Breaking Down the Common Types of Expenses in Hospitals

Expenses in Hospitals

Importance of Cost Management in Hospitals

Technology, new discoveries, demographics, regulatory factors, and new models of care keep the healthcare industry in a constant state of fluidity. The United States spends $4.3 trillion a year on healthcare expenses and the U.S. hospital facilities market size is expected to reach $2,540.4 billion by 2030 and to expand at a compound annual growth rate (CAGR) of 7.62% over the forecast period.

Hospitals need to manage expenses and revenues to remain operationally efficient. The pandemic has put high pressure on costs whilst driving revenues down. With elective procedures cancelled or postponed and hospital visits restricted to only necessary ones, hospitals hemorrhaged revenue making cost control vital.

Breaking Down the Different Hospital Expenses & Costs

Hospital costs breakdown can be broadly categorized into labor, capital, administrative, operating costs, nursing services, and professional services.

Wages, Benefits, and Labor Costs

While percentages vary from hospital to hospital, across the board the biggest expense for hospitals are wages and benefits which on average account for 56% of the total expense of a hospital. It is nearly 5 times more than any other category, with the second largest expenditure being professional fees at 11.9%.

Wages and benefits costs are further expected to rise largely stemming from the effects of the COVID-19 pandemic. Doctors and nurses have left the healthcare system due burnout or illness and as a result, labor costs have risen and forced hospitals to sustain services through expensive contract labor. Compared to pre-pandemic levels, hospitals saw their expenses for travel nurses increase tenfold. An article by Healthcare Dive stated that one third of nurses are expected to quit their jobs by the end of 2022 due to burnout caused by the pandemic and the stress being put on them with increased demand for their services. In the next decade, the United States will be short of nearly 122,000 physicians by 2032 according to 2019 data published by the AAMC (Association of American Medical Colleges).

The next decade will bring additional challenges as demographics indicate that by 2029, more than 71 million Americans will be 65 or older while roughly one million registered nurses are already more than 50 years old. Thus, in the next 10 to 15 years, one-third of today’s nursing workforce will reach retirement age. Nearly 700,000 nurses are projected to retire or leave the labor force by 2024 at a time when the need will be higher.

By 2025, estimates indicate that more than three million nurses may be needed to care for the population, however, the national supply of nurses is projected to only reach 2.8 million by 2025 leaving a gap of 250,000 nurses. This shortfall between supply and demand is expected to drive additional wage increases in future years.

Overall, these factors will therefore continue to keep the wage and benefits category the highest cost and largest challenge for hospitals.

Areas such as information technology (IT), non-clinical and clinical purchased services and supplies, laboratory, and pharmacy costs represent up to 60% of hospital operation expenses.

Supply Costs

One major cost head is supply including medical devices. Supply costs include products such as medical equipment, laboratory supplies, machinery, operating tables, linens, food, wound dressings, and intravenous solutions. On average, these expenses make up 15% of total expenses but can go as high as 30-40% in surgery-intensive hospitals. While these products are necessary to hospitals, research has shown that hospitals spend on average an excess of $12.1M on supply-chain costs.  The pandemic added additional items to the supply list. According to an article by Fierce Healthcare, hospitals have spent more than $3 billion on PPE kits from the beginning of the pandemic.

Hospitals in the US rely on global supply chains especially in the medical supplies category. Everything from masks to devices come from across the globe. Previously established relationships and contracts with distributors are disrupted with supply chain issues with factories and vendors shutting down operations. Consequently, hospitals have had to readjust systems leading to price escalations. Between fall 2020 and early 2022 costs for energy, resins, cotton, and most metals surged more than 30%; these all are critical elements in the manufacturing of medical supplies and devices used every day in hospitals. Global events such as the war in Ukraine, lockdowns in China and rising transportation costs continue to have fuel these cost increases and delays in deliveries. According to the Health Industry Distributors Association, transportation times for medical supplies are 440% longer than pre-pandemic times.

Specialist Fees

The next large cost center impacted is professional fees which are linked with specialists that usually run private practices but are attached to hospitals to provide expert opinions on specific medical cases, teach residents, and work at clinics. These fees are also often associated with doctors within the hospital that are specialized in fields such as anesthesiology, radiology, or pathology.

Technology Costs

An emerging cost area is technology with hospitals needing to constantly invest in newer digital health technology to ensure their patients get the most adequate care, especially with the new norm being virtual checkups and an increased demand for telehealth. Beyond that, while technology investments could be expensive, long-term efficiencies could help control costs. Emergent technologies such as robotic automation could help innovate and manage costs.

