Procurement proceses make up the daily lifeblood of healthcare organizations and assisted care facilities. Efficient and intentional procurement of goods and services keeps operations flowing and supports the mission of caregiving.
But every organization in the healthcare sphere also has a bottom line, and the same goods and services that keep daily operations flowing are also areas of the greatest budgetary impact. This is true across the industry. A recent Deloitte survey of procurement officers revealed that two out of three companies are now pursuing cost savings compared to less than 40% of companies just a few years ago.
How to Maximize & Measure Smarter Spending
Smart spend and procurement savings can free up opportunities to place resources where they’re needed most. Forward-thinking procurement officers, along with their finance and budget counterparts, can look to measure and maximize their procurement cost savings by:
- Identifying and defining areas for cost savings.
Many healthcare organizations spend large amounts in relatively predictable areas. Tracking this spend can reveal opportunities through greater efficiencies.
- Being deliberate about cost savings and cost avoidance.
“Cost savings” initiatives pursue driving down the costs of necessary goods and services, while “cost avoidance” initiatives pursue areas where costs can be removed altogether because they are deemed non-essential.
- Contract monitoring.
Money can be lost when invoices don’t match contractual terms. Tracking even small discrepancies can produce significant savings over time.
- Accounting for total cost.
Remember that there can be spend factors beyond listed prices for goods and services. Factors such as timed payments, delivery fees, and one-time expenses need to be incorporated into measuring procurement cost savings.
- Keeping an eye on the process.
The back office as well as the executive suite have to be aligned on procurement savings strategy, tracking metrics, and actionable steps when savings opportunities are identified.
- Remembering to keep things in balance.
Measuring spend and procurement compliance can lead to immediate savings, but leaders must keep in mind that savings are a strategic measure and not an end in themselves. Balancing measurable cost savings with overall organizational health leads to long-term success.
Technological solutions such as e-procurement offered by Procurement Partners facilitate opportunities for meaningful healthcare procurement savings. With 100% spend management visibility, it’s possible to clearly identify and measure cost savings opportunities by:
- Running automated reports.
Reports such as purchasing, general ledger budget summaries, and item details put measured procurement spend at your fingertips.
- Getting detailed line of sight.
Granular knowledge of spend vs. budget and contract compliance power knowledge of both cost savings and cost avoidance.
- Leveraging measured cost savings.
More savings in the budget means leaders can lead more and caregivers can care more.
Looking to Reduce Your Annual Spend?
Procurement Partners helps customers reduce their annual spend by 10% or more with an easy-to-use portal where users can place orders and process invoices for all vendors. Procurement Partners provides the leading spend management system for Healthcare providers across the continuum of care, from physician groups to urgent care, to surgery centers, to Senior living communities, and has helped companies achieve 40% time savings and 95% contract compliance through automating the procure-to-pay process.
