Technology Partner Should Offer Rapid, Simple And Powerful Data Analytic Tools To Inspire Budgeting Confidence

Your technology partner should offer rapid, simple and powerful data analytic tools to inspire budgeting confidence.

By Chris Heckler, CEO, Valify

Healthcare IT platforms available to monitor and analyze purchased services spending data are limited. This is surprising considering up to 45 percent of a hospital’s or health system’s non-labor budget is spent on purchased services, meaning millions of dollars are being spent without the level of scrutiny it deserves.

Most hospitals still rely on generic reporting systems to guide their spending and services procurement strategies, which are typically insufficient and not designed to capture the highly, non-standardized nature of purchased services data. Meanwhile, consultants who can offer cost reduction direction are often too expensive, too slow, and only offer partial insight based on an equally limited view of information from the same generic reporting systems.

The good news is there are cutting edge technology partners currently on the market dedicated to purchased services in healthcare. This technology can leverage data from hospitals and health systems to immediately identify savings opportunities, and some can manage the contract life cycle. However, the technology features and capabilities these partners offer varies widely.

This is part two of a three-part article series in which we will describe what organizations need to seek from a purchased services data analytics platform, such as a rapid, cloud-based implementation; a comprehensive, real-time view of spending; and a reliable, actively updated benchmarking database. In part one, we discussed the importance of purchased services spending and how hospitals could better manage those costs. In our third and final part of the series, we will discuss ways purchased services professionals can analyze spending data, the types of insights they can gain from such information and the importance of benchmarking performance against peer organizations, especially as it relates to vendor negotiations.

Limitations Of Current Purchased Services Spend Management Practices

Until recently, healthcare organizations and consultants solely relied on Excel and other reporting applications to analyze their purchased services spending data. Often a highly-manual process, older applications demand hours of input which healthcare professionals do not have, leaving even less time to monitor contract utilization, prepare for vendor contract negotiations, and perform other proactive cost-savings management tasks.

Generic data analytic and reporting applications also cannot effectively pull data from the entire enterprise, especially when data is spread across multiple facilities and different information systems. The result of this fragmented data is an incomplete analysis and highly unreliable reports that do not allow employees to fully and easily visualize spending performance or create action plans that will have maximum results.

Benchmarking data supplied in most consultant reports are also limited, relying on key performance indicators (KPIs) alone to measure performance instead of providing KPIs in addition to specific category benchmarks pulled from a real-time database of hundreds of peer organizations.

KPIs offer an essential overview of spending and how it compares to peers across the nation. However, category level benchmarking is truly actionable insight offering the granular view of what the hospital or health system should be paying for each service.

Rapid Implementation And Intuitive Operation

Another feature healthcare organizations should seek from their technology partners is an agile, cloud-based platform that can be implemented in five days or less. Cloud-based technology ensures data and analytics are easily available across the enterprise, is rapidly scalable as growth occurs or other new IT systems are implemented, and allows for immediate access to any software updates and enhancements.

A highly intuitive, graphical interface that is easily searchable is also a crucial feature the technology partner should offer. The point-and-click operation should require minimal onboard training and be quickly understood even by healthcare professionals who do not regularly manage purchased services spending data. Usability enables more efficient collaboration and empowers employees with unlimited and unfettered access to all data, which will allow organizations to realize savings even faster than in years past.

Powerful Analytics And Benchmarking

Most importantly, a purchased services data analytics partner needs to help the organization easily visualize at least 95 percent of their total spend and all of their purchased services spend across more than 1,200 categories, so they have a reliable view of their performance by ensuring all purchased serviced-related spend is captured. The primary reason for hospitals and health systems to sort their total spend data across a diverse and vast amount of categories is to ensure they fully capture rogue and off-contract spending which is typically hiding in smaller dollar amounts with unknown vendors that are missed by manual categorization practices. With this comprehensive perspective, healthcare organizations can quickly identify savings opportunities and track the progress of spending-reduction initiatives at a glance.

Easily visualizing real-time spend data is a crucial first step to pinpoint spending anomalies across the enterprise, down to the department or facility level. Category benchmarking capabilities, as described earlier, are equally essential which is why healthcare organizations need to seek out a technology partner who can offer a database of more than $180 billion in purchased services spending data that is updated monthly from peer organizations across the country.

Automated, Actionable Intelligence

Mastering purchased services spend management is a highly specialized and typically non-standardized area of healthcare financial management. This unique facet of operations not only requires a technology partner that delivers complete visibility into data, but one that also offers highly intuitive tools to help locate overspending and savings opportunities so that employees spend less time manually sifting through data and more time evaluating and realizing savings opportunities.

In the next part of the article series, we will further specify how important category benchmarking is to hospitals in determining whether vendor contracts are competitive. Benchmarking empowers purchased services professionals to walk into vendor negotiations with the evidence they need to secure a highly favorable contract for their institution.

About The Author

Chris Heckler is the CEO of Valify, a web-based analytics and benchmarking solution that delivers timely data-driven insight into purchased services spending across the enterprise.