New tool helps hospitals optimize spend management

VIE Healthcare Consulting, an operations consultancy dedicated to the healthcare sector, has launched a new tool to help hospitals optimize their spend management.

With healthcare costs continuing to rise, hospitals and healthcare institutions are looking to deliver greater margin improvements to combat the issue. According to Gary Young, director of the Center for Health Policy and Healthcare Research at Northeastern University, two-thirds of hospitals have margins either close to zero or in the red.

Purchased services spend is one major area where hospitals can drive margin improvement. Purchased services spend is estimated to be one-third ($330 billion) of US hospitals’ operating costs, covering areas such as dietary, housekeeping, and waste management. Most hospitals, however, have trouble to monitoring and evaluating the high volume of supplier contracts.

VIE Healthcare Consulting was recently granted a patent for its automated Invoice ROI solution, which gives hospitals access and insight into their line item spend details.“Invoice ROI provides finance, supply chain, and every hospital department with the line item invoice details of their services spend so they can effectively reduce and manage their services spend for cost savings,” Lisa Miller, founder of VIE, said.

The automated process offers invoice reconciliation, contract optimization, business intelligence and analytics, and benchmarking to drive previously unrealized cost savings. The solution critically allows clients to track purchased services spend in real time and compare it to historical data.

Initially, line item reconciliation examines each agreement and looks back 12-18 months to spot pricing errors or off-contract spend through an automated process.

Invoice ROI also performs invoice optimization. Rather than unquestioningly accepting 3-5% annual price increases, the process examines purchased services agreements to renegotiate market competitive rates. With accurate and accessible spending trend data, hospitals can more easily spot “rogue” vendors.

The solution tackles challenges surrounding data volume, lack of supporting detail in purchased services spend, and complexity of charges that can lead to billing errors being overlooked.

“Hospitals and health systems are coming under greater scrutiny as they face increasing pressures to deliver high-quality patient care while staying financially viable,” Miller added. “When a purchased service is correctly benchmarked, appropriately contracted, and effectively managed, a hospital can realize meaningful savings that can be passed on and used to improve patient care.”