The Future of Hospital Costs

In conclusion, expenses will continue to exert pressure on hospital margins. Hospital administrations have a challenging decade ahead of them and they will need to consider strategies to optimize labor costs, reduce fixed costs and invest in new technologies to gain efficiencies.

Pricing in the Hospital Supply Chain

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What is Pricing in Healthcare?

Pricing opportunity can be defined as optimizing the price paid for a good or service, which can be achieved through incumbent supplier negotiations or competitive sourcing activities. Accurately identifying pricing opportunities can be challenging due to several variables such as unique product/service specifications, quality, volume, technology advancements, and local market factors. As a result, most benchmarking exercises can leave hospital leaders with misleading perceptions of price competitiveness. Although pricing may be viewed as a straightforward value lever that is routinely reviewed by hospital supply chain, Pathstone finds many hospitals have yet to maximize pricing opportunities in more complex categories such as various clinical and non-clinical purchased services.

Successful implementation of pricing opportunities delivers the following benefits to health systems:
  • Financial benefits ranging 5-25% depending on the category
  • One of the quickest and least disruptive paths to financial improvement
  • More visibility into cost drivers of goods or services
Key Opportunity Indicators

Supplier Relationship Not Reviewed

If your supplier contract has not been evaluated for price competitiveness in the last 3-5 years, this can indicate there may be opportunity. Supplier relationships with hospitals can change over time. Expansions of supplier scope in an organization can be an advantageous leverage point to bring into the pricing negotiations. Furthermore, supplier markets evolve and change the dynamics of how they do business with their hospital clients. Many clinical areas, for example, are impacted by demographic changes (e.g. aging baby boomers), population health challenges (e.g. new diseases) or development of new technology (e.g. telehealth), all of which may affect the demand for certain supplies or services. As a result, continuous vigilance is important.

  • Client Example: In our experience, perfusion services is an example of a complex area that is challenging to identify pricing opportunity for many of our clients. The demand for perfusion services has been growing driven by the increase of open-heart surgeries for an aging population. As a result, many hospitals have seen their perfusion service volumes jump by 30-50% over the last several years. In such situations, Pathstone can help clients evaluate pricing opportunities with current market intelligence across our widespread client base.

Not in-line with Price Benchmarks

One common indicator of opportunity is identifying higher pricing when benchmarked against peers. Utilizing available resources such as group purchasing organizations (GPOs) or databases to perform the benchmarking can provide a good directional perspective on potential pricing value. However, hospitals should proceed with price benchmarking cautiously. Our experience has shown that when hospitals have the ability (often through third-party partnerships) to contextualize and customize benchmarks – this creates the best data and ultimately drives the most value.

  • Client Example: Benchmarking services are anything but straightforward. Pathstone often helps our clients benchmark their services both internally and externally. Pathstone provides external price benchmarks that are contextualized based on the health system’s volume, geography, specific service requirements, and unique operational considerations to determine an accurate and tailored cost savings opportunity.

Hospital Growth and Expansion

Within the healthcare industry, hospital consolidation and integration activity has been increasing. If integration has already occurred or may be imminent for your organization, then it presents a ripe opportunity to re-evaluate pricing for goods and services. Through integration, your volume may change (likely increase) which creates leverage to help drive more competitive pricing.

  • Client Example: Pathstone has worked with hospital systems that have merged, acquired new sites, or expanded service lines. A benefit of any consolidation activity is the ability to combine purchasing activities of two different organizations to create leverage with suppliers. For example, a newly merged health system was using two different dialysis service providers, and in turn, had varying pricing for the same dialysis services. In some cases, hospital sites were even using the same service provider through separate contracts but with very different pricing. Consolidated purchased volumes in the newly merged health system created leverage to negotiate better pricing with the chosen provider.

Prices are Higher than Reimbursement Rates

For certain goods or services where the hospital is receiving reimbursement, it can be a beneficial exercise to compare pricing against reimbursement. If the pricing is significantly higher, this data point can potentially be leveraged in supplier pricing negotiations.

Key Success Factors

Maximize Resources

Hospitals have a variety of resources at their fingertips but determining how best to maximize those resources is challenging. The use of Group Purchasing Organizations (GPOs), market databases, and/or consultants seem to be some of the best options for a hospital to obtain benchmarking information. Appropriate use of this information can create valuable metrics for internal KPI tools to identify opportunities.

