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KSM Blog | Katz, Sapper & Miller CPA

Who is Taking the Trash Out?

Posted 2:56 AM by

Does your organization have a centralized resource responsible for purchased services?

Purchased services are broadly defined as any purchased, contracted or outsourced service across all functional areas of a hospital or health system. Surveys and studies have been conducted that suggest many hospitals and health systems do not have a team or department that can accurately identify the total purchased services spending amounts within their system. It is estimated that 90% of supply chain spending in hospitals is covered under purchased services. Where is the money going? How much are we paying for telecommunications? Have insurance costs, real estate fees and legal costs been included in you purchased services assessment? These are questions that need answers.

Developing a monitoring program, where the goal is to track and assess all purchased services on a weekly or monthly basis, will drastically improve a hospital or health systems overall optimization. Some key examples of the “spend categories” to be tracked are: medical/surgical supplies, government, facilities, employee benefits, pharmacy, food services, telecommunications, risk management, banking, marketing, consulting services, biomedical and transportation.

The basic steps in tackling this cost reduction strategy are:

  1. Develop an action plan and identify total spend vs. purchased services
  2. Implement change and negotiate with vendors
  3. Monitor performance and track changes/savings

The impact of creating a monitoring system can lead to dramatic reductions in supply chain costs. Often times, responsibilities for purchased services are scattered across multiple departments, hospitals do not have negotiation experience or aptitude and more so than not, contracts with vendors do not even exist.

About Us
Katz, Sapper & Miller’s Healthcare Resources Group serves healthcare providers, including physicians, hospitals and health systems, surgery centers, and long-term care facilities. Our team of healthcare professionals has the scope and depth to meet client needs. Learn more.

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