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How third-party purchased services are helping providers save money

por John R. Fischer, Senior Reporter | September 24, 2021
Parts And Service
Third-party purchased services can help save hospitals on cost while preserving quality of care and operation efficiencies
In the last 18 months, purchased services have accounted for 34.8% of non-direct labor spending. With the Delta variant surge now digging into 2021 revenue gains and expenses rising, hospitals are looking at these third-party options to save on cost while maintaining operational efficiencies, according to Conductiv, a third-party spend optimization solutions provider and a consolidated subsidiary of Premier.

“In many cases, the urgency of sourcing new categories and implementing safety measures with on-site third-party service providers has highlighted the fragmented and unstandardized nature of supplier management for healthcare providers,” Chris Gormley, CEO of Conductiv, told HCB News.

Looking at 102 healthcare organizations that spent $49 billion on these services, Conductiv calculated significant cost savings with such services:

  • Revenue cycle management
  • Hospitals investing in revenue cycle management are estimated to save potentially more than $360 million and see improved margins and revenue gains. Such capabilities help them not only manage revenue, scheduling and operations but continue to provide quality care to patients.
  • Staffing
  • Workers in high-demand labor groups are in short supply and many are retiring or burned out. With total labor expenses rising, bringing in third-party staffing can potentially save hospitals over an estimated $81 million, while assisting in-house nursing, respiratory therapy, radiology and other departments.
  • Lab and reference lab testing services
  • Third-party lab services offer a potential estimated savings of over $127 million, especially for providers who are unable to scale in-house capacity, face lab and diagnostic supply shortages and are concerned about an unstable workforce.
  • Food and Nutrition Services
  • While not new or related to COVID, contracting with third-party FNS services can provide workforce support, relieve supply chain shortages, ensure patient nutrition and help boost staff satisfaction, all while saving providers over $67 million.
  • Environmental Services
  • In addition to preventing infection from COVID, outsourced cleaning and janitorial services save hospitals potentially over $58 million, while supporting clinicians and preserving safety for patients.
Other services providers are looking at include laundry and linen; inhaled nitric oxide therapy; intraoperative neurological monitoring; and snow removal. When choosing a third-party service, providers should know what specific capabilities they bring and how those equate to cost-savings. For instance, efficient third-party service should be able to utilize AI and machine learning to provide real-time views on utilization and usage rates. This can help manage specific savings targets and ensure providers comply with new agreements.

They should also be able to provide instant access to critical sourcing, spend, and process information to make sure hospitals are getting the level of service stated in contracts in terms of quality and price. In addition, hospitals and supply chain teams should consider GPO contracts, as they can yield the greatest savings and have the fewest discrepancies, which saves time for both buyers and sellers, according to Gormley. “Industry-leading purchased services contracts, technology and partners can help hospitals and health systems reduce costs, increase revenue, improve workflow and efficiencies, and enhance quality."

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