“Test” the Market

There are various approaches your organization can take to “test” the market. A competitive process like a Request for Proposal (RFP) or Request for Information (RFI) are common approaches. At times, just the initiation of a competitive process can motivate your suppliers to provide a significant reduction in current pricing in hopes you avoid looking at competitors. However, when going to the market an organization needs to have conducted its initial due diligence on the market and have an appetite for potential supplier conversion

Find the Right Fit

Hospitals often struggle with finding a quality product/service at the right price but also one that fits that organization’s needs. When pursuing price opportunities, it is important to maintain focus on quality. Establishing cross-functional work teams that can evaluate both pricing and quality is key. Additionally, developing service level metrics can help reinforce quality expectations with suppliers. Lower prices don’t always mean it will yield lower quality. Quality can remain the same or improve while pricing decreases as long as the work team maintains focus on this balance.

Benefit your Supplier

Obtaining the most competitive price is usually the result of a mutually beneficial partnership with your supplier. It is important to understand your supplier’s goals and look for ways to benefit your supplier through your relationship while still achieving your financial objectives. Challenge yourself as the customer to provide feedback to your supplier not only on the areas that require improvement but also on the areas in which they have met or exceeded expectations.

Best Practices for Healthcare Inventory Management

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What are Inventory Management Systems

Healthcare inventory management is incredibly important in medical facility processes. Inventory management systems can help hospitals and other medical organizations streamline their processes to save time and money while providing quality care to patients.

A streamlined inventory management system makes it easier to track equipment and supplies, which improves communication between departments, reduces theft, increases productivity, maintains compliance, and reduces the time it takes for medical personnel to sign equipment in and out for use. When you improve your medical supply inventory management, you improve several processes within your organization.

Why Is Inventory Management Important?

Healthcare organizations must keep track of various inventory, including:

  • Medical supplies
  • Medical equipment
  • Patient prescriptions
  • Health and wellness products

While a simple Excel spreadsheet may seem enough to manage inventory successfully, it’s actually more effective to implement a streamlined inventory management strategy. An efficient management workflow can help medical facilities save time, money, and effort. Medical facilities are pressured to reduce costs, and streamlining inventory management is one way to cut spending.

With proper medical inventory tracking and planning, hospitals can save time and money. Planning out the supplies needed can save $1,800 per surgery and precious minutes of time, for example.

Healthcare inventory management is a workflow that tracks a health system’s orders, purchases, inventory, payments, health product sales, and prescriptions. An effective workflow will help an organization avoid supply and monetary losses with an accurate and updated product and supply log. Inventory management also provides the following benefits:

  • Contract compliance: Effective healthcare inventory management helps organizations order and use the correct amount of products so they don’t obtain too few or too many supplies. This prevents them from breaking bulk purchasing contracts.
  • Digitized data: Virtual inventory management streamlines your processes to eliminate errors and the need for paper workflows. Paperless data also allows you to organize your information and inventory efficiently.
  • Improved communication: With an efficient healthcare inventory management system, administrative teams can effectively communicate with other healthcare teams to keep track of supplies and equipment.
  • Equipment and instrument protection: Inventory management prevents theft because it allows you to track where equipment is at all times.

Types of Healthcare Inventory Management

Many hospitals lack a standardized inventory management process, but a standard process can significantly decrease spending. There are two different types of healthcare inventory management, so it’s important to understand the benefits and disadvantages of both. Healthcare facilities can manage inventory using one of the following methods:

Periodic Inventory

Periodic inventory requires employees to update inventory data manually. For this method, employees take inventory periodically. For example, they may take inventory once a week or at the end of a similar period of time. While this method may be sufficient for small healthcare facilities, it is not ideal for hospitals and larger healthcare organizations.

This inventory management method leaves significant room for error and takes time away from other important tasks. Larger healthcare facilities benefit more from the perpetual inventory method.

Perpetual Inventory

The perpetual inventory management method continually and automatically updates inventory data. The advanced software needed to operate a perpetual inventory system can cost more than practicing manual periodic inventory, but its benefits surpass its cost. Perpetual inventory systems account for important details such as purchases, deliveries, additions, and subtractions. They allow medical staff to track equipment use at all times so all supplies are accounted for.

