ERP Cloud Supply Chain Advisory: Optimizing Your Supply Chain - Expense Management

Published April 14 2021
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Organizations are choosing to reinvent themselves to accelerate efficiencies and cost reduction strategies. One way to do this is through digital transformation to provide integrated systems and solutions for an immediate impact. Better collaboration and a single version of the truth align the enterprise and enable strategic decisions that improve efficiency and decrease costs. In this blog post, we share insight about expense reduction strategies to help companies improve operations. In the next blog post, we focus on various areas of operations optimization.

Expense management in healthcare is often fragmented and challenging because of competing interests from group purchasing organizations and distributors all trying to capitalize on a market with less visibility and infrastructure. Having completed engagements with hospitals, clinics, and LTACs of all sizes across the United States, we provide them with insight into all expense categories.

The Solution?

The first step is to benchmark performance in these areas:

  • Labor hospital or clinic by department and compare this to other similar organizations in the same location
  • Supply expense
  • Agreements commonly referred to as the “purchased service agreements expense”

By examining an organization at the 25th, 50th, and 75th percentiles for costs, we gain a sense of where organizations lack in best practices expense management strategies.

The next step is to pull a data request on the following areas:

  • Labor
  • Supply expense
  • Purchased services
  • Lab and blood
  • Pharmacy

For labor management, we look at the following:

  • Benchmarking tools for all departments
  • Labor productivity standards
  • Reporting methods and techniques

For supplies, we look at the following:

  • Waste in the utilization categories, nursing, rentals, etc.
  • GPO evaluation
  • Distribution evaluation
  • Reprocessing evaluation
  • Physician preference items (primary categories for opportunity)
    • Spine
    • Joints
    • Trauma
    • Coronary
    • Pacers
    • Peripheral vascular
    • Endovascular

For purchased services, we look at the following:

  • All expenditures by category to pinpoint major areas for expense reduction
  • All agreements that make up the largest portion of your annual expense to include these:
    • Ambulance
    • Housekeeping
    • Laundry and linen
    • Biomedical equipment
    • Specialty bed rentals
    • Security
    • FANS
    • EVS
    • IT
    • Etc.

For lab and blood, we look at the following:

  • Reference lab testing agreements
  • Blood Agreements 

Alithya has developed an assessment to review organizations’ expenses in just six weeks. Our simple model allows us to use our proprietary benchmarking techniques for labor, supplies, purchased services, reference lab and blood, and pharmacy to drive down operations expenses quickly with minimal to no disruption to operating teams. It takes approximately six months to implement the findings, and most of our clients choose to implement.

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