Healthcare Cost Solutions, LLC

Spend Analysis and Contracting Strategies

The Healthcare Cost Solutions team has corporate-level experience in defining, developing and implementing sourcing and contracting strategies with a variety of clients. We have developed proprietary processes for identifying those items, categories, vendors, departments, and expense accounts which warrant the greatest focus. We utilize benchmarks and our experience to help you get the maximum possible benefit from our assistance. One of our key differentiators is our preference to teach and mentor your staff in our tools and techniques.

Medical supplies represent the second highest expense to your health care organization – usually 25 to 30 percent of your operating expenses (budget) with 25 percent of those supply expenses tied to administration, overhead, and logistics. To understand and manage these supply expenses one must first capture spend data to determine which expense categories (e.g. supplies, purchased services, etc.) are driving changes in overall expense; how are these expenditures changing from one period to another; and what is driving agent creating these changes, i.e. price changes, consumption or utilization changes, product mix changes.

HCS uses proven analytical tools (e.g. our “Cost Drivers Analysis” analytics and reporting process) and expertise to identify highest impact expense categories which can lead to development and implementation of a comprehensive strategy that addresses each, including contracting, utilization, and new technology product introduction (for more information click here  Cost Drivers Analysis.pdf). With a background in contracting both at a local hospital level as well as a corporate multi-hospital system, HCS is positioned to assist the organization to enhance existing contracts as well as implement new contracts which reduce price and improve other related areas, such as service.

Once the “Cost Drivers Analysis” is performed, HCS works with you to assess existing contracts:

• Determine contract coverage, i.e. what is covered by contract, what is not, what price tier or level is available to the organization, compliance with contracts, etc.
• Based upon the contract assessment and cost driver analysis results, contracting strategies are developed and prioritized, including review of options, pros, cons, market, and internal success factors
• Once strategies are reviewed and stratified with senior executives, a financial analysis worksheets are utilized to project results under various scenarios using the institutions own data and consumption rate (growth).
• Based upon this financial analysis as well as vendor criteria, request for information (RFIs) or request for proposals (RFPs) may be developed to either enhance existing or create new contracts.
• Using the financial impact tools already developed to perform the initial analysis as well as the RFP document itself where used, HCS assists the organization in evaluating the vendor responses both financially as well as operationally. Impacts are projected and pre-determined criteria are used to score the results. Further requests and discussion may be held with the vendors to negotiate variances.
• Once the contract is finalized, HCS works to assist in contract implementation and maximization. HCS utilizes tools that are strategic in nature (based upon organizational goals) and tactical (using and enabling technology and enforcement of policies and procedures across the organization)

For more information about our spend management services, click here  Spend Management Services.pdf

We have worked with clients using various GPOs, including Broadlane, Premier, MedAssets, HPG, Novation.  We have assisted clients with contractign strategies for physician preference items, including spinal implants, heart valves, orthopedics, cardiology/EP using proven approaches such as capped pricing, demand leveling, and tiered as well as other discount options.