Hospital Inventory Management Best Practices

Inventory management is important in hospital and medical organization settings. With proper inventory management, you can increase productivity and know where your medical equipment and supplies are at all times. To improve your hospital inventory management, implement the following best practices:

1. Organize Your Inventory to Avoid Redundancies

Healthcare providers can often misplace supplies or equipment they already have. This can occur when someone mixes up inventory or delivers supplies to the wrong person or place. As a result, employees may end up ordering redundant supplies and equipment to replace misplaced items.

Inventory management can ensure all supplies and equipment pieces are easily located at all times. It can help hospital staff deliver supplies to the correct individuals and return equipment to the correct location when they are finished using it.

Implementing a hospital tracking system allows you to label and tag your equipment and supplies in your database. You can add locations to track where items are and where they should be at all times.

2. Create Tags for Equipment and Supplies

When equipment has tags with labels, barcodes, and identification numbers, staff can easily check pieces of equipment out for use or sign them off to other staff members.

Using a radio-frequency identification (RFID) system makes it easier to locate who last used a piece of equipment if it goes missing. This tagging system can also increase productivity and efficiency and help protect equipment and supplies from theft. Tagging equipment also streamlines its maintenance process and helps you monitor its life cycle.

3. Collect Department Data and Examine Existing Patterns

Collecting data can provide significant insight into existing usage patterns. It’s important to track how much equipment and supplies employees use so you can adjust accordingly. By collecting and analyzing data, you can avoid ordering only the supplies that you need, and you can openly share how your department is progressively saving money.

When you implement a data-driven approach in your supply management method, you can make informed decisions and collaborate effectively with clinical leadership.

4. Implement a Medical Inventory Management System

Manually managing inventory can lead to errors, missing supplies, overspending, and inefficiency. Implementing a clinical inventory management system can eliminate errors and create a more consistent process that makes it easier to document usage, prepare reports and maintain compliance. A supply management system can help your hospital or medical facility save time and money by protecting your equipment and allowing you to find its location at all times.

Let Pathstone Partners Help You With Your Inventory Management

An effective inventory management system can significantly improve your hospital or medical facility’s processes. Implementing an inventory management system can help you save money on supplies, locate equipment at all times, prevent theft, increase productivity and maintain compliance.

Perpetual inventory management is much more effective than periodic or manual inventory management, so having advanced software to track your supplies can significantly benefit your healthcare facility. When you implement best practices for inventory management, you help medical staff focus on important tasks by making equipment and supplies readily available.

Pathstone Partners can help you streamline your processes and make informed decisions with medical inventory management solutions. Our consultants will collaborate with your medical leadership team to drive value and results. We will help you bridge communication gaps and achieve consistent cost savings so you can provide quality patient care as efficiently as possible. Consult with Pathstone to learn more about our healthcare consulting solutions and how we can help you manage your inventory effectively.

Quality and Cost in Dialysis Services

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Pathstone formed a system-wide, cross-functional evaluation committee including representation from all executives on the premise.

A large and growing west coast IDN utilizes seven (7) vendors with eleven (11) separate agreements across eleven (11) hospitals.

Vendor relationships vary from small and local players to market giants DaVita and Fresenius and vendor satisfaction from high (joint venture) to low (exploring insourcing). There is a desire to work as one health system and standardize operations but no visibility into service quality and cost competitiveness at the market level.

Pathstone formed a system-wide, cross-functional evaluation committee including representation from executives (Nursing, Medicine, Finance, and Operations) and RN leadership on the premise that Pathstone’s clinical supplies consulting team would review market competitiveness and the team would drive all decision-making. The Pathstone team built a business case highlighting significant service-level and pricing discrepancies and the team decided to conduct a competitive Request for Proposal (RFP) process. Incumbent suppliers were evaluated for organizational capability, service quality, staffing model, and financial benefit.

Pathstone was able to secure market-competitive rates, eliminate an outlier contract penalty, and navigate a vendor change to achieve $1.2M in recurring annual cost savings. Hospitals then leveraged the savings to buy capital equipment.

The evaluation committee selected a supplier mix that offered the best combination of service quality and cost. A key outcome included formalizing a detailed set of service level metrics for vendors to track and report on a quarterly basis.

The Value of Revenue in the Hospital Supply Chain

Health Care Financial Consultant Revenue

What is Revenue?

This value lever can be defined as any revenue, rebate or reimbursement generated from a purchased product or service. Revenue is often overlooked by healthcare supply chain due to the department’s traditional focus on reducing costs. However, many products and services provided by suppliers can play a significant role in generating revenue, rebates or reimbursements for the health system.

