software is crucial to the management process. Adopting new technology in the form of software solutions simplifies and streamlines data analysis for procurement managers. Financial resilience is vital in today’s healthcare industry. Purchased services comprise a large segment of healthcare spending for hospitals and healthcare facilities. Data analytics improves the effective monitoring of purchased services spend. Reducing spend on purchased services can significantly impact a healthcare organization’s bottom line.

Purchased Services Analytics Tool

Procurement analytics, or purchased services analytics, aims to gather, extract, monitor, and evaluate procurement-related data to improve processes through data-driven insights. A purchased services analytics tool is a software solution or specialized software or platform capable of analyzing, monitoring, and ultimately optimizing the management of procured services. Analytics tools for purchased services empower healthcare organizations with valuable insights into spending, vendor performance, quality of services, and other operational metrics. Analyzing data and gaining insights surrounding purchased services equips executives and managers with vital information to make informed decisions, improve vendor management, manage costs, and enhance operational efficiency.

There are many benefits of using a purchased services tool for analytics. Some key advantages include:

• Vendor performance evaluation
• Risk mitigation
• Cost optimization
• Predictive analytics
• Data-driven decision-making capabilities
• Resource allocation
• Contract management

Procurement analytics using purchased services analytics tools involves gathering data from internal and external data sources. Internal data sources originate within corporate applications. In contrast, external data sources come from outside a company’s databases. An analytics tool can consider internal and external data sources when analyzing spend analytics. For example, external data sources for spend analytics are supplier-specific sources or commodity market information. Internal data sources will include purchase agreements and company financial statements. Although using a spend analysis example here, it is essential to understand procurement analytics involves more than spend analysis. Purchased services analytics can impact many activities in a healthcare organization, including sourcing management, contract management, risk management, sustainability, and more. Another way procurement analytics improves operations is by optimizing relationships with third-party suppliers and vendors. Understanding the robust data involved in procurement helps companies communicate needs and expectations with vendors. For example, contract management empowered by accurate data makes the negotiation process more efficient and effective. Vendor evaluation using data analytics empowers healthcare organizations to address issues objectively and identify areas of improvement, optimizing processes and improving vendor relationships. Finding the right purchased services analytics tools can potentially improve overall operational efficiency through cost reduction, corporate responsibility, risk management, and cash flow management.

Cost Savings In Purchased Services Analytics

Cost savings is a significant challenge for healthcare organizations. While providing the best possible patient care, healthcare organizations must prioritize financial sustainability, affordable healthcare, budget constraints, continual innovation, attracting the best talent, and adapting to market changes, among many other concerns. Cost control in healthcare is vital. Hospital cost reduction strategies include purchased services and analytics tools.

Analytics is the backbone of cost optimization today. Using analytics, companies can optimize staff, processes, and technology. Outside the healthcare industry, companies use analytics to boost customer acquisition and retention, gain marketing insights, mitigate risk, and implement innovation and development. Big companies experience significant cost savings through sustainable cost reduction using data analytics. For example, businesses can see rapid savings by identifying key activities, focusing on optimizing the efficiency of key activities and reducing the focus on inefficient or unnecessary activities. Another way companies accelerate savings through data analytics is by leveraging digital tools such as automation, therefore, eliminating low-value work.

Hospitals and healthcare organizations use data analysis to cut supply costs and improve purchased services management. In addition to spend analytics, healthcare organizations use predictive analytics to identify patterns and generate real-time information helpful in cost management. Procurement management offers an integral opportunity for healthcare organizations to reduce costs. By obtaining data about ordering patterns, use of supplies, vendor performance, and more, hospitals and healthcare companies can positively impact cash flow by reducing operational costs while improving operations and patient care. A practical example involves suppliers and contracts for like items. Through data analytics, procurement managers can view comprehensive data identifying duplicate suppliers and contracts to eliminate waste. Cost-savings in purchased services analytics are also evident through automation features for requisitions, purchase order invoices, and other processes, significantly reducing costly documentation errors.

Purchased services analytics cost savings may be challenging to realize; it is a complex process with several challenges. It is easy to see how analytics provides valuable insights. The challenge is effectively translating insights into cost-saving, actionable steps. It is vital to acquire the highest quality data available in real time. Incomplete or inaccurate data may hinder the accuracy of analytics and impede the decision-making process. Another hurdle healthcare organizations must overcome is vendor resistance. Some vendors may resist the idea of renegotiating contracts even when data analysis shows it is a realistic request. It is essential to continually monitor vendor contracts and attempt to implement cost-saving steps whenever possible. Procurement analytics can help all stakeholders accept renegotiation processes moving forward, leading to increased cost containment in hospitals.