Key benefits of this value lever include:
  • Financial benefits ranging 5-25% depending on the category
  • Increased revenue and reimbursement when cost reduction opportunities are limited
  • Enhanced supplier or contract rebates
  • Creation of funding to upgrade or expand products and services
Key Opportunity Indicators

Limited Discussion on Any Supply Chain Driven Revenue Opportunities

If your organization is not recognizing revenue as a value lever within supply chain, this may be one of the first signs of opportunity. Once spend categories with potential revenue opportunities are identified, negotiations with suppliers in those categories should include conversations around incorporating revenue or rebates into new arrangements.

  • Client Example: Pathstone worked with a client that received a cost reduction proposal from its release of information (ROI) provider. Though the client was eager to accept the offer, Pathstone understood that the supplier was funding the client’s program with revenue associated with billable patient requests that were not visible to the client. By analyzing program revenues, Pathstone was able to help the client negotiate a revenue share agreement that generated 30% in additional financial benefit to the organization.

Lower Supplier Prices Charged Compared to Market Rates

If supplier prices charged for an outsourced service are lower than what the market typically commands, this is another indication of the potential for hidden revenue opportunities. If the organization’s prices are well below market averages, it may be a sign that the vendor is capturing significant revenue to offset costs of the program being delivered to the client. Further investigation may uncover opportunity for the client to at least share in that revenue. Auxiliary services such as parking and cafeteria are common candidates for these types of evaluations and opportunities.

Shrinking Revenue from Existing Programs

If volume for a revenue generating product or service is decreasing, this may signal the current program needs to be modified to align with the current environment. Decreasing volumes may be caused by unexpected factors such as changes in supplier pricing, evolving market forces impacting demand or new supplier/end-user resistance.

  • Client Example:  Pathstone evaluated a health system’s accounts payable commercial bank card program, which offers a quicker payment platform for the health system’s suppliers in exchange for a rebate paid by the supplier to the health system. Our analysis showed low levels of card adoption by suppliers, translating to lower rebates for the health system. A deeper dive into the data revealed most suppliers were already being paid quickly without the use of the card program. By reconfiguring standard payment terms to exceed the card program, the health system created an incentive for suppliers to adopt the card program and thereby increased card program participation and rebates by 10%.
Key Success Factors

Develop Business Cases

Organizations that utilize a comprehensive business case to evaluate the pros and cons of an in-sourced or outsourced model will increase their chance of success. The business case is a fact-based tool that allows teams to have an open and objective dialogue when selecting the best strategy. For complex categories, engaging third parties to develop business cases can provide market information and objective analysis necessary to make the best decision.

Evaluate Program on an Ongoing Basis

Since costs, quality and performance of programs can change over time, organizations that continuously evaluate make vs. buy opportunities position themselves to generate more value over the long-term. Continuous self-assessment can uncover opportunities resulting from minor improvements in supplier relationships to complete transformations for an organization’s service delivery model. For example, one important question for an organization to ask about an insourced operation is: “What else can we do with these resources?” The opportunity cost of those resources can help identify alternatives that drive more value for the organization. Furthermore, alignment of the service with the organization’s overall mission should be evaluated.

Access to Market Intelligence and Best Practices

Hospitals that have conducted extensive market research are well positioned to evaluate existing outsourced or internal programs. Market intelligence on leading practice cost metrics and performance indicators can be an effective barometer to measure financial, quality and operational performance. Partnering with third party providers that can provide insight on market benchmarks can help an organization set the right targets to measure the competitiveness of existing programs.

Ways to Optimize Healthcare Supply Chains in Healthcare

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Optimizing the Healthcare Supply Chain

Optimizing the healthcare supply chain is crucial to ensuring patients receive high-quality care. While the healthcare supply chain has strict regulatory requirements, there are areas where it can improve. Enhance efficiency in the supply chain by following these hospital SCM tips:

Improve Visibility

You should be able to tell where products are within your supply chain at any given time and properly manage inventory. To do this, gather your data in a single location. This process includes data from manufacturing sites, distributors, suppliers, products, modes, customers and the like.

You will then need to improve your data analysis capabilities from end to end using software platforms, artificial intelligence (AI) or third- or fourth-party services.

Consolidate Your Supplier Base

Managing your suppliers is an easy way to optimize your healthcare supply chain. Consolidating suppliers can be simple if you:

Build partnerships with your suppliers that are a win-win for all parties.
Start retendering to improve your understanding of the market, improve supplier competitiveness and potentially build open contracts.
Conduct performance reviews on a monthly, quarterly and annual basis.

Center Performance

Define a hierarchy of meaningful outcome-based healthcare supply chain measures. These performance measurements should allow for analysis of the tradeoffs between key performance indicators (KPIs).

You can also create a KPI model focusing on the quality, service, costs and revenue of your entire supply chain. Target each part of the organization’s supply chain and capture real-time performance data.

Implement Standardization

Healthcare organizations often grow by acquiring other entities. This situation can result in all the separate systems and processes affecting one another.

Standardize processes for physical and financial elements using a framework like the Supply Chain Operations Reference (SCOR) model. Doing so allows you to implement and enforce standards across all areas of the medical supply chain.

Know Your Costs

Many organizations would benefit from a greater understanding of their costs, including how much these are and where they come from. Start by collecting data about your costs of goods and services. Using standard categories, you can benchmark and assess the data and look for patterns.

Analyzing the invoice will help you determine where your cost-saving opportunities are. You can identify non-standard patterns and implement new processes that eliminate waste.

Six Ways to Increase Hospital Profitability

Health Care Financial Consultant Improve Hospital Efficiency

Healthcare is an ever-evolving industry

To serve patients and meet business goals, hospitals must adapt to a new landscape, with different technologies, regulations and reimbursement models always appearing. Maximizing profitability and efficiency are two goals that often pose a challenge, as healthcare providers work to balance costs with effective, timely care and innovative services.

Since hospitals can be particularly complex healthcare systems, reaching these goals requires efforts across many parts of the business. Let’s explore some ways to increase profit in hospitals and healthcare systems and boost efficiency.

Understand Revenue Cycle Performance

If you want to find opportunities and areas for improvement, you’ll need to know your revenue cycle on a deeper level. Better data can also help executive team members quickly make informed decisions.

To dive into your revenue cycle, consider implementing revenue cycle analytics. These solutions can turn the raw data into visualizations like graphs and charts and display them in an easy-to-understand dashboard. You can also improve the quality of the data that enters your analytics solution with better reporting tools.

Invest in Healthcare IT Systems

Technology has seen huge advancements in recent years, so if you’re still running on outdated legacy technology, you’re likely missing out on significant profits. Some examples of cost-saving IT initiatives include decision support systems, electronic medical records (EMRs) and computerized physician order entry systems for prescriptions.

These digital technologies could offer significant benefits to hospital profitability. Annual savings from efficiency benefits alone could exceed $77 billion. By improving scheduling and coordination, for instance, a hospital could reduce hospital stays, increase productivity, and nurse administration time.

The safety benefits of healthcare IT can also boost your bottom line. A medication order system could alert physicians to potential drug reactions, helping eliminate adverse events overall. Healthcare IT technology can provide innumerable benefits for disease prevention and chronic disease management, which are becoming especially relevant in value-based care initiatives.

Reduce Readmission Rates

Readmissions are costly for the patient and the practice, and many of them are preventable. By collecting and analyzing data across the continuum of care, such as follow-up care, hospitals can focus on reducing readmission rates. Lower rates can help achieve maximum reimbursements and avoid penalizations from the Centers for Medicare and Medicaid Services (CMS).

Properly Negotiate Vendor Agreements

The vendors you work with have extensive training and resources to devote to contract negotiation, ensuring that their company has the upper hand. Hospitals typically don’t have the same kind of resources, which can put you at a disadvantage. Spend some time on training to ensure that anyone making these agreements knows the basics of successful negotiation.

You may also want to consider working with a healthcare consultant. At Pathstone Partners, we come to negotiations prepared to make hospital profit improvements. We might collect data on supplier relationships, out-of-line pricing benchmarks, hospital growth and reimbursement rates to gain the most leverage before meeting with a vendor.

Perform Line-Item Analyses

Your line-item analysis is a key part of understanding your monthly spending. Many hospitals are overpaying. A line-item analysis can provide additional security by confirming that all listed items and invoice pricing are included in the vendor contract and that hourly rates are consistent. Manual analysis is virtually impossible, even for smaller hospitals. Automated line-item analysis is another area where IT investments can help significantly.

Consider a Telehealth Strategy

Telehealth has seen a 38-fold increase from pre-pandemic numbers. Offering these digital service options can open up new revenue streams and expand your reach within a community. Telehealth is especially valuable in rural settings or in areas facing provider shortages, where it can make healthcare possible for people who would otherwise struggle to get to a doctor. Telehealth is also an excellent tool for managing chronic conditions and improving patient relationships.